North American wood pellet exports drop in November

North American wood pellet exports fell around 5pc from a year earlier to just above 1mn t in November, as mild weather tempered heating demand in Europe.

The month was the first in 2022 to see a year-on-year decline in overall US wood pellet exports, mostly owing to a steep drop in deliveries to the UK, and these fell 34pc below their three-year averages for November.

UK biomass-fired units running under contract for difference (CfD) agreements saw much lower generation in the final months of 2022 compared with previous years. An unfavourable price environment for CfD generation saw almost no generation at UK utility Drax's 660MW unit or at Czech-Slovak utility EPH's three 133MW CfD units in Lynemouth, paring wood pellet demand from the US.

The drop in US exports to the UK was partly offset by much higher Canadian exports on the year to the UK during November, trade data show.

Further on the demand side, mild temperatures across Europe in the 2022-23 heating season pared wood pellet demand. The number of heating degree days (HDD) in London, UK, fell to its lowest value for November since 2015, at 311, or 60HDD below the 10-year average for the month. A similar trend was seen in other major pellet-consuming countries including Denmark and the Netherlands.

A fire at a silo that damaged around 40,000t of wood pellets at Danish utility Orsted's 380MW Studstrup 3 power plant site in late September also resulted in volumes previously contracted for the plant to be re-directed elsewhere. There was a subsequent steep drop in North American exports to Denmark in November.

Studstrup 3 can consume up to 600,000 t/yr of wood pellets, most of which during winter seasons, and was expected to remain off line for at least the remainder of this heating season, the company said at the time.

Overall North American exports to Asia increased on the year in November. Canadian deliveries to Japan and South Korea have increased significantly since 2021, as long-term offtake contracts kicked in, with new biomass-fired capacity ramping up in the region, particularly Japan.

Canada shipped 1.67mn t in total in January-November, which is above the 1.5mn t/yr of long-term contractual volumes Canadian producers were estimated to have with their Asian counterparties for 2022.

Long-term contractual volumes between US and Japanese companies were expected to rise to 1.8mn t/yr by the end of 2022 from 350,000 t/yr in 2021. But such an increase was not reflected in US pellet deliveries to Japan, which totalled 425,000t in January-November, as surging spot prices saw stronger US deliveries to Europe and delays to shipments to Japan.

By John Cooper