FutureMetrics LLC released a white paper on April 21 that focuses on how inflation could affect the industrial wood pellet industry, specifically the costs associated with raw material harvesting, pellet production and transportation.
The paper, written by FutureMetrics President William Strauss, discusses how diesel fuel prices affect the cost of harvesting and transporting the raw material to the pellet mill. It also discusses how inflationary pressures related to raw materials, labour, electricity and other expenses might affect the operating costs of a typical 500,000 tonne-per-year pellet plant.
In the paper, Strauss explains that mills that can use rail transport to move wood pellets from the factory to the port are likely to have a less significant impact. Facilities that truck wood pellets to the port are much more likely to be adversely affected by the high price of diesel fuel, particularly for facilities that need to transport wood pellets over relatively long distances. In addition, Strauss analyzes the impact of inflation on the cost of loading pellets onto a ship and transporting them to Europe.
The analysis performed in the paper shows that most of the uncertainty in costs is related to transport. “From the forest to the mill to the final destination, logistics more or less dictate the final cost,” Strauss wrote.
A full copy of the 32-page report can be downloaded from the FutureMetrics website.