Browsing by Author "Mäkelä, Matias"

Availability of raw material is a key issue for the future of the wood pellet industry. Wood pellet production primarily uses dry by-products of the mechanical wood processing industry, but increasing demand forces to use even more wet sawdust of the sawmill industry. This study examined the procurement of wet sawdust as a raw material for four pellet mills. As a research method, a model based on linear optimization was created about the Finnish sawdust market. To form a market model, the research compiled a database of demand and supply of sawdust. The demand database was collected on 7 expert interviews, and the ability to pay of each actor was determined by reference fuel. The supply database was composed by gathering the industrial size sawmills in Finland. The production capacity of sawmills determined an estimate of the by-product sawdust. With this model, three different raw material procurement scenarios were created for the year 2021, based on the different production volumes of the sawmill industry, compared with the year 2017. In the base scenario, the utilization rate will remain at the 2017 level, the minimum scenario will decrease by 10% and in the maximum scenario will increase by 10%. In each scenario, raw material procurement of factories was examined at 50%, 75% and 100% of the maximum capacity of factories. In the first step of optimization, the profit margin of sawmills was maximized, by delivering items to the most profitable user. In the second step, the raw material costs of pellet mills were minimized by utilizing the results of the first stage optimization. The results show that the production volume of the sawmill industry has a significant impact on the raw material costs of pellet mills due to changes in supply. In the minimum scenario, the raw material costs of four factories were 10,1 to 10,4 percent higher, in the base scenario, 6,0 to 7,6 percent higher and in the maximum scenario, costs fell 0,7 to 0,8 percent compared with the year 2017. According to the results, the price of the sawdust may rise due to increased demand. Increasing raw material costs will affect the profitability of the pellet industry and the demand for the end-product negatively.