Wood chips are a high-volume commodity derived from forestry operations and milling byproducts. The market is highly segmented, as the value and specific requirements of the material are dictated by the industrial application for which it is purchased. Different sectors demand unique physical and chemical properties, transforming this product into a complex, specialized commodity.
Pulp and Paper Manufacturing
The pulp and paper industry is the largest consumer of wood chips, valuing the material for its high-quality fiber content. Manufacturers require chips to be exceptionally clean; a low content of bark and contaminants is a specification for high-yield chemical pulping processes. Bark contains impurities that reduce digestion efficiency and can result in lower-quality final products, leading mills to impose strict limits, often below 0.5% by green weight.
Chip size uniformity is a major requirement because dimensions directly influence the penetration of cooking chemicals and the subsequent pulp yield. For chemical pulping, an ideal chip size typically falls within 15 to 20 millimeters in length and 3 to 5 millimeters in thickness. Chips that are too thick resist proper digestion, while fines (chips that are too small) are overcooked and reduce final pulp strength. Paper mills separate purchases based on species, using long-fiber softwood for high-strength products like packaging, and short-fiber hardwood, such as eucalyptus, for smoother papers, including tissue and office stock.
Biomass and Renewable Energy Facilities
Wood chips serve as a primary fuel source, or biomass, for generating thermal energy and electricity in power plants and industrial boilers. Energy-focused buyers prioritize maximum energy content and volume, resulting in different quality standards than the paper industry. They are more accepting of lower-grade materials, such as logging residue, tree tops, and bark, provided the material is available consistently and in high volumes.
The most significant quality metric is moisture content, which directly impacts the net heat output or British Thermal Unit (BTU) value. Higher moisture content reduces useful energy because heat is consumed evaporating water during combustion. While most modern systems handle moisture content between 15% and 50%, a target range of 30% to 35% is preferred for optimal performance. Ash content is another factor; high ash levels (typically over 2.5% to 7%) cause operational problems like clinkering and fouling of boiler components, increasing maintenance costs.
Producers of Engineered Wood Products
Manufacturers of composite materials like particleboard, Medium-Density Fiberboard (MDF), and Oriented Strand Board (OSB) purchase wood chips as a raw material for panel products. Each product requires a unique size and shape to ensure the final board possesses the necessary structural integrity and surface quality. Demand in this sector is tied to the construction and housing markets, making it highly cyclical.
For Oriented Strand Board (OSB), the raw material must be long, thin strands or flakes, typically 75 to 150 millimeters long and less than one millimeter thick, rather than traditional chips. This dimension allows strands to be layered and oriented in perpendicular directions, giving OSB its structural load-bearing capacity. Particleboard uses a mixture of smaller wood chips, shavings, and sawdust, sorted into different size fractions for the core and surface layers. MDF production uses chips that are softened with steam and mechanically refined into individual wood fibers, which are then bonded with resin under high pressure. Cleanliness and consistent species are important for all engineered wood products, as particle dimensions and composition directly affect the bonding and strength of the panel.
Horticulture, Landscaping, and Agriculture
Wood chips are purchased for non-industrial applications in horticulture, landscaping, and soil management. These buyers typically operate on a smaller, localized scale but require specific material properties for functions like decorative groundcover and soil amendment. Landscapers seek chips with particular aesthetic qualities, such as specific colors or resistance to decomposition; cedar is popular for its natural rot resistance.
In agricultural settings, wood chips are used as a soil amendment to increase organic matter and suppress weeds. When incorporated into the soil, the high carbon-to-nitrogen (C:N) ratio can cause soil microorganisms to temporarily immobilize available nitrogen, potentially starving crops. Farmers using wood chips often need to apply supplemental nitrogen fertilizer to maintain soil nutrient balance during decomposition. Fresh wood chips are preferred for mulch applications, while chips used for composting are valued for their rigid structure, which helps aerate the compost pile and balance the C:N ratio of other organic materials.
The Global Export Market
International trade moves vast quantities of wood chips across oceans, primarily to countries with limited domestic forest resources but high demand for fiber or biomass fuel. Major importers include East Asian nations, such as Japan and China, which purchase chips for large-scale pulp and paper mills and growing biomass energy sectors. This global trade requires specialized, high-volume logistics, with chips shipped in bulk carriers from deep-water ports.
Export contracts are generally large-scale and long-term, especially when supplying new biomass power plants that seek guaranteed fuel supply. The contracting process involves stringent quality specifications, often measured in Bone Dry Metric Tons (BDMT) to account for fluctuating moisture content during transit. Key exporters include countries in the Southern Hemisphere and Southeast Asia that manage fast-growing fiber plantations, such as Australia and Vietnam. Selling to overseas buyers involves coordinating complex supply chains and meeting international sustainability certification standards for wood sourcing.