Podcast Preview with William Strauss

William Strauss, president of wood pellet consultancy firm FutureMetrics Inc., was Biomass Magazine’s first guest on its newly launched podcast series. If you’re active in the wood pellet industry, you likely know or have at least heard of William, who goes by Bill. He is a well-respected, widely recognized industry expert, and for Volume 1, Episode 1, he shared some insight on the current state of the global pellet market, with a focus about the current challenges—and right now, there are quite a few.

PMM: The Russian attack on the Ukraine, as well as other market forces, are really straining global wood pellet supply. Can you provide a high-level view of what’s going on in the markets right now?

W.S.  The industrial pellet markets have grown tremendously over the past 10 years or so—actually over the past 20 years, from almost nothing. One of my colleagues at FutureMetrics, John Swaan, filled and shipped the first vessel of industrial pellets to ever leave North America in bulk, back in 1998 ... so that is just how young his industry is; it didn’t exist before that first shipment, out of western Canada to Sweden. In 2021, total exports in the industrial market were almost 23 million tons. The average growth rate over the past 10 years in the market has been close to 17% for annualized growth rate, so the market is large and has grown tremendously—we expect it to continue to grow, especially among Asian countries, specifically Japan. So, it’s already turning into something of a mature market with a 23 million-metric-ton volume, but as you suggested in your question, recent events have really turned things upside down—it’s a highly disruptive period of time in the commodity markets, including wood pellets.

So, for Russia, Belarus and the Ukraine, in 2021, total exports from those three countries were about 3.4 million tons, and that was about 15% of the total global market for industrial wood pellets. A significant proportion of that 3.4 million tons is challenged—a lot of it won’t make its way into Europe, because the certifications from SBP (Sustainable Biomass Partnership) have been withdrawn, as well the other major certification agencies, which means eastern European and U.K. utilities would not get the credits that they need to get for using those pellets. Add to that very high energy prices in Europe—there is a strong demand for heating pellets, as natural gas and heating oil prices are crazy high—and the market is super short right now. Spot prices are well over $300 per ton in western Europe—if you go back a year and a half to two years ago, the average spot price was about $165 per metric ton, so it’s almost doubled. And about inflation, it’s obviously driving up prices for the end user, as well as alternatives to wood pellets, such as coal for power generation. Today (July 27), the price of coal was almost $400 per ton, and a year or two ago it was $60, so it’s about five times higher—it’s crazy.

Inflation is also impacting the supply side. High diesel fuel prices are causing the delivered price of wood to pellet factories to go up, and quite significantly in some places ... in some locations, diesel fuel is 60% of the delivered cost of wood, and diesel fuel prices have essentially doubled in the past year and a half, so we’re seeing delivered wood prices increase pretty dramatically across the board.

Listen to the rest of the podcast:
www.biomassmagazine.com/pages/podcasts

Don't Miss an Episode:
Pellet Mill Magazine's next podcast
to air on Aug. 17, talking pellet plant
design with KESCO Inc.
President and Founder Jason Kessler.

Interested in being a guest?
Contact Danielle Piekarski at
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