the global outlook for wood pellet markets · hawkins wright hawkins wright the global outlook for...
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HAWKINS WRIGHT
HAWKINS WRIGHT
HAWKINS WRIGHT HAWKINS WRIGHT
Theglobaloutlookforwoodpelletmarkets
WPACAnnualConference,O<awaSeptember2017
FionaMa<hews
HAWKINS WRIGHT
1.7 2.2 2.6 3.04.0
5.2
7.6
9.7
11.7
14.515.7
18.319.8
22.5
24.9
27.128.6
0
5
10
15
20
25
30
millionmetricto
nnes
+11%pa
Globalwoodpelletproduc@on
Sources:REN21,FAOandHawkinsWright
Note:Allfiguresareinmillionmetrictonnes(Mt)
• 2016sawthelowesteveryear-on-yeargrowth(+6%)
• ThisresultedinclosuresandlowcapacityuBlisaBonatmanypelletmills
• Howeverlow-costproducBoncapacitydidgrowinAsia
HAWKINS WRIGHT
Globalwoodpelletproduc@oncapacity,Q22017
Source:HawkinsWright,theOutlookforWoodPellets,Q22017
• Total(industrial+heaBng)woodpelletcapacity=41.2Mt
• EU=19.5Mt
• US=12.3Mt
• Canada=3.6Mt
• Asia=1.8Mt 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
US
Canada
Germany
Sweden
Latvia
Russia
Austria
Estonia
France
Vietnam
millionmetrictonnes
HAWKINS WRIGHT
EU2873%
OtherEurope3%
NorthAmerica18%
Russia&CIS4%
Asia2%
Globalheatingpelletdemandin2016=15.3Mt
Globalwoodpelletdemand,2016
Source:HawkinsWright,theOutlookforWoodPellets,Q22017
EU2882%
NorthAmerica1%
Asia17%
Totalglobalindustrialdemandin2016=13.4Mt
• Totalglobaldemandin2016=28.6Mt
• Annualglobaldemandgrowthof+6%
• +26%inAsia
• +2%inEU28
HAWKINS WRIGHT
Toptenwoodpelletconsumingcountries,2016
Source:HawkinsWright,theOutlookforWoodPellets,Q22017
HAWKINS WRIGHT
Asianwoodpelletdemand
• WoodpelletdemandinAsiagrewby+26%,(+0.5Mt)in2016> +19%inSouthKorea> +37%inJapan
• ProjectsinAsiaaregeWngbigger> GunjangEnergybegan
operaBngin2016,requiring0.35Mt/y
> KOEN’sYeongdongunit#1conversionbeganoperaBngthisyear,requiring0.5Mt/yofpellets
Source:HawkinsWright,theOutlookforWoodPellets,Q22017
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2013 2014 2015 2016
millionmetricto
nnes SouthKorea
Japan
OtherAsia
HAWKINS WRIGHT
0.53
0.14
0.18
0.21
0.24
0.25
0.34
0.39
0.90
1.53
1.94
7.07
OtherEU
Netherlands
Latvia
Slovenia
France
Sweden
Austria
Germany
Belgium
Italy
Denmark
UnitedKingdom
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
milliontonnes
2016 2015
Europeanwoodpelletimports,2016
Source:HawkinsWright,theOutlookforWoodPellets
USA60%
Canada21%
Russia10%
Ukraine2%
Belarus2%
Other5%
• ImportsfromoutsidetheEU=8.1Mt(ofwhichCanadasupplied21%)
• ImportsfromwithintheEU=5.6Mt
• Netimportsroseto7.3Mtin2016(+14%)
HAWKINS WRIGHT
Asianwoodpelletimports
• Asianwoodpelletimportshaverisen+46%inH12017v.H12016> Japan=0.23Mt> Korea=1.04Mt> TOTAL=1.27MtinH12017
• Mainsuppliersare> Vietnam(55%)> Canada(12%)> Malaysia(13%)
• JapanesebuyersprefersecurityandsustainabilityofCanadianpellets
• SouthKoreanbuyerswantlowercostpellets(i.e.Vietnamese)
SouthKorea:Woodpelletimportstonnes 2016 %chg15/16Vietnam 1,254,957 +23%Malaysia 199,077 +29%Russia 125,841 +50%Indonesia 75,854 +26%Canada 35,263 -60%Thailand 20,508 -42%Other 4,673 +1074%Total 1,716,172 +17%
Japan:woodpelletimportstonnes 2016 %chg15/16Canada 260,935 +79%Vietnam 62,441 +128%China 20,733 -64%Malaysia 1,418 +775%Thailand 503 +159%Indonesia 425 +40%USA 306 +29%Other 102 +89%Total 346,863 +49%
Source:Customsdata
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0
10
20
30
40
50
60
70
80
90
EUR/MWh
Heatingoil
Woodpellets
TheEuropeanhea@ngmarketrebalancedmorequicklythanan@cipated
• Colderweatherinlate2016andearly2017increasedpelletdemandforheaBnginEurope
• Persistentlylow,butvolaBle,oilpricesweakenedtheeconomicargumentforpelletheaBngandreducedcustomerconfidencein2015-16
• Butthishasimprovedoverthepastyear.Pelletswere8%cheaperthanheaBngoilinGermanyonaverageoverthelast12monthsAnalysisbasedondelivered(retail)pricesofheaBngoilandwood
pellets,includingtaxes.
