From the Director's Desk:
July EIA Data Still in the ‘Meh’ Category, Northern Exposure: Notes from a Chairman’s Tour – Early Gleanings from the PFI HDD Index
July EIA Data Still in the ‘Meh’ Category
Last Wednesday the EIA released their July 2022 data in the Monthly Densified Biomass Fuel Report. The report found July was a lackluster sales month with 129,269 tons sold (July average is 152,270 tons). A closer look at the regional data shows that the South was well off its average while the East and West hewed much closer to their averages. Through July the East is trending ahead of last year in a YTD fashion. Through July the East has seen 528,107 tons compared to the first seven months of 2021 (493,430). Conversely, the West is lagging last years numbers through July (178,217 in 2022 vs. 231,006 last year).
Production across the country was up about 7% from the six-year average and settled in at 143,221. That July average is dragged down by an ultra-low 2016 number (66,862 tons) and this month’s total is the lightest July production number since 2018. Producers in the East did exceed the monthly average and last year’s production with a 96,588 tons a month. After starting the year with a Q1 production total that mirrored Q1 of 2021 (253k tons this year vs. 252k tons in 2021), production for the last four months has exceeded last year’s April – July by about 22,000 tons or an increase of about 6%.
The summertime inventory high water mark (unless August throws us a curveball) just missed 320,000 tons, up about 5% from last year’s July high water mark of 304,185 tons. To find a larger summertime inventory position higher you’ll have to go all the way back to the “Great Pellet Sell Off of 2017-18 when the industry saw pellet inventory drop from 550,000 tons in July of 2017 to just 94,000 tons in December of the next year. This will be an interesting number to watch as we accrue the late summer/early fall data over the course of the next couple of months. Last year the inventory position fell just 130,000 tons before stabilizing and climbing again during an early and warm spring. I doubt very much that we’ll end up anywhere near that number and I’d suggest we’ll likely see a large bite appear in either the August or September data inventory numbers. It was in about August when stories of pellet volumes heading overseas started to accumulate. Last year August saw sales took a bite of 35,000 out of inventory. I’ll bet this August that number looks more like 70,000 tons. Someone, write that one down.
Northern Exposure: Notes from a Chairman’s Tour
Last week the PFI was on the road in upstate New York and a good portion of Vermont. PFI Board Chair Ben Rose (Michigan Wood Fuels) and I flew into Burlington and headed northwest stopping in Malone, New York leaving a short trip into Massena for the morning drive. We drove most of the way in the dark, so the morning offered the first glimpse of the surroundings. My first impression was a simple reaction to how many Canadian geese were in the area. The area around Malone felt a lot like the boggy open areas in northern Minnesota.
We made the short trip into Massena and were welcomed into Curran Renewables by Kelli and Pat Curran, the father/daughter team responsible for the plant’s day to day operations. We caught up with the team and talked about the vagaries of the global pellet supply chain, the challenges of finding help, parts, consumable materials, etc. I always enjoy fading to the back of the conversation when two pellet producers start comparing notes.
The operation at Curran is impressive. Pat has spent his life in the woods and has built a vertically integrated company that sources, harvests and directs fiber and logs to all manner of markets in the area including paper, pellets, sawmills and pallet manufacturing. Pat’s experience in and passion for forestry and forest products manufacturing are palpable. On multiple occasions I found myself thinking that if anyone was concerned about forest management in this country, they would do well to spend a day riding shotgun with Pat. Pat walks into the woods and sees things that the average Joe or Jane just, doesn’t. He sees the impact of good and bad management firsthand.
After spending the better part of last Tuesday with the Curran team, Ben and I headed back into Vermont staying the night in Middlebury, a quintessential northeastern college town if ever there was one. On our trip there we noted pellet inventories at hearth retailers along the way. Not surprisingly, we noted strong representation by Canadian brands.
On Wednesday morning we darkened the door at Vermont Wood Pellet and had a great time connecting with ANOTHER lifelong forest products professional in Chris Brooks. Chris’s facility produces a softwood pellet from the area’s red pine inventories and the pride in his pellet quality is immediately evident.
Finally, on our way back to Burlington to fly out late Wednesday afternoon we stopped at the Stove Depot in North Clarendon and caught up with owner Chad Merrill. Chad was gracious and welcoming and provided a ground level view of the pellet market in the area. Business, he reported, was brisk.
Watch future editions of the Pellet Wire for more photos from Curran Renewables, Vermont Wood Pellet Company and the Stove Depot. My sincere appreciation to Kelli, Pat, Chris and Chad for taking some time out of their day to offer a glimpse into the wood pellet market in that wonderful corner of our country.
Early Gleanings from the PFI HDD Index
Earlier this week we updated the PFI Heating Degree Day Index informed by the weekly update from the Climate Prediction Center. This early in the season the limited accumulated data (Lebanon, NH has only 94 HDDs TOTAL in the data so far) makes it harder to discern much meaning as the data could (and will) swing wildly with the first cold snap. Still, I think its fair to draw attention to two items that I think the data, limited though it is, does support.
First, in an era of slow-to-start heating seasons, the Pacific Northwest is lagging even last year’s slow start. Spokane has accumulated just 177 HDDs so far this heating season. Watch for those numbers to come back towards the mean next week as the 10-day forecast includes 5 days of cool, wet temperatures.
The same is NOT true in the Northeast and Upper Midwest. When compared to last year, most of those regions are well ahead of last year’s pace. Grand Rapids, Michigan is currently within single digits percentage wise of the norm, a first for the PFI Heating Degree Day Index. The 10-day forecast for Lebanon includes some precipitation, but set against the backdrop of warmer temps. By the time this Pellet Wire lands on your desk, Lebanon likely woke up with its first frost of the week.
—Tim Portz Executive Director
