Paper discusses how inflation is impacting the pellet industry

By Erin Voegele | May 02, 2022

FutureMetrics LLC on April 21 published a white paper focused on how inflation could impact the industrial wood pellet industry, particularly costs associated with feedstock harvesting, pellet production, and transportation.

The paper, authored by FutureMetrics President William Strauss, discusses how diesel fuel prices impact the cost of harvest operations and transporting raw material to the pellet mill. It also discusses how inflationary pressures related to raw materials, labor, electricity, and other expenses could impact the operating costs for a typical 500,000-metric-ton-per-year pellet plant.

In the paper, Strauss explains that mills that can utilize rail shipping to transport wood pellets from factory to port are likely to feel less significant impacts. Facilities that ship wood pellets to port via truck are much more likely to be negatively impacted by the high price of diesel fuel, particularly for facilities that must transport wood pellets relatively long distances. In addition, Strauss analyzes the impact of inflation on costs to load pellets onto a ship and transport them to Europe.

Analysis completed in the paper shows that most of the uncertainty in costs is associated with transportation. “From the forest to the mill to the final destination, logistics more or less define the final cost,” Strauss wrote.

A full copy of the 32-page report can be downloaded from the FutureMetrics website