Sources:DEPV(pellets);EUEnergyPortal(heaQngoil)
PricesofheaBngoilvspelletsinGermany
HAWKINS WRIGHT
60
70
80
90
100
110
120
130
Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17
Priceindex.Decem
ber20
13=100
DOLLARIndex
EUROIndex
CANADIANDOLLARIndex
Theindustrialmarkethasalsorebalancedin2017
• Agermonthsofdepressedspotindustrialpelletprices,withlihletrans-AtlanBctrade
• Upcomingnewsourcesofindustrialdemandandreducedpelletcapacitygrowthhaverebalancedsupply-demandandligedpelletprices
• ThedepreciaBonoftheUSdollarhasimprovedthefortuneofUSproducers
• BUT–spottradesaresBllveryinfrequent,contractedvolumesaccountformajorityofthemarket
Analysisbasedondelivered(CIFARA)spotpricesofindustrial-gradewoodpelletsinUS$withcurrencyconversion
Source:HawkinsWright,ForestEnergyMonitor
Indicesofindustrialpelletpricesindifferentcurrencies
HAWKINS WRIGHT
Newsourcesofindustrialpelletdemand-Europe
Name Loca@on Installedcapacity,MWe
Pelletdemand,Mt/y
Status
DongEnergy,Avedøre1 Denmark 250 ~0.4 BeganoperaBngend-2016
DongEnergy,Studstrup Denmark 245 0.5-0.8 BeganoperaBngend-2016
RWE/Essent,Amer9 Netherlands 340 1.2 DueonlineNov2017
UniperMaaslavkteMPP3
Netherlands 1100 0.5 Due2018
RWE/EssentEeemshaven
Netherlands 1600 0.8 Due2018
EngieRoherdam1 Netherlands 736 0.2 Due2018
EPH,Lynemouth UK 420 1.6 Dueearly2018
MGTPower UK 299 1.1 DueQ12020
Source:HawkinsWright,theOutlookforWoodPellets
HAWKINS WRIGHT
Newsourcesofindustrialpelletdemand-Asia
Name Loca@on Installedcapacity,MWe
Pelletdemand,kt/y
Status
KOENYeongdong#1 Korea 125 550 BeganoperaBng2017
Hanyang/KNHPGwanyangEnergy
Korea 220 500 Dueonline2020
KOENYeongdong#2 Korea 200 1,450 Plannedfor2020
KOMIPOGunsanBio Korea 200 800 Dueonline2020
NakayamaNagoya2 Japan 110 125 BeganoperaBng2017
SummitEnergySakata Japan 50 100 Dueonline2018
IHIKagoshima Japan 49 250 Dueonline2018/19
Aioi Japan 200 650 TBC
J-PowerTakehara Japan 600 250 Planned2020
Source:HawkinsWright,theOutlookforWoodPellets
ThisisjustaselecBonofthebiggestpellet-firedprojects,therearenumerousotherprojectsplannedinAsia(Over12GWeofbiomasspowercapacityiscerBfiedunderJapan’sFeedInTariffandrecentpolicychangesinKoreacouldresultingreaterrenewableenergydeployment)
HAWKINS WRIGHT
TheoutlookforindustrialwoodpelletdemandintheEUandAsia
Source:HawkinsWright,theOutlookforWoodPellets
11
20
2
9
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2014 2015 2016 2017 2018 2019 2020 2021
millionmetricto
nnes
TOTALEU28
TOTALAsia 29Mt
13Mt
• Asiandemandexpectedtoaccountfor31%ofindustrialmarketby2021
HAWKINS WRIGHT
Addi@onstoglobalwoodpelletproduc@oncapacity
Company Country Produc@oncapacity,kt/y Status
