No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Price Risks Along Pellet Supply Chains
Abstract
This chapter deals with the evaluation of most crucial supply risks, which exist under real market conditions in the biomass market. General risk parameters and relevant indices along the biomass supply chain are discussed in detail. A modelling of 10-year-price variations based on the three investigated supply chains is followed and current 3-year-price volatilities are presented. Raw material prices, shipping rates, exchange rates, and the final market price turn out to be the main drivers for actual price variations and investment decisions. They can have a major impact on supply chain economics and investment success. Finally, responding hedging strategies for biomass supply chains and related investment decisions are summarised.
... A research finding by Heakal [3] also pointed out that the oil price should increase with increasing demand or decreasing supply. Most researchers, for example [6,7,43], also concluded that supply and demand are the most influential factors in oil prices. Contrary to this finding, Chaw et al. [44] found that the "global economic rate" is the most influential factor. ...
Oil is a highly demanded worldwide product as oil prices can have a major economic and social impact. There are many factors affecting oil prices, but little is known about which factor mostly influenced oil prices. To understand what caused the fluctuation of oil prices, the investigation leading up to the identification of the factors must be constructed. Thus, this paper attempts to explore the factors that might have contributed to oil prices and analyze them using the fuzzy preference ranking organization method for enrichment evaluation (PROMETHEE) method. In particular, the objective of this study is to rank the influential factors affecting oil prices with the consideration of a few criteria. The fuzzy PROMETHEE model comprises four criteria and five factors as the input information. A group of four experts are invited to provide an evaluation on scales of 1 to 5 of the importance of factors with respect to criteria. In computation, the evaluations are treated as triangular fuzzy numbers in which the uncertainty in data is dealt with amicably. This approach combines the advantages of transformation equation and nonarithmetic mean of the defuzzification method that transforms triangular fuzzy numbers into crisp numbers. The results indicate that “supply and demand” is the most influential factor in determining oil prices. Comparative analysis and future research directions are also discussed at the end of this paper.
Summary & Conclusions
Production volumes and capacities
More than 650 000 tons per of pellets were produced in Russia in 2008. We expect that more
than 850 000 (and even up to 1 000 000 tons) tons of pellets could be produced per year by the
end of 2009.The production capacity of pellet plants was more than 1 290 000 tons per year in
2008. We expect that the capacity will be more than 1 700 000 (and even up to 2 000 000 tons)
tons per year in 2009. Belarusian pellet production is the smallest among 3 countries. They
produce about 60 000 tons of pellets per year. Ukrainians could produce about 200 000 tons of
pellets in 2009. The pellet plant capacities are increasing in all three countries.
Internal pellet market
Pellet domestic market is increasing in all 3 countries. We expect that it could be about 30% in
Russia by the end of 2009. It could be the same in Ukraine. Belarus can organize it and reach at
least 5-10% level.Domestic market for fuel pellets keeps growing in Russia as well as in Ukraine
and Belarus.
Main growth contributors are:
· private boiler-house owners – production enterprises, warehouses and logistics centres switching to pellets to decrease fuel costs and improve heat supply reliability
· municipal boiler houses
· private house owners
Boiler suppliers claim to have supplied over 1000 pellets boilers (below 200 kWth) in 2008 plus
several dozens professional pellets boilers (over 200 kWth) have been installed in different
regions of Russia by the end of 2008. It is important to know, that while in 2006-07 there were
no more than 10 companies offering pellets heating systems, by the beginning of 2009, the
number of pellet boiler suppliers is over 50 companies. And they are covering most regions of
Russia – at least the regions where pellet are being produced. Internal market in Russia is
growing. But it hardly gets any consequent support or even serious attention from the state – but
for rare exceptions on local level. As a result the market is developing voluntarily - without any
plan.
Export markets
The pellet export still dominates in all three countries. The prices are going up in 2009. Pellet
price is up to 120 Euro per ton on FOB St.Petersburg for bulk industrial pellets in April 2009.
Pellet producers were positively influenced by the world financial crises. The devaluation of
Ruble increased the profits of companies which export pellets. The European prices for pellets
went up again thanks to real winter and pellet producers receive double profits at the moment.
