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

February 21, 2020 

In this Week's Pellet Wire:

Executive Director's Notes: The Magic Number

Two weeks ago, I joined a handful of other biomass energy association directors on stage at the International Biomass Conference & Expo for an annual conversation about the state of our industry. One of the questions I was asked pertained to the current inventory levels across the industry. Remember, the industry exited the 2018-‘19 heating season with a low-fuel light, with just 68,000 tons of product scattered across the country. At the PFI 2019 Annual Conference, the slide illustrating that fact was arguably the most eye-opening of Connor Murphy’s (U.S. EIA) entire presentation. It certainly generated the most post-talk chatter.

So the question was, “How is the industry managing historically low inventory this heating season and working to avoid regional shortages?” No moderator likes to have a question answered with another question, so I offered that historically high levels of production have kept the pipeline full, but the underlying question is still there. Where should we be as an industry regarding inventory levels as we roll into and roll out of the heating season?

Inventory levels are this industry’s Goldilocks predicament. Levels that are too high tie-up producer cash, while industry levels that are too low make retailers nervous that the industry won’t be able to quickly respond to sudden surges in demand. Clouding the picture even further, of course, is the unpredictable nature of weather, the biggest factor in monthly demand.

This year is a sterling example. After the brow-raising numbers shared at our annual conference, industry observers and participants alike wondered about the sector’s ability to keep everyone in pellets. In February, inventories reached a historic low of just 18,000 tons, and producers were able to salt away just 130,000 tons by the end of July when retailers started to draw those volumes down. In October, volumes fell to under 60,000 tons, and I’ll speculate that November’s data (which will be available before you read this, putting me in the unenviable spot of predicting something that will be known once this is read) will show even lower inventory levels. It is in moments like the one we’re in right now that the 90-day lag in the data is really important to remember. The information I’m hearing from members would lead me to believe that while it’s possible November inventory will paint a grim picture, inventory levels are already building, and the December data may very well show that they started building that month. The concern I’m hearing now is not about low inventory levels, but instead about the industry modulating the high RPMs it has been running at to meet early fall demand in time to avoid laying in a glut of inventory. How can this be? The answer can be found in the Heating Degree Day index published by the National Oceanic and Atmospheric Association. The report is a bit of an eye chart, but in a few minutes, its message becomes discernible. Particularly in prime pellet-burning regions of this country, we’ve had a relatively mild heating season. Bangor, Maine, is down 226 heating degree days from the norm. Hartford, Connecticut, is down 485. In fact, scrolling through the report, which lists several hundred American cities, shows that this winter is milder than the norm almost as a rule (with Wyoming being the exception). Four of seven Wyoming cities show more heating degree days than the norm.

So where does this leave the industry? What are the right inventory levels to assure consumer access to an important home heating fuel throughout the heating season while not saddling producers with a bunch of stranded capital in finished products? I don’t know the answer, but I think it’s a question the entire wood pellet supply chain needs to actively think about, and I look forward to digging into this question at this year’s annual conference.

Tim Portz 
Executive Director

Photo of the Week: Showroom Scene

A view of the showroom at PFI member and specialty hearth retailer Martin Sales and Service Inc. in Butler, Pennsylvania. The family-owned business has been serving the Pittsburg area community for longer than 25 years.

Photo Caption: A view of the showroom at PFI member and specialty hearth retailer Martin Sales and Service Inc. in Butler, Pennsylvania. The family-owned business has been serving the Pittsburg area community for longer than 25 years.

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Industry News

How Weber used decades of expertise to improve smart grilling (Endgadget):

There are other companies that have made a name for themselves with novel designs and features. But when you think about charcoal grills, I'll bet the kettle shape Weber pioneered comes to mind... Read Full Article

Biomass leaders provide state of the industry at international event: 

The 13th Annual International Biomass Conference & Expo drew nearly 900 industry stakeholders to Nashville, Tennessee, where, following an awards ceremony, and roundtable discussion with biomass association leaders... Read Full Article

Cuisinart’s pellet grill cooks with wood or charcoal (CNET):

Cuisinart is the latest brand that wants in on the pellet grill game. Just like Weber, the appliance maker now has a new line of wood-burning outdoor cookers built to challenge Traeger for dominance... Read Full Article

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More Industry News

Pinnacle CEO Rob McCurdy to retire in May (Canadian Biomass Magazine):

McCurdy took on the CEO role for the B.C.-based wood pellet producer in August 2012 after holding various international positions in chemical, construction materials and mining industries...

Read Full Article

USDA: US wood pellet exports reach 6.89 million tons in 2019 (Biomass Magazine): 

The USDA Foreign Agricultural Service released data on Feb. 5 reporting that the U.S. exported 541,893.4 metric tons of wood pellets in December, bringing total pellet exports for 2019 to 6.89 million tons...

Read Full Article

Monitor Traeger pellet levels with your phone, control your grill with Amazon Alexa (ZDNET):

After experiencing the joy of wood pellet grilling, it's fun to see a useful accessory and more smart home integration launch from the folks at Traeger Grills...

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B.C. logging costs can’t be increased now, forest industry says (BClocalnews)

With continued steep border tariffs from the U.S. and new trade threats in Asia, B.C.’s Interior forest industry is grappling with new regulations on forest waste recovery that it says it can’t afford...

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WPAC calls for action to end railway blockade impacting wood pellet industry (Canadian Biomass Magazine) 

Since Saturday, Feb. 8, protestors supporting the Wet’suwet’en Nation in their effort to stop the construction of a natural gas pipeline in their traditional territories have blocked the main railway line between Prince Rupert and Prince George, B.C., near New Hazelton, B.C...

Read Full Article


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