From the Director's Desk:

Notes from the International Biomass Conference & Expo

We intentionally place our Spring Board meeting at the International Biomass Conference & Expo because of the show’s long history of extending complimentary registrations to wood pellet manufacturers. The conference offers a good opportunity for the varied pieces of the larger bioenergy pie to connect and hear about the state of play in the different markets we all serve. If a theme emerged at the conference, it would have to be the disruptive nature to energy markets of Russian aggression in Ukraine. Interestingly as the conference unfolded, crude prices sagged throughout the week and are falling as I type this. Either way, the volatility and immediate spike in gasoline, #2 heating oil, and diesel are on producers’ minds. This kind of turbulence creates opportunity by magnifying the cost competitiveness of heating with wood pellets but simultaneously creates challenges with increased costs in inbound and outbound freight.  

My thanks to our board for joining me in Jacksonville for a productive board meeting

2021 Wood Pellet Data Now Complete – 2 million tons sold, by a nose

On Wednesday, the EIA published the December 2021 wood pellet data, bringing to completion the production, sales, inventory feedstock data from 2021. PFI member Bruce Lisle stood over my shoulder as I refreshed the data and dropped the December sales figure into my table. The figure totaled $144,315, the lowest sales total in the month since reporting began. The sector sold more than 2 million tons of wood pellets in 2021, but as Bruce noted by “just 40 truckloads”.

With a soft December, 2021 finishes up looking a lot like 2018. With year-end sales reaching just above 2 million tons (2,000,837 tons) and production finishing off at 1,789,550 the year just never seemed to have that month where demand signals were such that producers really throttled up their production. In just one month 2021 production numbers top 2020 (April 137,484 vs. 122,657). Sales months were just slightly better with 2021 besting 2020 numbers in two months August (224,527 tons) and November (225,651).

December finished with 185,800 tons of wood pellets in inventory, the most in December since the pellet glut of 2016-17. Inventories are significantly up in all three reporting categories when compared to Decembers of year’s past. The East finished December with 96,443 tons on the ground. More tellingly, inventories grew in December in the East (by nearly 23,000 tons) and that hasn’t happened in the report’s history. Ideally, inventory building starts in March, or better yet April.

The PFI Heating Degree Day Index doesn’t offer a lot of reason to believe that the back half of the heating season will offer any significant departure from the trend showing up in the EIA data. This heating season just never really delivered that cold snap in any region that really drives pellet consumption in the way pellet producers would like