The prime costs in Rubles are the same as before devaluation of Ruble which was observed in
2009. The pellet production is developing in all 3 countries and we expect the organization of
serious pellet industry in Russia soon.
Purpose
One way of overcoming logistics barriers (poor transportation, handling and storage properties) towards increased utilisation of biomass is to introduce a pre‐treatment process such as torrefaction early in the biomass‐to‐energy supply chain. Torrefaction offers a range of potentially beneficial logistics properties but the actual benefits depend upon how the supply chain is configured to address various elements of customer demand. Hence, the aim of this paper is to develop a framework for torrefaction configuration in a supply chain perspective for different types of customers.
Design/methodology/approach
Sophisticated pre‐treatment processes are yet to reach the commercialisation phase. Identification of possible supply chain configurations is in this paper done through a conceptual approach by bringing together knowledge from related research fields such as unrefined forest fuel, pellets and coal logistics with prescriptions for configuration derived from the subject area of supply chain management (SCM).
Findings
A framework that explicates different elements of supply and demand of torrefaction is proposed, and exemplified by three distinct supply chains. Depending on demand, torrefaction serves different purposes, bridging gaps in place, time, quality and ownership. Furthermore, different supply chain configurations will pose different requirements on torrefaction in terms of producing different product quality, durability, energy density and hydrophobicity of the pellets.
Research limitations/implications
The proposed framework entails a set of propositions, but requires further development through empirical studies using complementary research methods such as interviews or surveys and quantification through techno‐economical or optimisation from a supply chain perspective.
Practical implications
This paper provides a framework that can inform decisions makers in biomass‐to‐energy supply chains, in particular at torrefaction plants, on upstream and downstream implications of their decisions.
Originality/value
The findings have implications for biomass‐to‐energy supply chains in general, and in particular, the paper provides a supply chain perspective of pre‐treatment processes, where previous research has focused primarily on technical aspects of torrefaction.
The wood pellet market is booming in Europe. The EU 2020 policy targets for renewable energy sources and greenhouse gas (GHG) emissions reduction are among the main drivers. The aim of this analysis is to map current European national wood pellet demand and supplies, to provide a comprehensive overview of major market types and prices, and to discuss the future outlook in light of raw material supply. Approximately 650 pellet plants produced more than 10 million tonnes of pellets in 2009 in Europe. Total European consumption was about 9.8 million tonnes, of which some 9.2 million tonnes is within the EU‐27, representing a modest 0.2% of Gross Energy Consumption (75 EJ level in 2008). The prices of most pellet types are increasing. While most markets of non‐industrial pellets are largely self‐sufficient, industrial pellet markets depend on the import of wood pellets from outside the EU‐27. Industrial pellet markets are relatively mature, compared to non‐industrial ones, because of their advanced storage facilities and long‐term price‐setting. However, industrial pellet markets are unstable, depending mainly on the establishment or the abolishment of public support schemes.
Following our scenarios, additional 2020 demand for woody biomass varies from 105 million tonnes, based on market forecasts for pellets in the energy sector and a reference growth of the forest sector, to 305 million tonnes, based on maximum demand in energy and transport sectors and a rapid growth of the forest sector. Additional supply of woody biomass may vary from 45 million tonnes from increased harvest levels to 400 million tonnes after the recovery of slash via altered forest management, the recovery of waste wood via recycling, and the establishment of woody energy plantations in the future. Any short‐term shortages within the EU‐27 may be bridged via imports from nearby regions such as north west Russia or overseas. © 2011 Society of Chemical Industry and John Wiley & Sons, Ltd
This paper surveys a wide body of economic literature on the relationship between exchange rates and trade. Specifically, two main issues are investigated: the impact of exchange rate volatility and of currency misalignments on international trade flows. On average, exchange rate volatility has a negative (even if not large) impact on trade. The extent of this effect depends on a number of factors, including the existence of hedging instruments, the structure of production (e.g. the prevalence of small firms), and the degree of economic integration across countries. The second issue involves exchange rate misalignments, which are predicted to have short-run effects in models with price rigidities. However, the exact impact depends on a number of features, such as the pricing strategy of firms engaging in international trade and the importance of global production networks. Trade effects of currency misalignments are predicted to disappear in the long-run, unless an economy is characterized by other relevant distortions. Empirical results broadly confirm these theoretical predictions.
