GAIN report highlights Canadian pellet industry

By Erin Voegele | July 19, 2013

An annual biofuels report recently filed with the USDA Foreign Agriculture Service Global Agricultural Information Network provides an overview of the rapidly expanding Canadian pellet industry. Citing data provided by the Canadian wood Pellet Association, the GAIN report notes that Canada was home to 42 pellet plants in 2012, representing a combined capacity of 3 million metric tons. The province of British Columbia, located in the western region of the country, accounts for approximately 65 percent of Canadian pellet production capacity.

In 2010, the nation had 33 plants with a combined production capacity of 2 million tons. The report cites CWPA Executive Director of estimating that 90 percent of the country’s pellets were exported to Europe in 2010.

According to the report, Canada produced approximately 1.14 million metric tons of pellets in 2006. The production level rose to 1.48 million metric tons in 2008, before leveling off to between 1.3 million metric tons and 1.34 million metric tons from 2008 through 2010. The industry expanded fairly rapidly in 2011 to 1.93 million metric tons and reached 2 million metric tons in 2012. This year Canadian pellet producers are expected to manufacture approximately 2.54 million metric tons, with 2014 projected production reaching 3.23 million metric tons.

Since 2006, the vast majority of pellets have been exported. In 2006, 1.05 million metric tons of the 1.14 million metric tons of pellets produced were exported. In 2011, 1.87 million metric tons of the 1.93 metric tons of Canadian produced pellets entered the export market. The percentage dropped in 2012, when only 1.37 million metric tons of the 2.54 metric tons of pellets produced in Canada were exported. In 2014, the GAIN report predicts only 2.21 million metric tons of the 3.23 million metric tons of pellets produced will be exported.

Canadian consumption of wood pellets held relatively steady from 2006 through 2011, averaging between 65,000 metric tons and 95,000 metric tons per year. Consumption increased rapidly last year, to 233,000 metric tons, and is expected to reach 400,000 metric tons this year. The GAIN report predicts that the Canadian marketplace will consume 690,000 metric tons of pellets in 2014.

While production and consumption is increasing, growth in the number of pellet plants is expected to slow this year and next year. In 2008, Canada was home to 25 pellet plants, that number rose fairly steadily by four or five annually through last year, when 42 facilities were in existence. In 2013 and 2014, the report predicts there will be 46 pellet plants in Canada.

Growth in nameplate capacity has grown in relative parallel to the development of new facilities, increasing from 1.4 million metric tons in 2008 to 3.71 million metric tons in 2013. However, capacity use, which averaged approximately 66 percent from 2010 to 2012, is expected to reach 87 percent by next year.