RISI Wood Fiber Conference Craig Jackson February

Transcription

1 RISI Wood Fiber Conference Craig Jackson February

2 1.CellMark 2.Challenges Facing Supplier 3.Challenges Facing Traders 4.Opportunities 5.Summary Conclusions

3 CellMark Incorporated in offices in 30 countries 700 employees Presented in 120 markets Trading volume of 6 million tons Annual sales of USD 3+ billion

4 Main Focus CellMark specializes in sales and marketing and we bring a broad range of products, services and solutions to the world market. We focus our capabilities in these key areas: CellMark Energy plans to be a global leader in production and trade of Bio Mass Pulp Paper Packaging Recycling Metals Energy Chemicals Basic chemicals Source:

5 Bioenergy Employees in The U.S, Sweden, Italy, Singapore, Korea and Vietnam Involved in the bioenergy sector since 2010 Moved 350,000 + tons in Asia since April, 2015 Exclusive sellers for wood pellet plants in: Malaysia, and Indonesia and Vietnam

6 Our Portfolio GPS Sara Rasa ABC

7 GPS Formally known as Polima Compressed Wood Bintulu founded in 2006 Located in Bintulu, Sarawak Close to Deep Water Port (28 km) and Close to Raw material (60 KM radius) The state of Sarawak has large wood-based industries generating significant amount of wood residuals STIDC controls over 120,000 hectares of mature Acacia Plantation Capable of producing durable and premium quality wood products

8 Sara Rasa Founded in 2012 By European Bio Energy Experts Located Surabuya Indonesia Raw Material residuals for legal logged industries CPM Pellet Mills 75,000 Capacity

9 Asia BioMass Corp Asia BioMass Corporation J/V between AVP amd CM Will Produce 84,000 MT per annum Located near significant wood waste. Start up 4Q 2017

10 Biggest Challenges Challenges Facing Supplier/Trader. Some apply only to Supplier and Some to Trader and often Both Raw Material Logistic Freight Quality Competition Legislation/Sustainability

11 Raw Material Procurement Logs Residuals from Plywood and Lumber Mills. Sawdust and Dominos from the Furniture Industry Wood Chips Don t forget Wood has multiple uses unlike Coal Raw Material

12 Raw Material Logs Have Multiple Uses Dimensional Lumber Furniture Pulp and Paper Animal Bedding All higher value than current pellets

13 Raw Material Residuals from Lumber Dependent of the Lumber Business More and more the waste is being used internally

14 Raw Material Furniture and Veneer Industry Waste Again depends on the vagaries of the Furniture and Veneer Industry Currently a huge source in Vietnam as furniture companies are moving out of Indonesia and Taiwan Is this sustainable?

15 Raw Material Saw Dust Used to make Charcoal Used as growing Medium for Mushrooms Animal Bedding Hard to Store Often Dirty

16 Raw Material Wood Chips Current price for unprocessed wood chips is higher than pellet price MDF has higher value New Pulp Mill being built in Vietnam. Will use 1.6 million BDT of wood. What does that do to raw material price for pellets?

17 Japan and South Korea: Future Biomass Imports Demand Growth Scenario Demand mostly imported wood pellets Biomass in tonnes pellet equivalent and includes PKS and wood chip Source: Indufor Analasys

18 Tender Documents are Released Korean Tender Submit bid with 5% bid bond Tender has penalty for non conformance for Ash and NCV Winners submit delivery schedule with performance bond 10% Genco then tells you what delivery schedule they accept Deliveries are usually MT per day over 3-6 months Winners ship to a warehouse and then redeliver.

19 Logistics Logistics If we reach the forecast volume how are we going to meet the logistic requirement? Japan requires bulk shipment 7000 MT-25,000 MT per shipment Who can deliver to Genco s in Korea at increased volume? Current system will not work.

20 Logistics Varies by End User/Market Bulk Shipment Bulk In Container Jumbo Bags in Container Small Bags (15-20 KG) in Container

21 Logistics Korea Currently Supplier are selling on FOB Trader is handling Ocean Freight DDP delivery Inland Costs Storage

22 Logistics Korea Bulk Shipment Can Also Load using Jumbo Bags Unloading

23 Logistic Korea Containers Containers are off-loaded

24 Logistics Korea Containers Lift Container to Dump Truck to be moved to Container Free Storage Delivery Pellets into Container Free Storage

25 Hooper or Dump Truck Dump Trucks are used based on end user requirement Hooper Trucks are used based on end user requirement

26 Logistics Japan Will require Bulk shipment. Ranging from 7,000 MT Now to 25,000 MT Future Very little infrastructure to handle in SE Asia ports Cost is higher than Container Supplier charter a Vessel?? End User buys FOB??

27 Freight Both Korean and Japanese customers want long term fixed price contracts. (FOB, CIF) Because of RPS and FIT If CIF how can Suppliers and Traders handle? Charter a Vessel?

28 Freight Cost of Freight Depends on Oil Price Supply and Demand Price of container freight is rising Hanjin Bankruptcy Merge of Container Lines in Japan

29 Quality Trader has to buy from Multiple Sources To meet demand. Suppliers are Small to Medium Need to have Good Partners Quality Varies because Raw Material varies

30 Competition Rising Prices Mean Greater Chance NA producers come to Asia They have the Infrastructure They have the Scale Greater Competition from other Asian suppliers

31 Legislation The Pellet Market Potential in Asia is HUGE But Not Financially Driven: Will Korean and Japanese Governments stay the course?? Can they afford the cost RPS in Korea Has been pushed back once already FIT in Japan MITI meets in March to review current FIT system

32 Sustainability Very Hard to Achieve Multiple Sources of Raw Material Producers with FSC or PEFC Limited Will Market Pay the Price.

33 Opportunities Infrastructure Scale Freight Quality China

34 Infrastructure Port Services need to Improve Bulk shipments Load Faster Handle Bigger Vessels

35 Freight Charter Vessels Long Term Chip Carriers

36 Scale With the Forecast Volume Build Bigger Mills Need to Secure Raw Material. Forest Ownership

37 Quality We are Selling Energy Quality will be more important Industrial/Residential Grade Makes Economic Sense Fewer Possible Producers

38 China The potential is Gigantic But not there yet.

39 Summary and Conclusions The Potential Is Huge? Current Pricing Does Not Support New Investment: Price Currently is in most cases Below Production Cost. Most Sellers are Counting on Future Traders in Korea Speculate. Taking loss to gain Market Share Taking loss to reach Record Bidder Status

40 Summary and Conclusions Pellets should not be compared Fuel Oil Or Coal. Wood has many other uses besides pellets Furniture, Paper, MDF, Plywood Remember you are Buying Energy not Tons Both Supplier and User are going to have get better at working towards WIN/WIN relationship.

41 Thank You