From the Director's Desk:
Changes to the PFI Index
We launched the PFI Index late last year in an effort to create a tool that could help producers and other interested parties understand where things stood from a heating degree day perspective at a glance. I asked for feedback and I’m sure glad I did. The table below illustrates a couple of key adjustments we’ll be making to the index going forward.
First, more than one producer pointed out that sharing this year’s relationship to a long-term average doesn’t have a lot of utility. Producers and retailers of wood pellets compare this year’s sales figures to last year’s. At the most producers might keep a five-year running average. I’ve left both columns in the example below to highlight the significant difference between the two comparisons. Sticking with the long-term average would likely have resulted in an index that showed a deficit against long-term averages for the entire heating season. That doesn’t feel incredibly informative. Moving to a year-to-year comparison yielded the Index’s first indication of more HDDs since its launch.
While winter in the Pacific Northwest and the mountainous West may not be rewriting the record books, it’s at least as good as last year and trending towards slightly better. If the format on the website allows it, we’ll run both numbers. If not, we’ll move to a comparison to the prior year.
October EIA Data
Earlier this week the EIA published the October data for its Monthly Densified Biomass Fuel Report. The data suggests that the lackluster beginning of the heating season continued into October. Inventory levels in every region were at three, if not four, year highs, and producers modulated production as a result.
Production in the East was well off 2020 numbers (105,894 in 2021 vs. 118,178 in 2020). No region reported production within 10% of last year’s output. Overall production sagged to 164,683, the lowest pellet output in October since 2017. U.S. sales totals were a disappointing 223,197 tons, the lowest sales total in October in the report’s history.
Anyone following the PFI Index could have anticipated these lackluster numbers as the Heating Degree Days (HDD) just haven’t been there. Until just these last couple of weeks, no location within the pellet-burning regions of the United States has come anywhere close to last year’s HDD totals. This week’s PFI Index suggests that in the Pacific Northwest and mountainous west HDDs have finally caught up to last year’s numbers. I’ll be interested to see if the similarity in HDDs in the region yields similar sales numbers to last year’s totals. I’ll put that on the “watch list.”
