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Sizing Them Up
by Tim Portz (Biomass Magazine) A close look at export data for wood pellets, fuel ethanol and biodiesel reveals a varying reliance on export markets for U.S. producers. -- The combined export value of wood pellets, ethanol and biodiesel for U.S. producers has flirted with $3 billion since 2012, and depending upon how the final numbers shake out for last year, 2016 may very well be the year this milestone is surpassed. For both wood pellets and fuel ethanol, export numbers have never been higher than they are right now, and all three sectors are eyeing foreign markets as a means to significantly grow their businesses.
An analysis of the same data reveals key and informative differences. While foreign markets are an important part of the overall market picture for fuel ethanol and biodiesel producers, exports account for less than 10 percent of annual production while, from a volumetric perspective, wood pellet production in the U.S. is heavily reliant on foreign markets.
Now, the looming question is, what impact will a Trump administration, which campaigned on a promise to revisit the nation’s trade agreements, have on the export opportunities for each of these industries?
An examination of where wood pellet, fuel ethanol and biodiesel exports go also reveals some key differences between the categories. Exports for both wood pellets and biodiesel are largely dependent on one buyer—the U.K. for wood pellets, and Canada for biodiesel. In 2015, shipments of wood pellets to the U.K. generated 85 percent of the total export value, while Canada represented over 90 percent of the export value for biodiesel producers.
The fuel ethanol export market is far more distributed, with the largest foreign buyer, Canada, representing just 25 percent of U.S. exports, according to data from the Renewable Fuels Association. Over 50 different countries received fuel ethanol exports from the U.S., and Brazil and China both closely followed Canada. In its 2017 industry outlook, however, the RFA noted that China has recently raised import duties on U.S. ethanol, and the association expected that this would “sharply curtail exports to that nation.”
For products with robust domestic markets like fuel ethanol, export opportunities are simply the icing on the cake, and the best chance at incremental growth. Other industries like industrial wood pellets were built solely to satisfy foreign demand, and its continuation, growth and expansion is vital to the long-term viability of the industry. READ MORE