Forest Economic Advisors Predicts Long-Term Price Increases for the Wood Biomass Market

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Near-term downturn in biomass prices will be followed by long-term price increases after 2012, according to a new report by Forest Economic Advisors

In the first of an ongoing series of quarterly forecasts, Forest Economic Advisors (FEA) finds that production of wood-based energy will resume its upward trajectory in 2010 and continue to grow through 2024. With rising demand for new sources of bioenergy from wood pellets, biomass electricity and biofuels, consumers are left wondering where the fuel supply will come from, and at what price. FEA predicts continued growth not only from these emerging sectors, but also from traditional forest products companies. The added demand for biomass supplies will force increased extraction of logging residues and intensified use of roundwood in the years to come. While prices will ease in the short term, all biomass grades will experience price increases after 2012 as a result.

“A developed and diversified wood-based energy sector will have a profound impact on the economics of the entire forest products industry,” said Erik Kankainen, FEA’s Senior Economist for Bioenergy and Timber. “Our forecasting service will answer the many questions surrounding the scale of the sector’s development, as well as quantify the economic effects growth in bioenergy will have on the rest of the industry".

FEA’s first Wood Biomass Forecast also finds that rising housing starts and an improving economy will boost residue production over the next several years, returning almost 90% of the supply that was lost from 2005 to 2009 by the end of 2012. After accounting for increases in biomass demand related to production from the traditional forest products industry (namely pulp and nonstructural panels), FEA estimates that mill residue supplies available for bioenergy will grow by 5.4 million oven-dry tons from 2009 to 2012. Wood pellet production will continue to rise at a rapid pace, driven by domestic and export demand, and biomass electricity generation will also grow. Biofuel production will be a key consumer of wood biomass over the long-term, though not until conversion technologies are proven and tested on a commercial scale by a round of first generation biofuel facilities currently in the planning phases.

About the Wood Biomass Forecast
The Wood Biomass Forecast marks the debut of FEA’s quarterly forecasting service, which offers three five-year forecasts and one 15-year forecast per year. Each report contains a detailed analysis of the macroeconomic and policy environment for biomass energy, analyses of the supply and demand outlook, as well as price forecasts for a variety of biomass concepts and regions. Membership in the biomass service includes phone access to FEA’s team of analysts.

About FEA:
FEA performs cutting-edge economic analysis on lumber, wood panels, timber, biomass energy and macroeconomics. Founded in 2009 and based in Westford, MA, FEA brings a fresh perspective to the forest products industry, providing insight to help clients make effective business decisions.

Contact :
Brian Doyle
978-496-6338
http://www.getfea.com

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