From the Director’s Desk: First Look at 2024 Data, Policy Watch, Annual Conference Shaping Up
First Look at 2024 Data
While pellet manufacturers don’t measure their year on a conventional January – December calendar, the EIA’s Monthly Densified Biomass Fuel Report does, and last week the agency released the January data set, which reads as a continuation of the mild heating season we’ve all watched unfold.
The Numbers (rolling average)
U.S. Sales: 140,689 (169,556)
U.S. Production: 142,323 (141,033)
Total Inventory: 192,787 (95,387)
The numbers released last week surprised no one. Manufacturers and retailers alike are ready to put the 2023-24 heating season in the rearview mirror. To call this season a “mild winter” doesn’t quite capture it and frankly, the Heating Degree Day data offered by the Climate Prediction Center seems out of step with the winter we all experienced (record warmth in many locales) and the sales figures we’ve watched slowly accumulate.
I’ve included as this week’s Photo of the Week the Pellet Fuels HDD Index from January 27th. Only one locale shows ‘fewer’ accumulated Heating Degree Days from the prior year (Baker City, Oregon). Cities in the northeast showed increases over last year’s HDD in the double-digit percentages, but that data doesn’t square with the many media reports of record warmth that proliferated that month nor does it square with the regional sales numbers. In the East, sales were a limp 77,101 tons (compared to 81,169 tons in 2023) and the PFI Index reports that the region had 13-14% more heating degree days. While pellet sales can’t be expected to correlate exactly with Heating Degree Days, it seems just as unlikely that the sales number would be such a departure from what the HDDs might suggest.
As a result, wood pellet inventories are up across the country with the East finishing the month at 125,709 tons, the highest January inventory total in six years. Inventories in the East are down just 10,000 tons since October and that may be the most telling statistic in the report. In the heating season of 2018-19, wood pellet inventory fell to 80,000 tons in the same time frame with similar production numbers. The kind of winter we all hope for consumes all the pellets our producers in the East can make, plus a good share of the pellets they’ve laid by. This year, inbound purchase orders could be satisfied with production coming off that line in real time.
For the next three months, the Monthly Densified Biomass Fuel Report will articulate what we already know; this year was generally disappointing. Thankfully, the EIA data set provides clarity on how warmer temperatures impact our business and provides visibility on how the industry responded. I have underscored that sentence as a reminder that the EIA seeks comments on its Monthly Densified Biomass Fuel Report. If you’ve got comments, praise, appreciation, or tweaks, I urge you to offer them to the EIA by the deadline of April 22.
Policy Watch
On May 1, the Pellet Fuels Institute will execute its 2024 fly-in with a highly targeted Hill Day focusing exclusively on speaking with members of Congress with some jurisdiction over the farm bill (Senate and House ag committee members) about the provisions within the farm bill that impact wood pellet manufacturers and why they must be maintained. The Pellet Fuels Institute’s normal fly-in pattern usually has us in town in October, but in election cycle years DC empties out in the fall. This year, we’ll work to bring policymakers to us for plant visits while they are all out in their districts in the fall and execute our fly-in in May.
As a reminder, our policy positions and ongoing policy asks can be found on the Pellet Fuels Institute website. Pay special attention to the four bullet points found under “Farm Bill” for a look at what we will be advocating for on May Day.
Annual Conference Shaping Up
Just by virtue of being in Charleston, South Carolina, I can say with high confidence that attendees at the 2024 PFI Annual Conference will have a good time. History and good food abound. Golf and fishing? Those too. I’m most excited about the conversations we will be hosting on our conference stage, however. Some notables:
Brent McClendon, National Wood Pallet and Container Association – I’ve been looking forward to getting Brent on stage for a few years now. Wood pallet manufacturing is an enormous part of the hardwood segment in this country. I’ll let Brent share just how big of a deal wood pallet manufacturing is and how big a deal wood pellet manufacturing is for wood pallet manufacturers and their story of sustainability.
Renee Hornsby – National Hardwood Lumber Association – I’m thrilled that we’ll be able to speak with a member of the executive team at the NHLA. Our relationship with hardwood manufacturers is the foundation of our business and, in my opinion, the foundation of our political strength in Washington. The value we add to the broader hardwood segment is arguably our strongest leg to stand on. I look forward to hearing about the hardwood segment and the future they are pondering, preparing, and advocating for.
Harold Arnold, Fram Renewable Fuels – Harold returns to our Producers Panel this year allowing for some commentary on the state of the industrial wood pellet sector. While the instances of crossover between domestic markets, players, and policies and international markets are negligible, our long-term interests in maximizing the value of every gram of harvested wood are aligned. Harold is a biomass industry champion and I’m delighted he will be with us in Charleston.
Keep an eye on the Pellet Wire for more updates about the conference, our supporters, and the professionals who will be joining me on stage.
