Emerging biomass markets will significantly strengthen demand for wood
fiber in the South, driving prices higher for forest products as the United
States turns to alternative fuels for energy, according to a study released
Monday by Forest2Market.
The new demand will be fueled by wood-burning power companies that produce and
sell electricity to public utilities, as well as an increasing amount of wood
pellets that are exported to European energy markets. The development of new
facilities that turn biomass into cellulosic ethanol for transportation fuel
will also impact the forest products industry.
As a result, demand for wood fiber from these emerging markets is expected to
climb from 2 million tons in 2008 to at least 13.5 million tons in 2020,
according to Forest2Market, a provider of pricing information and analysis for
forest products. However, the estimate is conservative, and it could be adjusted
higher as more companies announce plans to build biomass facilities.
The new study, "Quantifying Forest Biomass Resources in the U.S. South," is the
first to analyze the impact of bioenergy markets on the forest products
industry. The report quantifies the industry's changing landscape, looking
specifically at the effects of forest biomass on wood fiber supplies, demand and
"The pace of the development of bioenergy markets and the resource requirements
to feed them will disrupt the entire southern wood fiber market," said Pete
Stewart, president and founder of Forest2Market. "It will be much steeper and
more disruptive than that of the OSB market over the last 15 years. We recommend
that forest products companies begin planning for the future by establishing
stronger relationships with their suppliers and creating more efficient
Faced with rising oil prices, an international push for clean energy projects
and a continued focus on reducing carbon emissions, federal and state
governments have spent millions on biomass research and development. As a
result, new energy markets are emerging that rely on southern forests for
The primary supply for the growing demand is pulpwood and wood chips, and prices
for pulpwood and chips are expected to rise. Secondary sources include
construction and demolition debris, as well as leftover woody biomass from
harvesting operations, such as tree limbs.
"We were beginning to see the effects of new energy markets in the delivered
prices for pulpwood, chips and wood fuel in some areas in the South," Stewart
said. "We thought it was time to take a closer look, using the breadth and depth
of our data, to determine what the competitive landscape for wood fiber might
look like in 10 or 15 years."
The study is based on Forest2Market's unique database of transaction-level
information gathered from millions of shipments to mills throughout the South.
The study will help lay the groundwork for strategic decision making that
traditional forest products and new bioenergy companies will need to survive in
Based in Charlotte, N.C., Forest2Market has developed sophisticated analytical
tools to accurately forecast timber prices in the U.S. South and Pacific
Northwest. The company's delivered price benchmark product is used by industry
professionals to set timber prices for contracts, supply agreements and bids.
The price information is more accurate because it is based on transaction-level