As pellet exporters ramp up in the South (soon to be consuming 10 million tons per year of wood), strategic fiber sourcing should accrue to their advantage over traditional pulp and paper competitors.
Aggressive and well-financed exporters gain that advantage, in part, by deploying a new procurement model – one aligning them much closer to suppliers, all of them hungry for a market more reliable, and predictable, than pulp and paper.
And with loggers in severe financial distress and stumpage resources stretched thin in several areas, a new approach is essential, and appears underway in the South. Advantage pellets.
It seems only logical to have a strong supply chain. But this “new” notion stands in stark contrast to week-by-week practices among pulp and paper across the South, where low-cost and even lower-commitment “gate wood” is dominant. That method has sufficed lately as it has distinctly been a buyers’ market for pulp and paper for at least two years, during which suppliers had no leverage – and pulp mills had few competitors – until now.
Long avoided by pulp and paper, new elements being rolled out among pellet players include guaranteed, long-term volume orders to loggers and timber owners, as well as binding commitments sufficient for bankrolling efficient but expensive harvesting crews.
From RISI Wood Biomass Markets: https://www.woodbiomass.com/woodbiomass/news/North-America/wood_products/RISI-Viewpoint-New-supply-model-from-pellet-exporters-earns-advantage-over-pulp-mill-wood-buyers-in-US-South.html