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

January 24, 2020 

In this Week's Pellet Wire:

Executive Director's Notes: Industry Hot Streak Continues

Early last week, the U.S. EIA published its Monthly Densified Biomass Fuel Report with data through October 2019. Wood pellet producers across the country sold 283,061 tons of pellets for space heating, just missing October 2018’s mark of 287,689 tons. This year’s October sales garnered a higher per-ton average price, however, netting the sector $48.77 million in sales receipts, an all-time high in the report’s history. To date, wood pellet for space heating have generated more than $298.5 million in receipts, compared to $254 million through the same period last year, and $221 million in 2017. Spread evenly among the roughly 55 facilities on the report producing these increased volumes, and you end up with each plant netting $1.7 million more through October than they did just two years ago. For a small business, this new revenue dollars are game-changers. Two months of data remain before we have a complete picture of how 2019 unfolded. Still, it isn’t a reach to think that we’ll continue the trend of matching or exceeding last year’s monthly totals. By that logic, we can expect the industry to ship 435,000 tons over the course of the next two months, selling around an average price of $172/ton. That would see 2019 close with 2.23 million tons of product sold, generating nearly $373.5 million in sales, an increase of nearly 15% over 2018.

I would like to publicly acknowledge the U.S. EIA for establishing and maintaining a report that measures the ups and downs of our industry and has become vitally important for our sector to understand. Last year, our annual conference opened with a data-rich presentation by Connor Murphy, the report’s current curator, and every set of eyes in the room was glued to his deck. Immediately following his presentation, I put Connor on notice that we’d like him back again. Connor, if you’re reading this, Milwaukee’s got some great food.

October’s report confirms everyone’s suspicion that inventoried product continues to run at historic lows. The month closed with the East having just 58,000 tons of inventory on the ground, compared to 102,000 tons in October 2018. Last week, large sections of the Northeast experienced a significant warm-up that certainly slowed retail pellet sales. It’s hard to imagine folks were in a pellet-buying mood on Jan. 11 near Portland, Maine, when temperatures rose to 63 degrees. These kinds of warm-ups do change consumer behavior, and retailers respond to that. While it is anecdotal, I heard more than one member in the region tell me that sales were slowing down and the pipeline was filling up.

I’d like to conclude by highlighting a portion of the report that I’m not sure gets as much attention as it should. Table 3 on the report is titled “Feedstocks and the average cost per ton for the manufacture of densified biomass products.” If there is a data set out there that underscores the important economic contribution of wood fiber, I don’t know about it. The report tracks where producers of wood pellets get their fiber and how much they pay for it. There are three categories that track residuals (sawmill residuals, wood product manufacturing residuals and other residuals). In October, across these three categories, producers spent $42 million for more than 1.3 million tons of fiber. This is the smoking gun in our sector—helping extract maximum value from each log that the broader wood products sector uses. In the absence of wood product manufacturing, where do upstream producers go with all that fiber?

Tim Portz 
Executive Director

Photo of the Week: Attention to Quality

Fiber By-Products Corp.'s packaging and PFI-certified lab technician works his magic to ensure pellet fuel is meeting – and exceeding –PFI Standards Program requirements.

Photo Caption: Fiber By-Products--Corp.’s packaging and PFI-certified lab technician works his magic to ensure pellet fuel is meeting—and exceeding—PFI Standards Program requirements.

Send Us Photos!  Help us build a collection of photos of our members, their pellets mills, and product! Send images to Tim Portz at [email protected].

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Industry News

USDA: US pellet exports reach nearly 778,000 tons in November (Biomass Magazine):

More than a dozen countries imported U.S. wood pellets in November. The U.K. was the top destination with 565.110.6 tons, followed by Belgium-Luxembourg with 63,782.4 tons, and the Netherlands with 61,834 tons...

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South Korea announces new wood pellet standard (Canadian Biomass Magazine): 

According to Argus, the new standard separates industrial and residential wood pellet standards. Industrial pellets are now categorized as I1, I2 and I3 grade, while residential pellets are categorized as A1, A2 or B grade...

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Rebates increase for Cowichan residents replacing old woodstoves:

Up to $2,000 per household is available, starting this week, to help Cowichan residents make the switch from wood-burning home appliances to heat pumps...

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Pinnacle announces new ship charter for Trans-Pacific transport of wood pellets (Lesprom Network):

Pinnacle will be chartering this vessel from NYK Bulk & Projects Carriers, a leading Japanese ocean carrier, on a long term charter to carry the company's sustainable industrial wood pellets from Canada to Japan...

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Port of Stockton reports first wood pellet shipment (Biomass Magazine):

The Port of Stockton announced that the first wood pellet shipment from the port was successfully loaded to the M/V Global Serenity in December. National Carbon Technologies shipped the pellets from Michigan and they were loaded by Metro Ports. The shipment was roughly 2,000 M/Ts of torrefied wood pellets destined for Japan as a trial shipment...

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Report: Russia wood pellet production continues to grow (Biomass Magazine) : 

IA report recently filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network predicts that Russia’s wood pellet industry will continue to increase production and exports in response to growing demand from European countries...

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Northern Ambition (Biomass Magazine):

Canada’s wood pellet industry is reaping the benefits of simultaneous growth in both supply and global demand, with nearly 400,000 metric tons (MT) of new production capacity online in 2019 and another 400,000 expected this year...

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Pellet Fuels Institute

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