Enviva's Struggle with Wood Pellet Export Prices and Repurchase Commitments

Enviva, the dominant business supplying wood pellets as a fuel source, reported a substantial drop in wood pellet export prices in the third quarter, also citing risks to its business from its agreement to repurchase 1.8 million tons of pellets from a customer on order for the period from 2023-2025.

In a filing with the Securities and Exchange Commission, they said “These conditions and events in aggregate raise substantial doubts regarding the company’s ability to continue as a growing concern.”

Enviva has pellet manufacturing plants in Virginia, Florida, Mississippi, Georgia, South Carolina, and North Carolina, and one is under construction in Alabama. It has port facilities in all of those states except for South Carolina including Alabama. Each plant produces between 600,000 and 750,000 metric tons of pellets annually, according to the Enviva website.

The company’s quarterly SEC filing cited the “unfavorable pricing environment in the wood pellet market.” Ironically, the company sold 17.7% more pellets in the third quarter than the same period last year.

Enviva said that it will work to modify the terms of the huge pellet purchase and undertake other measures in its business to control costs.