Catch up with PFI in this issue of the Pellet Wire!

January 10, 2020 

In this Week's Pellet Wire:

Executive Director's Notes: Full Throttle 

Lost amid the holiday shuffle was the release of the September numbers in the U.S. EIA’s Monthly Densified Biomass Fuel Report. Wood pellet producers and industry observers have come to rely on the picture painted by this report to better understand production, demand and standing inventory. September’s report makes it plain that producers of wood pellets for residential heating are running their facilities as hard as they’ve run them since reporting began in 2016. September saw manufacturers in the East post another 100,000-plus ton month, clearing that hurdle for the third month in a row. To put that into further perspective, consider that in 2018, the East logged just one 100,000-ton month (October). Production in the East has been strong all year, and the monthly average is hovering just under 100,000 tons. Comparatively, the East averaged just 65,000 tons per month as recently as 2017. At an average of $175 per ton, we’re talking about over $6 million in monthly revenues across the region that wasn’t there just two years ago. This is welcome news to the financial professionals in our industry. While the numbers aren’t as jarring in the West or South (the two other regions producers fall into in the report), they all point to record production across the country.

The only visible fly in the ointment right now is the uncomfortably low level of inventory the industry is experiencing. For the most part, producers haven’t been able to stockpile any finished product, and the ultra-low inventory levels we began the year with (just 55,000 tons in the entire country) haven’t improved greatly. That said, the “right” number is up for debate, but in conversations with many producers, it’s clear that large, multilocation wood pellet retailers would like to see an improved inventory position. So far, consumers have been insulated from any isolated shortages, and ultimately, it is their experience with which we need to concern ourselves. While it is counterintuitive for a participant in the home heating sector to welcome news of warm weather, the predicted record highs for the area (58 degrees forecast for Albany, New York, on Saturday) may well be just the breather that producers and retailers alike need to make their inventories last throughout the entire heating season. I shared this news yesterday with a Pacific Northwest producer who directed me to a forecast that included cold temperatures and plenty of snow.

Looking ahead to the October data (scheduled for a release next Thursday), I suspect we’ll see another 100,000-plus production month in the East, and another hit to the overall inventory position as of October undoubtedly saw retailers across the country taking everything producers could make while also drawing down on any standing inventory.

While the heating season is far from over, I’m happy to see the industry making and selling record numbers of pellets. These additional dollars will go a long way in setting producers up to invest in an early spring inventory buildup that, come March and April, could help mitigate some of the anxiousness about pellet availability we’re facing this heating season next year.

Tim Portz 
Executive Director

Photo of the Week: Making the Retailer Rounds

Hearth department team members pose for a photo at Coastal Farm and Ranch.

Photo of the health department team members posing for a photo at the Coastal Farm and Ranch

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Industry News

EIA: Densified biomass fuel sales reach 870,000 tons in September (Biomass Magazine):

The 84 manufacturers surveyed for September had a total combined production capacity of 11.84 million tons per year and collectively had the equivalent of 2,301 full-time employees...

Read Full Article

Congress and president support woody biomass in year-end spending and tax deals (Biomass Thermal Energy Council): 

December 20, 2019 – WASHINGTON – In the final week of the 2019 legislative session, Congress passed a $5 million allotment for the new Community Wood Energy and Innovations Program (CWEIP) in the massive $1.4 trillion spending deal...

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Freight train carrying wood pellets derails in BC (Canadian Biomass Magazine):

Canadian National Railway Co. spokesman Jonathan Abecassis told the Vancouver Sun there were no fires or injuries, and none of the pellets went into the nearby Skeena River. Investigators are set to examine the site today...

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Drax appoints new leader (Biomass Magazine):

Drax Biomass Inc. announced Jan. 6 that Matt White will become its new senior vice president and run Drax’s U.S. biomass operations...

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Prospect acquires 10% stake in Pinnacle (Canadian Biomass Magazine):

Prospect Co., Ltd. announced Dec. 27, 2019, that it has acquired an aggregate of 18,000 common shares of Pinnacle Renewable Energy Inc., representing approximately 0.054 percent of the issued and outstanding common shares...

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Shouldering Risk for Forest Restoration (Biomass Magazine): 

In a rural county that’s four times the size of Rhode Island but home to only one stop light, it isn’t often that something incredibly exciting happens...

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Report predicts strong growth in US pellet exports to Japan (Biomass Magazine):

USDA Foreign Agricultural Service’s Global Agricultural Information Network indicates Japan’s market for wood pellets is expanding rapidly. While the policy-driven market opportunity for foreign wood pellet suppliers is exceptional, the report states U.S. suppliers remain on the margin

Read Full Article

Pellet Fuels Institute

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