February 2012
Over The Wire Tissue Edition
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U.S. Woody Biomass Prices Drop in Past Three Years

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Prices for wood waste, have been sliding for most of the past three years, but were still higher in the fourth quarter of 2011 in most regions than they were five years ago, according to the North American Wood Fiber Review (NAWFR), Seattle, Wash., USA. The price drop seen in 2010 and during the first half of 2011 was mainly the result of lower prices for fossil fuels, particularly that of natural gas, and reduced demand for energy. This declining price trend has reduced the interest by both commercial and residential energy consumers in switching to more expensive green energy, NAWFR notes.

The two major sources for woody biomass are bark from sawmills/plywood plants, and forest residues left after logging operations. In the major biomass-consuming regions of the U.S., prices for forest biomass have been $10 - $20/o.d. metric ton higher than for mill biomass during most of 2011. The region with the lowest biomass prices in the fourth quarter of 2011 was the West, while Maine and New Hampshire continue to have some of the highest prices in the country. In the U.S. South, prices have fallen 15% - 20% since early 2010 and forest biomass prices in the South Central states, in particular, have come down lately thanks to favorable weather conditions, according to NAWFR.

The much-heralded Chinese log export boom has impacted woody biomass pricing in the Pacific Northwest the past year. China does not allow the importation of logs with bark, which has resulted in an abundance of bark at export ports along the U.S. west coast, where export logs have been debarked. This new source of biomass supply has created headaches for biomass supply managers in the region as they have had to turn away ample supplies. As a result, prices for forest biomass, mill biomass, and urban wood have all declined between 5% and 10% during the fall, as reported by NAWFR.

Some biomass buyers have not only reduced prices, but also implemented strict quotas of delivered volumes. As long as prices for natural gas and oil are relatively low, there will not be much increase in demand for biomass and biomass prices will continue to stay relatively low throughout the country.

More information is available online.



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