Development of pellet production and trade in Russia

Development of pellet production and trade in Russia. TERESHCHENKO SVETLANA Associated professor, Ph. D(Ec) Saint Petersburg State Forest Technical Academy (Technical University), Russia

Saint-Petersburg State Forest Technical. University Was founded in 1803 as a first in Russia special forest educational institution by the Decree of Emperor Alexander the First. In the 20 th century Forest Institute was reorganized into the Forest Technical Academy

Saint-Petersburg State Forest Technical University Nowadays there are: 5 institutes, 9000 students, 370 teachers, 62 hectares park, two museums, arboretum, continuous training department

Saint-Petersburg State Forest Technical University

Nowadays situation in Russia with pellet production • According to data received by RBC. Research, there are more than 250 pellet factories in Russia nowadays • Their potential is more than 3, 5 billion tons pellets in a year • Level of use of their potential is only 50 %

Large and medium companies that are working in pellet production in Russia • Large and medium size enterprises for which such production is additional type of production. • There about 13 such enterprises, but they are producing more than 50% of pellets in Russia.

ООО «Выборгская лесопромышленная корпорация» ( «ВЛК» ) • http: //vfdc. ru/en • Was created as a branch of pulp and paper enterprise but now it is specialized on the pellet production • It is one of the biggest producers in the world (1 billion ton per year) • The supply base of Vyborg Forestry Development Corporation LLC is the total area of the forest fund of the Leningrad, Vologda, Pskov, Novgorod, Tver, Ryazan regions and the Republic of Karelia. The total area of the supply base is 44305. 7 thousand hectares. • Vyborg Forestry Development Corporation LLC uses mainly low-grade roundwood, which is not suitable for other industries

Small companies that are working in pellet production in Russia • Small enterprises which use wastes of wood processing and saw-milling enterprises • There a lot of individual entrepreneurs working in such production (with production of 10 -15 thousand tons per year), but it can be said that information about their production is not included in the national statistics

Dynamics of production of pellets in Russia 2000 -2017

Dynamics of pellets production at Russian markets • The Russian market of pellets is among the few that have demonstrated stable growth in the last seven to eight years. • A small drop was noted only in 2013, and in general the growth trend continues: annually the output is increased by 50 -100 thousand tons.

Development of pellets production in Russia • Development of pellets production at Russian market is oriented mostly at export opportunities • There is a real opportunity to develop export opportunities in the world market • According to prognoses made by POYRY company the world consumption of pellets in 2020 will be 47, 3 bill ton (50% more than

Dynamics of export of pellets

Consumption of pellets on Russian market • The domestic pellet consumption market is still poorly developed, almost all producers are oriented to the European or Asian market. • In Russia there are too few energy facilities that consume wood fuel. • Demand - private individuals or small boiler houses, and there almost no large boilers or thermal power stations working on pellets. As a result, up to 97% of all produced pellets are exported (in 2012 it was less than 90%).

Export of pellets in Russia • Russia, according to the information agency Infobio, confidently holds the third place in the European pellet market. • Most Russian companies involved in exporting products do not experience sales problems. • In the second half of 2015, 157 Russian pellet producers participated in the export of products. • The devaluation of the ruble against the euro made export destinations attractive even for those companies that previously suffered from high transportation costs

Quality of pellets • European consumers every year raise higher requirements for the quality of biofuels. In 2015, the decision of the EU leadership from 3 to 1. 5% reduced ash content in pellets intended for industrial consumption. • Now it is required to confirm the quality of origin of raw materials. In 2016, Russian manufacturers, working without certificates, faced serious marketing problems.

Certificates that are receiving Russian companies • EN plus • SPB

Export of pellets

Structure of export of pellets in Russia • The largest importer of fuel pellets in Europe is Great Britain. But, UK energy companies prefer to order pellets from the United States. • Russian producers, although they are increasing their supplies to the UK (in 2016, 54, 000 tons were sent there, and 63, 000 tons are expected to be sent in 2017) - the share of consumers from foggy Albion is 4 -5% in the total export structure of pellets. • But more than 40% of all Russian exports of wood pellets are sent to Denmark: 400 thousand tons in 2016. In 2017, this figure promises to grow to 600 thousand tons.

State structure of export of pellets in Russia in 2012 -2017

Export of pellets to European market • More recently, Sweden was an active consumer of Russian pellets, which in 2012 -2014 was buying 200 -250 thousand tons of products, but in 2016 the volume of supplies to this Scandinavian country was reduced to 120, 000 tons, and its share in total exports decreased from 30 to 10%. • Still considerable parties are delivered to the Netherlands, Italy, Finland, Latvia, Lithuania, Belgium, Germany.

Export prices for pellets in dollars

Export prices of pellets in rubles

TASK 1 • Please think in a group how can be stimulated consumption of pellets in Russia • Which opportunities has Russian in the world pellets markets?

THANK YOU FOR ATTENTION!!!! teresveta@mail. ru