From the Director’s Desk: PFI HDD Index Launches for 2023-2024 Heating Season, Digesting the July Monthly Densified Biomass Fuel Report, With Federal Shutdown on Ice, PFI Fly-in a Go
PFI HDD Index Launches for 2023-24 Heating Season
October is here and with it comes a reboot of the PFI’s Heating Degree Day (HDD) Index, our attempt to provide a heads-up, easily digestible summary of the progress of the heating season in key wood pellet markets across the country. The PFI HDD Index is now in its third year, and we will continue to refine it and make it as useful a tool as possible. Wood pellet consumption correlates tightly with HDDs and the index is another important tool in understanding the trajectory of the current year in pellet usage and sales.
Early in the heating season, expect some big swings week-to-week as our index communities have just started accumulating HDDs. For instance, Spokane is 175% ahead of last year’s pace, but through September 30 had only accumulated 167 HDDs. Last year, Spokane generated over 6,000 heating degree days so the data isn’t very informative right now. As the season progresses, the accumulated data will start to come back towards the mean and be a more telling indicator of the winter we are having.
Director’s addendum: The Twin Cities Marathon was canceled this weekend because of “black flag” conditions owing to unseasonably high temperatures. It was an auspicious start to the heating season in the upper Midwest and I suspect October sales, when they become available, will show that consumers showed little urgency in laying in heating fuel supplies of any kind.
Digesting the July Monthly Densified Biomass Fuel Report
On Monday, the July data for the Monthly Densified Biomass Report was published. Generally speaking, the report shows producers in the East cracked the production throttle slightly, while their counterparts in the West worked to rebuild inventories before the fall sales push really gets going.
Total wood pellet production across the country came in at 141,888 tons, about the same as last year’s 143,221 tons. The five-year average for the month before posting this most recent number was 153,451 tons. This total would have been far closer to the rolling average had the East not throttled back to the extent they did. Production totaled just 87,074 tons, the lowest July production total since 2018. Producers in the East were unmoved to higher production as sales fizzled in July (73,623 tons) and inventory in the region fell right being on pace with last year’s inventory total as the month began (148,483 tons). Despite ratcheted-down production, inventory in the East still climbed to 163,647 tons, a couple of thousand tons more than last year’s July inventory total (160,650 tons). The East has settled into 160,000 as a target high water mark for the season with the region topping out there each of the last three years. The East has never grown its inventory position in August, so I’m expecting this number to hold as the high water mark this year as well.
Frequent readers of the Pellet Wire will know that the data point everyone was waiting to see was the inventory position in the West. Last season, sales surged in late spring driving inventories as low as 12,682 tons, the lowest March figure in the report’s history. The low fuel light was on out West. Producers have taken note and inventories have climbed 24,000 tons since the end of May and settled in at 55,247 tons as July closed. Now, getting back to last year’s August inventory position of 68,538 tons feels within reach. The West has grown inventory positions every year since 2016 except for last year. Seeing August inventories close above 60,000 would go a long way in giving everyone involved in pellet making and selling out West a lot more confidence as we head into the heart of the heating season.
With Federal Shutdown on Ice, PFI Fly-in a Go
There have been some anxious moments in the last two weeks for the PFI board, its executive director, and those members planning on a day of wood pellet advocacy later this month. A looming federal shutdown introduced a lot of questions, the answers to which were elusive and not a lot of fun to ponder. Would travel to DC be impacted? Would policymakers maintain their scheduled meetings? All of these concerns were ameliorated when a seven-week reprieve was signed into law over the midnight hours this past weekend. I certainly breathed a sigh of relief and can resume preparations for a productive time in DC as planned.
