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In this Week's Pellet Wire:
From the Director's Desk:
Tax Credit Information Page Online
By now, a consumer has purchased a wood pellet appliance that will qualify for a 26% investment tax credit on their 2021 taxes. Certainly, retailers have been informing their customers about the tax credit and the PFI feels strongly that it must be a resource for those consumers interested in taking advantage of this incentive.
Our marketing and promotions committee identified the development of a comprehensive webpage as a logical place to start. I’d like to publicly thank the Hearth, Patio and Barbecue Association for their help in pulling together the Frequently Asked Questions document that we borrowed from liberally. In talking with the team over at HPBA, we agreed it was important that our provided information should be closely aligned.
Now that we’ve established a digital footprint with answers to the pertinent questions, we’ll turn our attention to providing retailers with some way of directing consumers to our resource, likely a simple one-pager that can be easily distributed and reproduced at retailing locations.
Investing in New Capacity
While I think I may struggle to gather the requisite data to substantiate this claim, it feels like 2021 will find more new wood pellet capacity aimed at domestic heating and BBQ markets added to the production fleet than we've seen in over a decade. In both private conversations and public announcements, a trend towards increased production capacity is clear. PFI member American Wood Fibers got things started last year in November with the purchase of Nature’s Earth facility in Laurinburg, North Carolina. In the release where we announced Frank Pellets had joined the PFI we also noted that they’ll be bringing another mill online later this summer. Most recently, PFI member Dansons announced a 110,000 ton plant in Hope, Arkansas manufacturing BBQ pellets. Sprinkle into those a handful of expansions and deals not currently ready to be publicized and I think we’re walking up on 200,000 tons of new capacity being added to the domestic fleet this year. I’ll also add that if the over/under for new production planned and added in 2021 is set at 200,000 tons, I think I’d bet the over. Congratulations to AWF, Frank Pellets, and Dansons. We’re proud to have you as members and cheer your continued growth in this great industry.
November Sales Sag Slightly
This week the Energy Information Administration published the November 2020 wood pellet data in its Monthly Densified Biomass Fuel Report, and a cursory examination shows both production and sales figures fell short of the 2019 numbers. Sales were more of an outlier than production when compared to the historical trends. November 2020 sales failed to eclipse 200,000 tons (190,742), the first time that has happened in the report’s history. Production was slightly off last year, but still the second-highest November total since at least 2016 (172,601). I’ll attribute the downturn in sales to a relatively mild month in the Northeast coupled with summertime buying. Remember that through the summer (May-August) wood pellet sales were up over 100,000 tons when compared to 2019. It is certainly plausible to imagine those consumers who bought early found themselves still with an adequate supply and passed on an additional purchase in November. While disappointing, the softer sales certainly buoyed inventory levels. Last year inventories saw a drawdown of over 30,000 tons in November and this year we experienced about half of that, easing concerns about constrained supply.
—Tim Portz
Executive Director
Photo of the Week
Tax Credit Page Up and Running: We’re pleased to report that an informational page on the tax credit available for qualifying wood and pellet appliances has been completed and published. We’ll work to both keep it current and build retailer awareness of it.
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Industry News
Dansons set to open pellet mill in Hope, Arkansas
Dansons USA is proud to announce it will open the country's largest barbecue wood pellet mill and distribution center in Hope, Arkansas. The facility, which is approximately 335,000 square feet and sits on 143 acres, will initially start with three pelleters and a 100,000-ton capacity, but has the infrastructure for eventual expansion to 300,000 tons and nine pelleters.
Read Full Article
USDA: US exports 7.26 million metric tons of wood pellets in 2020
The U.S. exported nearly 7.26 million metric tons of wood pellets in 2020, up 5 percent from the 6.92 million metric tons exported in 2019, according to data released by the USDA Foreign Agricultural Service on Feb. 5.
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Drax signs agreement to acquire Pinnacle Renewable Energy
Drax Group plc announced on Feb. 8 it has signed an agreement to acquire Canada-based pellet producer Pinnacle Renewable Energy Inc. The acquisition will more than double Drax’s pellet production capacity.
Read Full Article
EIA: Densified biomass fuel sales reach 800,000 tons in October
The U.S. Energy Information Administration recently released data showing U.S. manufacturers produced approximately 850,000 tons of densified biomass fuel in October, with sales reaching 800,000 tons.
Read Full Article
Job Opportunities Likely with New BBQ Wood Pellet Mill
With so many Americans out of jobs because of the COVID-19 pandemic, we get word that there are new job opportunities coming to Southwest Arkansas. A major manufacturing company Dansons USA has announced they will be opening a BBQ Wood Pellet Mill in Hope, Arkansas.
Read Full Article
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