Tanac Brazil 400 Commissioning
SYEnergy SouthKorea 500 Commissioning
PlantaBonEnergy Australia 250 RestartedQ32017
HighlandPellets UnitedStates 150(4thlineatexisBngmill) DueonlineOct2017
DraxBiomass,AmiteandMorehouse
UnitedStates 150(75kt/ycapacityexpansionsateachmill)
Duelate2017
Graanul,BroceniandOÜOsulaGraanul
Latvia 150(newmillatBroceni)110(expansion)
UnderconstrucBon,due2017
AnViệtPhát Vietnam 200(expansionatexisBngmills)
UnderconstrucBon
Enviva,Hamlet UnitedStates 600 Duelate2018
Pinnacle,Entwistle Canada 400 Duelate2018
DraxLaSalle UnitedStates 500 Duetorestart2018
Source:HawkinsWright,theOutlookforWoodPellets,Q22017
Note:Allfiguresareinthousandmetrictonnesperyear(kt/y)
HAWKINS WRIGHT
Addi@onstoglobalindustrialpelletproduc@oncapacity
Source:HawkinsWright,theOutlookforWoodPelletsQ22017
• NetcapacityaddiBonshaveslowedinthepastyear
• SomerecentcapacityclosuresorreducBons
• Investmentenvironmentchallenging:fewerprojectsreachingfinancialclose
• From2019,furthervolumeswillneedtobesoughttomeetindustrialdemandforecasts–eitherviatransferfromheaBngpelletmarketorthroughnewindustrial-focusedcapacityaddiBons
20.3 20.3
2.4 22.7
-
5
10
15
20
25
Currentcapacity(Q22017)
Underconstructionandfinanced
Futurecapacity(2019)
milliont/y
HAWKINS WRIGHT
Industrialpelletsupply-demandbalance
11
20
2
9
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2014 2015 2016 2017 2018 2019 2020 2021
millionmetricto
nnes
TOTALEU28
TOTALAsia 29Mt
13Mt
Current+underconstruction industrial pellet capacity(~23Mt)
• Approx6Mt/yofnewpelletsupplywillbeneededby2021ifdemandistoriseasexpected
Source:HawkinsWright,theOutlookforWoodPellets,Q22017
HAWKINS WRIGHT
Conclusions
• Ageradifficultcoupleofyears,supplyanddemandarenowmorebalanced> Newdemandiscomingonline> ProducBoncapacitygrowthhasslowed> Fewerspotvolumesarebeingproduced(proorcon?)
• AcBvityintheAsianmarketisrampingupfast,buthowwillthisdemandbesaBsfied?> Koreantendersareextremelychallenging(logisBcs,price,specificaBon)> Japanesebuyersarediligent(longtermsupplysecurity,sustainability,
bankability)
• ThemarketmaynoBceablyBghtenasnewdemandcomesonline> SignificantaddiBonalpelletcapacitywillbeneededifdemandistogrow
asexpected> LowerinventoriesintheheaBngmarket(and/orcoldtemperatures)
maymeansmallervolumesavailablefortransfertoindustrialmarket
HAWKINS WRIGHT
TheOutlookforWoodPelletsDemand,supply,costsandprices
AmulB-clientservicecomprisingregularlyupdatedforecastsofthewoodpelletmarket’sdevelopment• Two‘main’reports(Q1&Q3)• Two‘update’reports(Q2&Q4)• WorkshoporpresentaBonmeeBng• Chartsandbackgrounddataonrequest
• On-callresponsetoadhocqueries
W:www.hawkinswright.com
T:+447809888300