What affects the wood pellet prices?

As a renewable and clean energy, biomass pellets are applied in home heating, boilers, industrial production, and power generation. With the increase of market demand, more and more biomass pellet manufacturers emerge. They compete on price and cause the price disparity. Many manufacturers seek price advantages by sacrificing the quality. In this passage, I will introduce the factor that influence the wood pellet price. It can help you to buy high quality and cheap wood pellet fuels.

Wood pellet raw materials

In the market, wood pellets are mainly made of pine, redwood, and poplar. The price pine wood pellets is ￥830/ton, redwood pellets are ￥850/ton, poplar wood pellets are ￥770/ton. With the development of biomass energy industry, sawdust material consumption is increasing every year, which will drive up the wood pellet price.

Calorific value

The calorific value of pine and redwood pellets are 4300Kcal/kg, the poplar and weed tree wood pellets are 4100kcal/kg. Generally, the higher the calorific value, the higher the heating efficiency, and the higher the price. The following are calorific value of common woods:

Supply and demand relationship

If the wood pellet manufactures are too many and the wood pellet supply is higher than demand, there will be large quantity of inventory. The suppliers have to lower the wood pellet price to destock. In warm winters, the wood pellet demand decrease and the price will drop. If the price of natural gas or fuel oil go up, the demand and price of wood pellets will increase.

Distance from the supplier

Wood pellets are packed in bags or loaded in bulks and transported by trucks. Usually the bulk wood pellet prices are lower than bagged wood pellet prices. If you have a long distance from the wood pellet supplier, the transportation cost will be high.

Production cost

Raw material cost

It includes the cost of raw material and the cost of transportation. If the wood pellet manufactures locate near the wood processing mills or furniture factories, it will save a lot of cost for transportation.

Different kinds of biomass materials varies in price. For example, crop straws are cheaper than sawdust for wide sources and low heat value.

Power consumption in production

Besides electricity and water consumption, it also includes equipment wear and tear, maintenance, fixed assets depreciation cost. But such consumptions doesn’t cause huge price disparity.

Labor cost

It refers to the salary paid to workers. Many regions have stipulated the minimum wage standard. In some places, labor shortage drives the manufacturers to raise worker’s salary. The increasing labor cost also influence the wood pellet price.

Operating cost

It includes the cost of tax, marketing, transportation. It is the last influencing factor for pellet price.

In conclusion, the wood pellet price is influenced by wood pellet quality, supply and demand relationship, distance, and production cost. Owing to different development level, the labor cost, transportation cost varies in different places. The wood pellet price in developed countries is higher due to the high labor cost, rent, and energy cost.

The market prospect of wood pellets

Wide application. Wood pellets are going to play a more important role in industry boilers for heating supply, hot water supply, smelt, and electricity generation.

Policy support. Coal firing has been restricted in many places to reduce pollution. At the same time, local government has made policies to support the use of biomass fuels.

Great market opportunity. Although the wood pellet market grows up rapidly in recent year, the demand is still over supply. Wood pellet market used to concentrate in Europe and North America, now it has expanded to Asia. Japan, Korea and China will be the strongest growth impetus.

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