Wood Market Profile, 1993/94

August 1994

Metro
Solid Waste Department
600 NE Grand Ave.
Portland, OR 97232-2736
(503) 797-1650
Fax (503) 797-1795

 

Overview

Wood recovery continued to increase rapidly in 1993. The number of waste wood processing, salvaging and pallet reconditioning businesses serving the Metro area jumped from three in 1990 to 29 at the beginning of 1994. Responding to strong demand for secondary wood fiber due to timber harvesting restrictions, local processors stepped up their efforts to obtain wood from the wastestream. Expanded recovery of this material can be attributed to more intensive marketing efforts by wood processors, increasing and more stable prices for secondary wood products, and the high cost of disposing of this material in landfills.

Graphic: Estimated Tons of Wood Recovered from Metro Area (1986-1993) [See source document]

Key Facts

Major Generators:

Estimated Generation: 196,000 tons[1]

Estimated Recovery: 106,030 tons = 54%[2]

End Users:

Processors:

Wood Salvagers:

Origin of Material: Metro area and adjacent counties

Secondary Uses:

Location of End Markets: Primarily along the I-5 corridor from Eugene to Longview, Washington.

Tipping Fee: $0 to $75 per ton; $0 to $6 per cubic yard[3]

Major Factors Affecting Market Recovery:

Outlook: Recovery leveling off

Recycling Infrastructure

Processors

The size, sophistication and quality control requirements of Metro-area waste wood processors vary greatly. This is reflected in the many ways that waste wood is recovered.

Most is collected source-separated by commercial waste haulers and contractors from commercial and residential construction and demolition sites. Some processors collect material directly from large-quantity generators such as furniture manufacturers, grocery stores, warehouses and distribution centers. Processors also receive a significant amount of material from self-haulers.

Brokers

Twelve businesses and one non-profit organization broker salvaged wood and wood products for reuse. Some of these operations physically handle only a portion of the material they sell and arrange for the rest to be transported directly from the generator to the secondary user. Others remill salvaged wood into high-value products such as finish molding, furniture, and flooring.

Secondary Uses

In 1993, roughly three-quarters of the waste wood recovered for processing was chipped for use as hog fuel. The remaining one-quarter was processed into "furnish" for use as feedstock in manufacturing reconstituted panelboards such as hardboard, particleboard and medium density fiberboard. Processors can sell furnish for more than they can sell hog fuel, but furnish has to meet tougher quality specifications. A significant but unquantified amount of wood waste is salvaged for reuse.

Primary Recycling Process

For all secondary uses, waste wood is stripped of contaminants, primarily metal and plastic, and then mechanically reduced through chipping or shredding. It also may be screened to meet end-market specifications.

Factors Affecting Wood Markets

Raw Material Prices and Supply and Demand

The supply of virgin timber in the Pacific Northwest has been restricted in recent years while demand for wood products has been increasing. Timber harvesting from U.S. Forest Service and Bureau of Land Management forest land has decreased 75 percent since 1988.[4] This decrease has been partially offset by increased harvesting of private forest lands.

Supply shortages have been compounded recently by historically low interest rates and increased construction activity. This dynamic is driving the price of wood products up and increasing the need to cultivate alternative sources of wood. Metro area processors have been able to sell all of the material they process.

Processing Costs

Good quality recovered wood is relatively simple and inexpensive to process. However, it is common for loads of recovered wood to contain large chunks of metal and stray pieces of plastic sheeting from construction sites. Metal chunks can jam and/or damage processing equipment, thus increasing operations and maintenance costs. Small pieces of metal, plastic, soil, rocks, rubber and silicone reduce the marketability of hog fuel and furnish.

"Dirty" loads increase processing costs because they have to be "cleaned up' mostly by hand. Processors can remove most metal contaminants relatively inexpensively using magnets, but this technique does not capture all unwanted material; some manual quality assurance usually is necessary. The only effective way to remove plastic contaminants is by hand. The most effective way processors can prevent recovered material from being contaminated with soil and rocks after they receive it at their sites is to have paved working surfaces. This is a significant capital cost.

Secondary Product Value

Salvaged Wood Products

Salvaged wood products can command premium prices. The quality of many salvaged wood products -- particularly those made from old growth timber and rare species of wood -- surpasses all new products available. Such material also may have been crafted in "vintage" or "classic" designs, have a "seasoned" appearance, or have other aesthetic features that increase its value compared to new products.

Panelboard

Panelboard products are sold in large quantities and have low unit prices. This effectively holds down the unit value of recycled-content furnish. Panelboard manufacturers have rigorous quality specifications for recycled-content furnish to ensure that the quality of their products is consistent whether they contain recycled material or not. U.S. panelboard orders jumped 4.2 percent between 1991 and 1992, and remained essentially stable in 1993 at 25.60 billion square feet.[5]

Fuel

The main factors affecting the value of hog fuel are the price of alternative fuels, and the cost to burn alternative fuels. Hog fuel competes with bunker oil based on world prices and with natural gas based on prices in the Pacific Northwest. Tire derived fuel (TDF) is used in some cases to supplement these fuels. Natural gas has become the fuel of choice for many industrial facilities because it is competitively priced and has low particulate emissions per BTU of energy generated. Reprocessed fuel oil has relatively low particulate emissions per BTU compared to hog fuel.

This relationship between particulate emissions and energy output is significant because some facilities must burn some natural gas or oil to meet their energy needs without exceeding the particulate emission limits allowed under their state air discharge permits. Additionally, hog fuel requires more storage space per unit of energy output compared to alternative boiler fuels.

The approximate price spreads for industrial fuels are listed below.

Fuel$/Million BTU[6]
Natural Gas$2.40 to 3.20
Wood$1.35 to 2.95
Oil$1.30 to 1.60
Tire Derived Fuel$1.05 to 1.95

Outlook

Recovery of waste wood is expected to continue to increase due to high virgin wood fiber prices, high landfill disposal prices, strong construction activity, and aggressive public and private education and promotion. These conditions maximize processors' profit margin potential and offer strong economic incentives for them to maximize recovery and throughput.

Increased competition should continue to drive down prices charged by processors. This should increase the attractiveness of wood recycling to wood waste generators. However, because wood recovery has reached a relatively high level, it is not expected to increase as rapidly in coming years as it has since 1990.

Footnotes

[1] Generated equals quantity recovered from the Metro area for secondary uses plus quantity disposed.

[2] This estimate is for post-consumer waste recovered from the Metro area in calendar year 1993. It is based on the 1993 Metro Recycling Level Survey. "Post-consumer waste" is defined in Oregon statute as "a material that would normally be disposed of as a solid waste, having completed its life cycle as a consumer or manufacturing item." The term "wood" includes construction lumber, pallets, crates, stumps and landclearing debris. It does not include woody yard debris. The term "recovery" includes wood that was processed for use in secondary products (e.g., reconstituted panelboard), and chipped for industrial boiler fuel. It does not include wood that was salvaged for reuse.

[3] This is the range of fees processors charged for incoming material in July 1994. Some charge by weight while others charge by volume. This price range does not include wood or pallets salvaged for reuse.

[4] Investigation of Alternative Markets for Recycled Wood, prepared for Metro by International Resources Unlimited, August 1993.

[5] U.S. Department of Commerce, U.S. Industrial Outlook 1994.

[6] These ranges are for fuel delivered to end users within a 100-mile radius of the Portland-Metro area. They are based on information gathered from processors, end users and Oregon Department of Energy officials in July 1994. They are intended strictly to illustrate the relative prices for these competing fuels.

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Last Updated: July 30, 1997