The EUBIONET III project has boosted (i) sustainable, transparent international biomass fuel trade, (ii) investments in best practice technologies and (iii) new services on biomass heat sector. Furthermore, it identified cost-efficient and value-adding use of biomass for energy and industry. The aims of this article are to provide a synthesis of the key results of this project. Estimated annual solid biomass potential in the EU-27 is almost 6600 PJ (157 Mtoe), of which 48% is currently utilised. The greatest potential for increased use lies in forest residues and herbaceous biomass. Trade barriers have been evaluated and some solutions suggested such as CN codes for wood pellets and price indexes for industrial wood pellets and wood chips. The analysis of wood pellet and wood chip prices revealed large difference amongst EU countries, but also that on the short term prices of woody and fossil fuels are barely correlated. Sustainable production and use of solid biomass are also deemed important by most European stakeholders, and many support the introduction of harmonised sustainability criteria, albeit under a number of preconditions. The study identified also that a number of woody and agro-industrial residue streams remain un- or underutilised. The estimated European total potential of agro-industrial sources is more than 250 PJ (7.2 Mtoe), the amount of unutilised woody biomass (the annual increment of growing stock) even amounts to 3150 PJ (75 Mtoe). Finally 35 case studies of biomass heating substituting fossil fuels were carried out, showing that the potential to reduce GHG emissions ranges between 90 and 98%, while costs are very similar to fossil fuel heating systems. Overall, we conclude that solid biomass is growing strongly, and is likely to heavily contribute to the EU renewable energy targets in the coming decade.
This paper surveys a wide body of economic literature on the relationship between currencies and trade. Specifically, two main issues are investigated: the impact on international trade of exchange rate volatility and of currency misalignments. On average, exchange rate volatility has a negative (even if not large) impact on trade flows. The extent of this effect depends on a number of factors, including the existence of hedging instruments, the structure of production (e.g. the prevalence of small firms), and the degree of economic integration across countries. Exchange rate misalignments are predicted to have short-run effects in models with price rigidities, but the exact impact depends on a number of features, such as the pricing strategy of firms engaging in international trade and the importance of global production networks. This effect is predicted to disappear in the long-run, unless some other distortion characterizes the economy. Empirical results confirm that short-run effects can exist, but their size and persistence over time are not consistent across different studies.
The relationship between exchange rates and international trade: a literature review, Staff Working Paper ERSD-2011-17, published by the World Trade Organization (WTO)
- M Auboin
- M Ruta
Biomass mobilisation for industrial-scale bioenergy plants. Practical approach for establishing real biomass supply pathways in Austria
- R Ehrig
- M Wörgetter
- C Pointner
- C Kristöfel
- C Strasser
Ehrig R, Wörgetter M, Pointner C, Kristöfel C, Strasser C (2011) Biomass mobilisation for
industrial-scale bioenergy plants. Practical approach for establishing real biomass supply pathways in Austria. In: Proceedings of the 19th European Biomass Conference and
Exhibition in Berlin Eta Florence/ WIP Munich, Florence, Munich, 2011, 6-10 June 2011
Wood pellets production and trade in Russia, Belarus & Ukraine, Market research report accomplished as subcontract for Pellets@las project
- O Rakitova
- A Ovsyanko
- R Sikkema
- M Junginger
Personal communication with bulk parcel operator Furness Withy Australia about ocean transport freight costs for wood pellets
- P Alderton
Alderton P (2012) Personal communication with bulk parcel operator Furness Withy Australia
about ocean transport freight costs for wood pellets. 23.07.2012
BAFA) (2012) Drittlandskohlepreis. Durchschnittliche Einfuhrpreise frei deutsche Grenze für Kraftwerkssteinkohle
- Ausfuhrkontrolle Bundesamt Für
World biofuel maritime shipping study. Report accomplished for IEA task 40
- D Bradley
- F Diesenreiter
- M Wild
- E Tromborg
Bradley D, Diesenreiter F, Wild M, Tromborg E (2009) World biofuel maritime shipping study.
