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In this Week's Pellet Wire:
From the Director's Desk:
Dog Days?
For the past month, most of the country west of the Mississippi has been gripped in a punishing heatwave, making the upcoming 2021-22 heating season feel a long, long way away.
Still, July is an important month for wood pellet producers as summertime production reaches full steam as plant teams work to put adequate inventory on the ground in preparation for both early-buy and early fall sales that really are just 60-75 days away.
I suspect this July will look quite different than last July and the July of 2019. Each of the previously mentioned Julys saw robust production and hearty sales. Last July, sales nearly reached 200,000 tons (192,924), a significant departure from the 125,000 – 130,000 ton pattern just a few years ago. Similarly, production in July in 2019 and 2020 topped 170,000 tons after hovering in the low 100,000 ton range. While I doubt the industry will return to the numbers more common in 2016-18, I think we’ll likely see us split the difference. Why? Inventory.
July often sees the industry reach a high-water mark of sorts regarding standing inventory. Volumes begin to draw down in August, making July the peak of our annual inventory build. Last year we topped out at 211,938 tons. In March, after a very soft late winter, we had already reached 170,000 tons. I expect these numbers kept producers from running their plants quite as hard April through June, perhaps a lucky break considering what we have heard about hiring particularly for harder to fill night or weekend shifts. We won’t know until mid-October but I suspect we’ll exit this July with more inventory on the ground than last July, but not by much. I’d say the industry ends up with somewhere between 230,000 and 250,000 tons on the ground after posting a string of months where production was 85-90% of 2020 numbers. By then we’ll have some indication of how much inventory consumers were sitting on as the summer sales figures start to come into sharper focus.
I hope your summer is going well and that you are able to spend some quality time with friends and family.
Wishing you a safe and productive two weeks.
—Tim Portz
Executive Director
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