Wood fiber costs for Canadian and US pellet producers were slightly higher in the 1Q/18 than in the previous quarter, continuing the upward trend that began in early 2017. In western Canada, poor winter weather conditions hindered harvest operations, forcing multiple sawmills Slowing production or increasing downtime in the first quarter. Lower sawmill operating rates have led to a reduction in the pellet manufacturer's supply of residue feedstock, forcing some people to use more expensive forest biomass in their feedstock mix. Canadian pellet producers The total fiber cost has risen slowly in 2017 and early 2018, reaching the highest level in three years at 1Q / 18.
According to the North American Wood Fiber Assessment Report, the Canadian Pellet Raw Material Price Index (PFPI-CA) reported in US dollars increased by 8.1% year-on-year to US$44.21/odmt in 1Q/18. This increase is mostly the result of the stronger Canadian dollar against the US dollar.
The cost of pellet raw materials in western Canada may increase overall in 2018, as the supply of scraps from sawmills in the region is reduced, which is an important source of raw materials for the pellet industry.
In the US, the pellet raw material price index (PFPI-US) also rose slightly from the previous quarter to reach US$63.60/odmt. However, compared with the same quarter of 2017, the PFPI-US index fell by 3.0% due to the combination of raw materials. Increased, low-cost shavings and wood chips have a higher share, while high-cost logs have a lower share. As the 2018 continues, US Southern wood production and its impact on sawdust and shavings will affect the index. The increase in the supply of wood mill residues, the price of wood chips and shavings may be reduced, thus benefiting those granulating plants that can handle the residue.
