RISI Sees Pellet-Driven Wood Supply Transformation

by FOR

A “RISI Viewpoint” column dated June 28, signed by International Woodfiber Report Editor Chris Lyddan, asserts that the rapidly growing demand for pellet-mill pulpwood in the South is not only expanding wood suppliers’ market options but is placing competitive pressure on established supply paradigms.  According to RISI’s projections, Southern pellet mills’ woodfiber requirements—expected to approach 7 million green tons this year—should reach 14 million green tons by 2014 if “announced” capacity comes on line, and without counting “announcements” anticipated but not yet published.  In addition—says RISI—there is increasing “wood competition among various new electric energy or cogen projects across the South on volumes projected to match or exceed pellets.”

Significantly, RISI affirms, “new elements being rolled out among pellet players include guaranteed, long-term volume orders to loggers and timber owners, as well as binding commitments sufficient for bankrolling efficient but expensive harvesting crews.”  RISI makes a point of distinguishing these guarantees from existing “preferred supplier” systems which “traditional” consumers have implemented, in terms of the types of guarantees they offer, and comments, “The success of those new strategies will be tested over the coming quarters,” and “all wood buyers are watching.”