Report accomplished for IEA task 40. Ottawa, Vienna, 01.07.2009
Sponsored by Canadian bioenergy association, natural resources Canada, Canadian wood fibre centre, wood pellet association of Canada
- D Bradley
Bradley D (2010) Canada report on bioenergy 2010, Sponsored by Canadian bioenergy association, natural resources Canada, Canadian wood fibre centre, wood pellet association of
Canada, Ottawa, Sept 15, 2010
World Bio-trade Equity Fund Study Report accomplished for IEA task 40 bio-trade
- D Bradley
- B Hektor
- Pp Schouwenberg
Bioenergy development in British Columbia, Canada. mutual exchange with Europe. Presentation of the BC Bioenergy Network at 4biomass workshop
- S Ferguson
Ferguson S (2010) Bioenergy development in British Columbia, Canada. mutual exchange with
Europe. Presentation of the BC Bioenergy Network at 4biomass workshop, Vienna, 5th
October 2010
Albany biomass pellet plant winds up, ABC rural broadcast service, News release on 02
- O Grieve
Grieve O (2012) Albany biomass pellet plant winds up, ABC rural broadcast service, News
release on 02.03.2012, available at: http://www.abc.net.au/rural/news/content/201202/
s3422461.htm Accessed 10 Oct 2012)
International Energy Agency Ed (2011) World energy outlook 2011. Paris, 2011
KMI) (2012) Shipping indexes. Baltic Dry Index. Daily data since 2010, available at: http:// www. kmi. re. kr/ Daily. do? command= List
- Institute Korea Maritime
Baltic Dry Index, Compilation of daily data 1984-2010 from Bloomberg
- M Maersk
Maersk M (2010) Baltic Dry Index, Compilation of daily data 1984-2010 from Bloomberg.
Edited by Copenhagen Business School, Frederiksberg, 2010
Personal communication with the supply and logistics manager of fuel trade company Genol GmbH & Co KG. Vienna
- H Sumetzberger
Sumetzberger H. (2012) Personal communication with the supply and logistics manager of fuel
trade company Genol GmbH & Co KG. Vienna. 08.02.2012
Department for Environment, Fishery and Forestry, Department of Agriculture, Fisheries and Forestry (ABARES) (2011) Forest and wood products statistics
- Australian Government
Statistics. BlueNext Spot EUA. Historical transactions from 24.06
- Bluenext Exchange
Global wood pellet industry market and trade study prepared for IEA bioenergy task 40: international sustainable bioenergy trade
- M Cocchi
- L Nikolaisen
- M Junginger
- Sheng Goh
- S Heinimö
- J Bradley
- D Hess
- R Jacobson
- J Ovard
- L P Thrän
- D Hennig
- C Deutmeyer
- M Schouwenberg
- P P Marchal
Cocchi M, Nikolaisen L, Junginger M, Sheng Goh S, Heinimö J, Bradley D, Hess R, Jacobson J,
Ovard LP, Thrän D, Hennig C, Deutmeyer M, Schouwenberg PP, Marchal D (2011) Global
wood pellet industry market and trade study prepared for IEA bioenergy task 40: international sustainable bioenergy trade, Florence, December 2011
ARA Coal Year Futures Request of historical prices from
- European Energy Exchange
European Energy Exchange (2012) ARA Coal Year Futures Request of historical prices from 2006 to
10/2012 at. http://www.eex.com/de/Marktdaten/Handelsdaten/Kohle/Coal. Accessed 15 Oct 2012)
Logistic management of wood pellets: Data collection on transportation, storage and delivery management. Development and promotion of a transparent European Pellets Market
- S Senechal
- G Grassi
- M Nordenmark
- F Vivarelli
- M Junginger
- R Sikkema
Senechal S, Grassi G, Nordenmark M, Vivarelli F, Junginger M, Sikkema R (2009) Logistic management of wood pellets: Data collection on transportation, storage and delivery management. Development and promotion of a transparent European Pellets Market", in frame of the
task "Creation of a European real-time Pellets Atlas" for Pellets@las project, Brussels, 2009
Pellets market data, request and data collection
- Wip Renewable Energies
WIP Renewable Energies (2012) Pellets market data, request and data collection.
