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In this Week's Pellet Wire:
Executive Director's Notes: Fiber Continues to Flow
In our last Pellet Wire, I made some predictions about what we might see once the March 2020 numbers were released by the U.S. Energy Information Administration. Publishing predictions in print opens up the potential for missing the mark wildly, for all to see.
So how did I do?
First, I offered this assessment of March production totals:
“March 2020 production will still eclipse the production from the same month last year. Even if the industry slowed 10% off the January-February pace (176,000 tons/month), we’re still talking about 160,000 tons of pellets produced.”
This one was right on the mark. The report noted that 158,633 tons of wood pellets were produced compared to 141,446 tons in March of 2019.
Next, I suggested that the inventory position around the country would eclipse 100,000 tons:
“…our inventory position at the end of February was already beyond what we had on the ground a month later last year, and I expect to see total inventory levels above 100,000 tons.”
This month’s report shows inventory levels at 136,575 tons well beyond last March’s number of 68,138 tons. In fact, our inventory position as March closed out is beyond even what we had on the ground at the close of April 2019 (121,896 tons).
For now, the data released by the EIA supports what I’ve learned via anecdotal conversations I’ve had with our producer members for months; robust wood pellet manufacturing has endured despite COVID-19.
After perusing the data for the highlights (production, inventory, sales) I started looking closely at Table 3 in the monthly data. Table 3 tracks feedstock purchases by wood pellet manufacturers. If COVID-19 has or ever will significantly impact fiber availability for wood pellet producers, the data in this table will reflect that. So far, the data reveals nothing resembling a shortage or even tightening of the fiber inventories.
Here’s a closer look:
In 2019 the monthly average for residuals purchased (sawmill, wood product manufacturing and other) was 1,180,315 tons per month. March of 2020 was just off that number at 1,153,739, but still beyond the March 2019 residuals total of 1,110,471 tons. To find any significant discrepancies, you’ve got to dig into specific residual types. For ‘sawmill residuals’ March 2020 (265,061) was off the 2019 monthly sawmill residuals average (301,320) by about 14%. Similarly, other residuals in March 2020 (449,979) was off the 2019 other residuals monthly average (502,550) by about 10%. Still, the total residuals for March were buoyed by a strong month in wood products manufacturing residuals which came in at 16% over the 2019 monthly average (438,699 tons vs. an average of 376,444 tons). So, while the availability may have flagged in specific fiber types, producers were able to purchase 98% of their 2019 monthly average in total residuals. If COVID-19 has caused significant fiber challenges for producers in 2020, it didn’t show up in the March data.
So now we look toward the release of the April numbers (July 15) and what we might learn about production, inventory and fiber availability from that data.
Finally, I’m thrilled to be welcoming Connor Murphy of the U.S. Energy Information Administration to one of our conversations we’re hosting as part of our VirtuallyPFI annual conference offering. Connor will be joined by Bill Strauss of Future Metrics who will add some global perspectives to Connor’s domestic data.
—Tim Portz
Executive Director
Photo of the Week: Register Your Support – Win a Pellet Grill
Member and longtime PFI Annual Conference sponsor, Danson’s has always supported our conference with a pellet grill to motivate people to action regarding their conference registration. This year, despite our inability to gather in person, is no different.
All attendees registering at the “Register Your Support” rate of $445 will be entered for a chance to win. Registration revenue from our conference is vitally important to the success of PFI. We are hopeful that our traditional conference attendees can support us at the “Register Your Support” rate.
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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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Registration for VirtuallyPFI is Open
 Earlier this month, we announced that the agenda for VirtuallyPFI, our replacement for our coronavirus-impacted in-person conference, has been finalized and registration is open. If you missed that email or haven’t had an opportunity to look at the agenda, I encourage you to have a look. We pulled the discussions from the agenda of our annual conference and I look forward to the conversations about our sector, in what may go down as one of the most unprecedented business years any of us have ever experienced.
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