From the Director’s Desk: Happy New Year, October EIA Data Recap
Happy New Year
A special thanks to everyone who asked Santa to bring some cold air to the pellet-burning regions of this country. The PFI HDD Index on December 23 showed all but two locales lagging behind last year’s pace (and last year was plenty mild). Just two weeks later, more than half of the locales on the index show more HDDs than last year. What’s more, the 8-14 day temperature trends published by the Climate Prediction Center indicate colder-than-normal temperatures are expected to persist well into January. Paired with the Christmas cold snap we just experienced, augers are turning, and pellet-burning consumers are taking note of their rate of pellet depletion. It “feels like” pellet-burning weather right now, and I suspect December and January pellet sales will more closely resemble long-term averages.
The Pellet Fuels Institute is eyeing a big year in Washington with a new administration and a new Congress being sworn in this month. Our legislative and regulatory affairs committee is already meeting to strategize how to make real gains in our objectives in the context of a Trump administration and Republican Congress. There are 12 new Senators and 66 new Representatives, many of them from pellet-producing states and districts. The Pellet Fuels Institute and its members will work hard to introduce our industry to this freshman class and outline how federal policy impacts our industry and our businesses.
We look forward to getting started early with a fly-in taking shape for early April. Please watch the Pellet Wire for more details as they become finalized.
October EIA Data Recap
The numbers (5-year average):
October 2024
East
Sales – 122,253 (132,651)
Production – 92,785 (121,279)
Inventory – 136,394 (95,659)
West
Sales – 43,890 (51,333)
Production – 39,139 (41,230)
Inventory – 88,743 (55,451)
South
Sales – 32,310 (37,354)
Production – 16,135 (25,253)
Inventory – 41,322 (36,157)
All U.S.
Sales – 198,453 (230,172)
Production – 148,059 (187,762)
Inventory – 266,459 (187,267)
The challenge of rearward-looking data sets, particularly heating fuels, is that they reflect the weather that was, not the weather that is. Last week, the EIA released the October data from its Monthly Densified Biomass Fuel Report, and it serves as a reminder that, in that month, winter hadn’t really gotten going. The November 4 edition of the Pellet Fuels Institute Heating Degree Day Index found only two locales ahead of the prior year’s pace, with most locations trailing 2023 numbers by double-digit percentage points. As a result, the pattern we have been observing of modulated production to reduce standing inventory played out in the month. While each of the three reporting regions posted their highest sales figures of the year, each of them fell short of their 5-year averages. The East performed the best against the 5-year average, with sales of 122,253 tons, just over 92% of the average. This aligns with what the HDD Index was telling us about the weather across the country, as only Portland, Maine, and Concord, New Hampshire, had accumulated more HDDs than last year. If there were more HDDs, why didn’t 2024 sales eclipse 2023 (122,253 tons vs. 128,647 tons)? I suspect that, like the industry, many pellet consumers may be managing their own standing inventory levels, delaying purchases until they’ve burned up what they carried into the season.
Of all the data points included in this batch, the inventory levels are the most illuminating. Producers closed the month with 266,459 tons, well above the 5-year average but 130,000 tons less than the bloated 393,404 tons producers were carrying around Memorial Day. I suspect that, until producers bring their inventory levels closer to the 5-year average, we will see a reluctance to really get into the production throttle. The next data set will be telling, as an average number has producers moving around 75,000 tons of inventoried pellets in addition to what they produce. Reviewing the HDD Index from December 2, I think it is unlikely that producers moved much of their inventory, as the report indicates relatively mild weather for that month.
The data set that I believe will show the best numbers in probably two heating seasons will be the December data released in early March. This week’s HDD Index shows that December finished with 7 of the 12 cities on the index ahead of last year’s pace of accumulated HDDs. Only the West and Northern Rockies were lagging behind last year’s pace. The 5-year sales average for December is 168,964 tons, and I would be very surprised if sales this year didn’t top that.
—Tim Portz
Executive Director