http://www.pelletsatlas.info/cms/site.aspx?p=9138. Accessed 20 Jul 2012
Contract concepts. From spot purchases to multi-year deals, producers, buyers and brokers must know their way around supply agreements
- L Geiver
Geiver L (2012) Contract concepts. From spot purchases to multi-year deals, producers, buyers and brokers must know their way around supply agreements, in Biomass Magazine, July
2012. pp. 25-29
Global development of bioenergy. Presentation from Pöyry consulting at University of Applied Sciences Wiener Neustadt
- H Röder
Röder H (2012) Global development of bioenergy. Presentation from Pöyry consulting at
University of Applied Sciences Wiener Neustadt, Wieselburg, November 2012
Prices and trade volume of EU Emission Allowances, Request of historical prices and volumes at
- European Energy Exchange
European Energy Exchange (2012) Prices and trade volume of EU Emission Allowances,
Request of historical prices and volumes at. http://www.eex.com/de/Marktdaten/Handelsdate
n/Emissionsrechte. Accessed 15 Feb 2012
Historical pellets market prices. Weekly prices, Compilation by Sipke Veer
- Apx-Endex
APX-ENDEX (2012) Historical pellets market prices. Weekly prices, Compilation by Sipke Veer,
Amsterdam, 14.07.2012
Erzeugerpreisindizes für Verkehrsund Logistik-Dienstleistungen
- Deutschland Statistisches Bundesamt
Statistisches Bundesamt Deutschland (DESTATIS) (2012) Erzeugerpreisindizes für Verkehrsund Logistik-Dienstleistungen, Quartalswerte Deutschland 2006 bis 2012 data report,
Wiesbaden, November 2012
Report accomplished for IEA task 40 bio-trade. Ottawa
- D Bradley
- B Hektor
- P P Schouwenberg
Bradley D, Hektor B, Schouwenberg PP (2010) World Bio-trade Equity Fund Study. Report
accomplished for IEA task 40 bio-trade. Ottawa, April 18, 2010
Eurostat (2012b) Harmonised consumer price index-inflation rate 1997-2011 European and Non-European countries
European Commission, Eurostat (2012b) Harmonised consumer price index-inflation rate
1997-2011 European and Non-European countries. Brussels, 2012
Biomass procurement officer at GDF Suez, 07.02.2013. Lugner M (2012) Sales manager max lugner from pellets producer Schweighofer
Interviewed pellet producers, traders and end-users (2011-2013) Personal communication with
Dusan S (2011) Black pellets manager of Vattenfall Europe AG, 08.08.2011. Hermes HD
(2012) director business development biomass of Vattenfall Europe GmbH, 29.10.2012.
Mertens J (2013) Biomass procurement officer at GDF Suez, 07.02.2013. Lugner M (2012)
Sales manager max lugner from pellets producer Schweighofer, 15.06.2012. Pease H (2013),
Senior biofuel portfolio manager for RWE supply and trading, 18.04.2013
Consumer price index natural gas
Statistics Canada (2012a) Prices and price indexes. Consumer price index natural gas.
http://www.statcan.gc.ca. Accessed 19 Jul 2012
Table 330-0007-Raw materials price indexes-2306. Monthly data
Statistics Canada (2012b) Table 330-0007-Raw materials price indexes-2306. Monthly data,
2002 = 100. http://www.statcan.gc.ca. Accessed 19 Jul 2012
Lugner M (2012) Sales manager Max Lugner from pellets producer Schweighofer
- J Mertens
Mertens J (2013) Biomass procurement officer at GDF Suez, 07 Feb 2013. Lugner M (2012)
Sales manager Max Lugner from pellets producer Schweighofer, 15 June 2012. Pease H
(2013) Senior biofuel portfolio manager for RWE supply and trading, 18 Apr 2013
E1
Erratum to: