The Original Major Market Driver

The past couple of heating seasons have been a rocky for many U.S. manufacturers because of warmer temperatures and cheap oil and natural gas, but the brutal cold this winter has brought so far has finally turned the tide,
By Anna Simet | January 31, 2018

Markets and policy are always changing. That presents both opportunities and challenges to the wood pellet industry, as well as for those who follow and report on it. After writing my page-12 article, “A Shifting Market,” which aligns with this month’s theme of European production and consumption, some important policy votes occurred in the European Parliament. While nothing is final yet, there were some new, positive developments—hence the addendum at the end of the story, shortly before this issue hit the printer.

While my article provides an overview on the past, current and future landscape of European wood pellet markets, it’s nicely complimented by staff writer Patrick Miller’s Q&A with Enviva Chairman and CEO John Keppler, who discusses the metamorphosis the company has gone through over the past decade, and the challenges it has faced while navigating the European export market. EU demand for industrial wood pellets has been the foundation of Enviva’s incredible growth, and the company sent its first shipment of wood pellets—10,000 tons—to Europe in 2007, owning just one acquired plant at the time. Fast forward to 2018, and  the Enviva’s annual capacity will soon total over 4 million metric tons annually. Its portfolio includes 45,000 tons of state-of-the-art storage capacity, a deep-water marine terminal at the Port of Chesapeake, six operating plants—the majority of which have been built from the ground up—and another under construction.

While Keppler discusses the Asian opportunities his company is also engaging in, he is quick to say that he believes new demand in Europe is far from over, and identifies several potential driving forces. Without new demand, wood pellet consumption in the EU is expected to plateau, and then taper off. But for now, especially being domestic production is much less than demand, North American imports will be needed for the foreseeable future.

Also in this issue, you’ll find “Coming Out Hot,” on page 25, for which I briefly chatted with several U.S. wood pellet producers who sell into the domestic market. The past couple of heating seasons have been a rocky for many U.S. manufacturers because of warmer temperatures and cheap oil and natural gas, but the brutal cold this winter has brought so far has finally turned the tide, it seems. Sales are up and inventory is low, they told me, and I look forward to hearing more from them post-season, after the numbers have been crunched.

Much like the markets on the other side of the globe, things in the domestic sector can change in a very short time frame. Policy and advocacy aside, sometimes, the only thing left to do is watch, hope and wait.

Author: Anna Simet
Editor
asimet@bbiinternational.com