From the Director's Desk: A Look at the September Data, One Heck of a Storm
A Look at the September Data
Last week the EIA updated their Monthly Densified Biomass Fuel Report (link in Industry News section) with the September wood pellet data. The report reveals that September was strong across all the measurables, but not record breaking for the month in any category, save one that must be computed from the offered data.
Here is a quick look at the U.S. total numbers (September average displayed in parenthesis):
Production: 157,917 tons (147,583 tons)
Sales: 212.710 tons (210,498 tons)
Average Wholesale Price: $208.31 /ton
U.S. Total Inventory 185,503 tons
September Draw Down* 70,834 tons (40,556 tons)
*The September Draw Down is the difference between the August Inventory position and the September position.
While all of these numbers are over the September averages, the data point that jumps off the page is the September Draw Down. The annual pellet production and sales cycle has pellet producers building inventory in spring and summer and then drawing that inventory town in the fall and winter when sales exceed production. This September producers moved over 70,000 tons of inventory, more than a quarter of the inventory that was on hand at the close of August (256,337 tons). Each of the 3 regions (East, South, West) showed inventory depletions.
The East saw the largest inventory depletion with one third of the August inventory position (which was 138,760 tons) moving in September (down to 92,777 tons). Sales were brisk in the East at 133,158 tons against a September average of 121,387 tons. With September production in the region at 110,024 tons and an inventory depletion of roughly 46,000 tons producers in the region were motivated to run their operations at strong output levels. Looking at production levels in the East in August and September producers made 221,522 tons of pellets, the largest two-month output since August and September of 2019 when producers made 238,00 tons. In what is becoming a theme, the data is revealing that while 2022 is yielding better numbers than 2021 and 2020, it still isn’t setting records.
As I’ve mentioned before, I keep sifting the data looking for a clear indication of the impact of the overseas demand for premium heating pellets in the data. The report doesn’t ask specifically about heating volumes headed for export markets and changing the report on the fly just isn’t practical nor the purview of the EIA.
Still, I feel strongly that a portion of the record inventory depletion in the East is as good of an indicator of heating pellet exports as we are likely to find. I’ll wrap by pointing to Table 8 in the report. This table rolls all export volumes together, without any regional breakdown. In that way, it is difficult to parse out specifics but the available data tells a story all the same. In September pellet exports exceeded 900,000 tons for the second time this year and the average export price was $244.19/ton, an eye-popping data point. In fact, the same table reports that export prices have exceeded domestic prices for the last two months. I haven’t done an exhaustive audit of the available data, but I’d be willing to bet the first round of cocktails at the hotel bar in Austin that August and September of 2022 stand alone as months that saw export wholesale prices exceed domestic wholesale prices.
One Heck of a Storm
The numbers are still being finalized but the Christmas blizzard of 2022 crippled most of the country and regrettably cost many Americans their lives. Temperatures plunged, the winds blew unabated for days and snow piled up. The videos from Buffalo, New York are hard to believe.
I found myself timing a return trip to Minnesota from Iowa and Interstate 35 was closed officially mid-morning on the 23rd. Anyone familiar with the area around the Minnesota/Iowa border knows that a blizzard will lock down that stretch of I-35 in a hurry. North of Mason City, Iowa all the way to Owatonna a northwest wind meets no obstruction for over 1,000 miles. The drifts I observed on the southbound lanes of 35 were 6-8 feet deep in spots.
The Heating Degree Days piled up on our Index (included as this edition of Pellet Wire’s Photo of the Week) shows two locations have surpassed long term norms for accumulated HDD’s. Last year, all locations on the Index stayed at least 10% behind long term averages. When next week’s data comes out on Monday, I suspect there will be at least one more location beyond the long-term average. It may well be Buffalo. Despite the frigid temps here in the Upper Midwest the representative locations for that region on the Index (Grand Rapids, MI and Wausau, Wisconsin) still trail long term averages by over 10% and as I write this, temperatures in the Twin Cities are above freezing.
—Tim Portz Executive Director
