menu-bgimg

What we can offer you

We provide detailed transactional data, cost benchmarks and in-depth analytics for participants in the wood raw materials supply chain.
  • Pricing Data
  • Benchmarks
  • Product Forecasting
  • Advisory Services
  • Analytics
Learn More

SilvaStat360 Platform

  • Price Benchmarks
  • Madison’s Lumber Reporter
  • The Beck Group’s Sawmill TQ
  • Timber Supply Analysis 
  • Global Economic Data

Explore Forest2Market's Interactive Business Intelligence Platform

Learn More

Industries

From biomass suppliers in the Baltics to pulp producers in Brazil and TIMOs in the United States, Forest2Market provides products and services for suppliers, producers and other stakeholders in the global forest products industry.

Learn More
x
 
Blog

US South Wood Fuel Prices - 4Q2012

February 15, 2013
Author: Daniel Stuber
by Daniel Stuber

Wood fuel prices increased by $0.30 per ton in 4Q2012 to an average of $19.76 per ton Southwide.

US South Wood Fuel Prices - 4Q2012

In December, looking at preliminary data (October and part of November), I predicted they would fall. What was behind the surprising increase?

Market Forces Exerting Upward Price Pressure

  • Demand for wood fuel improved, as total purchases by volume were 5 percent higher in the 4th quarter.
  • Our regression analysis shows wood fuel prices will experience a change of $0.32 per ton when natural gas prices change by $1.00 per MMBtu. In October and November (December numbers are not yet available), natural gas prices increased by $0.39 per MMBtu.

Market Forces Exerting Downward Price Pressure

  • Pine pulpwood (internal bark) purchases increased by 1.16 percent during the period. This means that an additional supply of bark was available for energy production.
  • Pine secondary chips (sawmill residues) were also more abundant, a result of increased lumber production to meet demand from an increased number of housing starts. Purchase volumes for the pine secondaries increased by 1.96 percent in 4Q2012.
  • Our regression analysis shows that wood fuel prices experience a change of $0.42 per ton when electricity rates rise by $1.00 per MMBtu. In October and November (December numbers are not yet available), electricity prices dropped $1.29 per MMBtu.

The Real Driver of Wood Fuel Price Change in 4Q2012

The answer in this case turns out to be much more straightforward: the major driver of higher wood fuel prices can be found simply by breaking out the individual price components from the total delivered price into wood raw material costs and freight costs.

In the 4th quarter, wood raw materials costs fell an average of $0.06 per ton. Freight costs, on the other hand, were higher, up $0.36 per ton, in response to higher diesel prices.

Despite a freight-induced bump this period, wood fuel prices are likely to continue their downward trajectory (above figure), as lumber production to meet housing demand increases supply and as more tracts become available for harvest creating more in-woods fuel supply.

Back to Blog

You May Also be Interested In

August 22, 2019
WSJ’s Incomplete Reporting Perpetuates Misconceptions About Bioenergy
A recent article published in the Wall Street Journal notes that the increased consumption of wood pellets in the...
Continue Reading
July 10, 2019
Regional Wood Fiber Costs vs. Oil Prices: Is there a Correlation?
In my first installment on the topic of oil price volatility and its impact on delivered wood costs, I showed the...
Continue Reading
April 18, 2019
For Asian Bioenergy Producers, Success is Driven by Mastering Feedstock Management
The largest risks with early-stage project development of modern bioenergy plants—including the ability to raise the...
Continue Reading