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Industry News Report predicts increase in Russian wood pellet production

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Report predicts increase in Russian wood pellet production

    Report predicts increase in Russian wood pellet production
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An annual report recently filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network provides an overview of the Russian Federation’s pellet sector. According to the report, Russian wood pellet production and exports are expected to continue to grow, driven primarily by increasing demand from Europe and increasing local consumption.

The report indicates that Russia is currently the third largest exporter of wood pellets to the EU, following the U.S. and Canada. Russia produced an estimated 878,000 metric tons of wood pellets last year, nearly double from 2012. A drop in production in 2013 is attributed to the temporary suspension of operations at Russia’s largest pellet facility due interruption of input supplies and legal issues. That facility, Vyborgskaya Forest Corp., has an installed capacity of 1 million metric tons, but is currently operating at an estimated 50 percent of capacity due to raw material supply.

According to the report, official Russian statistics of wood pellet production may not be accurate due to the fact that the statistics primarily capture large-capacity factories, while mid-sized and smaller facilities that operate as part of larger wood processing plants do not report their production.

The top 10 pellet production facilities are estimated to have 92 percent of the export share of the total Russian wood pellet industry, with the remaining 7 percent destined for South Korea.

This year, Russian pellet production is expected to increase 15 percent, mostly due to strong EU demand. In the mid-term, domestic demand for wood pellets is expected to increase 10-20 percent annually. Domestically, pellets are used for heating.

According to the report, the Russian Customs Service has reported 2014 pellet exports of 880,000 metric tons, up 13 percent from the prior year. Approximately 382,000 metric tons were shipped to Denmark, with 218,000 metric tons destined for Sweden, and 57,000 metric tons exported to Italy.

This year, at least four new wood pellet facilities are under construction in Russia with a combined capacity of 500,000 metric tons.

The report cites trade sources as stating the number of Russian pellet processing plants is shrinking, from 145 in 2010 to approximately 100 plants last year. According to the report, larger businesses are expected to continue to absorb smaller wood pellet producing facilities that cannot effectively compete with larger, vertically integrated facilities that have permanent suppliers of raw materials and a better understanding of the market.

The report predicts pellet production this year will reach 1.36 million metric tons, with 1.02 million metric tons of that volume exported. An estimated 97 pellet plants are expected to be in existence this year, with capacity use at 85 percent.

One bioenergy project highlighted in the report, located at the JSC “Eastern Siberian Biotech Plant,” is expected to be used as an experimental station for the production of cellulosic ethanol from forestry processing wastes. According to the report, the facility will produce a variety of products, including 30,000 metric tons of biobuthanol, 100,000 metric tons of wood pellets, along with yeast and acetone.

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