The following article originally appeared in Construction & Demolition Recycling Magazine in February 2018.
By Marcin Lewandowski, Director of Risk Analytics at Ecostrat Inc.
Construction and demolition processors need to stay up to date on important information about the wood waste markets to stay successful.
When it comes to information regarding the markets for wood waste, the construction and demolition (C&D) industry could use some help. On average, 80 percent of wood waste recyclers forego 20 percent of potential revenue or incur a 20 percent cost premium. All is not lost, however. The C&D wood waste markets can be optimized through better market knowledge.
The main reason why markets for C&D wood are not well developed is due to a lack of information. Essentially, there is a disconnect between wood waste generators’ knowledge regarding market options and what happens in the market. Wood waste markets are fluid and often seasonal, so tracking them requires resources, such as a designated staff. By understanding the dynamics of these markets, C&D recyclers can best optimize their wood waste supply chains.
TAKE YOUR PICK
There is an array of available markets for C&D wood. These differ substantially, and the best solution for one wood waste producer may not be appropriate for another. There are several variables that need to be considered when choosing a market, such as existing processing capabilities and transportation costs. Understanding these variables is a key factor in determining the market hierarchy for a wood waste recycler. For instance, a wood waste recycler may increase revenue for its product by adding a screen to its grinding process, and thereby accessing markets that were unavailable. For this reason, it is important to understand the benefits and limitations of available and potential markets.
Having the right information is crucial for a quick response when markets shift. As mentioned previously, wood waste markets can change considerably in a short period of time. For example, a new market that uses wood fuel for pellets can operate normally for six months and suddenly disappear due to tighter wood specs. If wood waste generators lack knowledge about alternative markets, they can find themselves losing critical revenue. The process of developing and maintaining a market database takes time and resources, and producers that need to gather information from scratch have a considerable disadvantage. However, access to market knowledge gives a significant advantage to C&D recyclers as they can react as soon as market changes occur.
The following case study presents an example of how suddenly and dramatically the wood waste market can change and how a good knowledge of alternatives can save money for wood waste recyclers.
In 2016, a large biomass power plant in New York state shut down, taking away a market for 250,000 tons of wood waste per year. This plant was responsible for buying most of the C&D wood that was being generated in the Buffalo area and in big southern Ontario cities, such as Hamilton and Toronto. Within two months, the price of wood waste dropped from $10 per ton to negative (i.e., tip fee).
Due to these market shifts, the C&D wood recyclers in the area needed to find alternative markets. By this time, it was known that a new power plant was going to go online in the Toronto area in the following year. However, finding alternative markets until the power plant started its operations was critical.
The closed power plant formally accepted low-quality C&D wood waste. Consequently, C&D recyclers were not used to paying much attention to their sorting and processing methods. Once wood waste generators implemented changes to wood processing, however, they were able to access higher-end markets. Here are some of the new opportunities that we found for these suppliers:
- Particleboard markets accept clean dimensional lumber, skids and some types of plywood. One of the main challenges for this market is the ability to keep the wood dry and clean. Therefore, to access this market, C&D wood recyclers had to ensure that wood waste was properly sorted and kept away from the elements.
- Solidification markets use dry fine wood fiber to solidify liquids, which are later landfilled. Just like the particleboard markets, the challenge is to keep the fiber dry and well processed. However, solidification markets can accept treated wood waste and have a high degree of tolerance for contamination.
- Greenhouse heating markets use wood waste as fuel for heating. They tend to be significantly smaller than biomass power and combined heat and power (CHP) markets, but they can often tolerate higher levels of contamination. This is because farming tends to be less regulated than other industries. With that being said, the greenhouse heating market only accepts dry material. This means that suppliers had to move the material as soon as possible after the grinding process, ensuring the wood was still dry. Additionally, since the need for greenhouse heating varies during the year, the greenhouse market is seasonal.
- Cattle bedding markets can be lucrative, but require good-quality wood fiber. To access this market, C&D wood recyclers have to grind material into fine and dry fiber. Cattle bedding markets purchase wood fiber year-round, allowing for reliable off take. Additionally, farmers prefer C&D wood over other wood wastes because it is less detrimental to their processing equipment.
The availability of up-to-date market information allows wood waste recyclers to best optimize their supply chains. Markets for wood waste differ, and wood waste producers need to know the benefits and limitations of each one to identify the best options for them. This way, wood waste recyclers ensure that they maximize revenue from C&D wood.Go Back