From the Director's Desk: A Big One Cometh, November Pellet Data Thoughts, Appalachian Wood Pellets Hosts House Ways and Means Committee
A Big One Cometh
This past weekend I opened my Accuweather app and was confronted with a snowstorm prediction offered not in inches, but in feet. I’m not sure I’ve ever seen that before. As I type this, we are officially in the “calm before the storm” period but by the time you read this, the Twin Cities will be blanketed under as much as two feet of new snow. If the predictions prove accurate, the snowfall will rank in the top 10 snow events of all time in the state.
Apart from the inconvenience of dealing with such a massive influx of snow, I am inclined to cheer this prolongment of winter as so far accumulated Heating Degree Days have lagged long-term trends and even lagged last year’s mild winter. A look at the 10-day forecasts for Massena, New York; Portland, Maine and Burlington, Vermont all show that after this storm moves through depositing some new snow, the weather will return to the mild pattern that has dominated since January. All of those locales show temps in the mid-30s with a few low 40s showing up in at least one location.
November Pellet Data Thoughts
Last week the Energy Information Administration updated its Monthly Densified Biomass Fuel Report with data from November of last year. My initial thoughts can be found below.
Production:
At 157,068 tons produced nationally, the November data suggests wood pellet producers were already beginning to doubt that the demand from overseas was going to be the bonanza the early hype suggested. Producers cracked the throttle from the prior month and just barely eclipsed a dismal 2021 total of 149,511. If there was going to be one region that deserves a call out, I would offer the East with a production total of 106,982 tons, a three-year high for the region in November.
This brings the 2022 production total to 1,599,922 tons against a total of 1,644,189 tons through November last year. To put that into context, both 2019 and 2020 saw a production of over 1.8 million tons through November.
Sales:
I’ll stop short of calling November sales a return to the "salad days" of the late 2000-teens, but the numbers offered a nice bounce from a soft November in 2020 and 2021. At 214,929, the month made an honest effort at the monthly average of 220k. The average wholesale price retreated about $3 to $209.78. The standout region in the sales category was absolutely the West, posting 61,685 tons, the highest monthly sales total for the region since October 2019 (81,186 tons). November makes it four months in a row where sales numbers (U.S. total) eclipsed the totals from the year prior. The result is with one month of data left in the well it seems clear that 2022 sales figures will exceed those of last year. To date, sales are 1,626,928 tons compared to last year’s through-November total of 1,576,339 tons. A “better than last year” is all but a certainty now with last year’s sales total within 94,000 tons. At the same time, it’s also a certainty that 2022 finished below 2 million tons sold; we are just waiting for next month’s data drop to make it official.
Inventory
Total U.S. inventory fell to 112,174 tons, a significant departure from last November's 163,356 tons. The industry has been lower (twice) in November in both 2020 and 2019. If December was a strong selling month and there were some production hiccups I think it’s possible next month’s inventory numbers will ebb even lower. A look back at the PFI index from the end of the year shows strong HDDs against the year prior in December, so I’m expecting the numbers WILL fall and maybe even approach the low fuel numbers of 19-20 that saw inventory bottom out at 50,000 tons at the end of January.
Appalachian Wood Pellets Hosts House Ways and Means Committee
On February 6, more than 20 members of the House Ways and Means Committee held a hearing at Allegheny Wood Products in Petersburg, West Virginia. Allegheny Wood Products is a sister company of PFI-member Appalachian Wood Pellets and the wood residuals produced there are later converted into wood pellets. The committee, now operating within a Republican majority in the House of Representatives, held the hearing at Allegheny Wood Products as part of a larger effort to solicit the voices of the people participating in the American economy. Tom Plaugher, of Appalachian Wood Pellets, Inc., and his team were on hand to answer questions about their lumber and pellet business, building critical understanding with policymakers about wood pellets, how they are made and the impact policy can and does have on their markets.
—Tim Portz Executive Director
