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In this Week's Pellet Wire:
From the Director's Desk:
June EIA Data shows soft sales, inventory approaching 300k tons
On Wednesday the EIA refreshed its pellet data set with June data. The numbers suggest that producers, eyeing their own inventory and the accumulating industry data, have eased back on the production throttle believing they are in good shape for this year’s heating season. June saw heating fuel manufacturers produce 139,710 tons, the lowest June total since 2017. The monthly production average in the first half of this year was 142,178 tons. For comparison, last year’s monthly average in the first half of the year was 155,909 tons. Despite this slight modulation in the industry’s production throttle, the sector still grew its inventory position in June. As June closed out producers had 293,546 tons on the ground. My earlier prediction of 300,000 tons on the ground at the end of July is at risk as last year’s inventory build in July was just 2000 tons. If the next data set reveals a similar build for this July, we’ll top out just short of 300,000. Still, the sector’s inventory position heading into the 2021–22 heating season is as strong as it has been in three years. Certainly my travels this week through Michigan and Indiana revealed plenty of finished product on the ground at the member facilities I visited during this year’s Chairman’s Tour. Initially the 159,751 sales number was disappointing it when comparing it to last year’s colossal June (185,327 tons) but a closer look reveals that June 2021 was the second biggest June in the report’s history.
Early Observations from the Chairman’s Tour
I’m writing this week’s Pellet Wire from a hotel room in Indianapolis, two-thirds of the way through my planned visits with member producers in Michigan and Indiana. After completing tours of and meeting the teams at both Michigan Wood Fuels and Fiber By-Products I’m most struck by the quality of the folks working at these facilities. This industry is full of some great people who carry real pride in their operations and their pellets. Pellet operations don’t carry large employee rosters and at each stop there was a very familial feel. In more than a handful of instances I met team members who were family. A husband-and-wife team masterfully run the fiber yard at Michigan Wood Fuels. The Schrock brothers run Fiber By-Products but I also met a father-daughter team at the plant.
I’m still digesting everything that I saw, heard, and learned but the biggest takeaway apart from the quality of people working in wood pellet manufacturing is how vital our operations are to our upstream fiber partners. I’ll expand on this in a later Pellet Wire, but at each stop I noted the constant whine of truck engines gearing down as they entered the wood yard with more residue. One of my stops included a cabinet facility that serves the massive RV sector that in Northern Indiana. Cory Schrock (Fiber By-Products) showed me their residue collection trailers and the systems they deploy to keep those trailer moving and ready to receive new materials. For one of the production lines at the plant, a trailer is filled with wood residues every six hours. The Fiber By-Products team shuffles the filled trailer out and replaces it with a new one day after day. As the RV sector has boomed, so have the residual streams its cabinet shops throw off and without a reliable off-take partner a very real production bottleneck would soon emerge. It is important to note that Fiber By-Products doesn’t simply accept these residues in their yard, it runs the entire collection operation. This allows their fiber partners to focus on their core business, confident that their residuals won’t begin piling up in their parking lots. The volume of material has to be seen to be believed.
—Tim Portz
Executive Director
Photo of the Week:
All in the Family: Members of the Fiber By-Products demonstrate a real pride in their operation. L to R: Cory Schrock, Matt Myers, Jon Gingerich, Brad Schrock and Chad Schrock.
*One of my favorite aspects of visiting member facilities is the opportunity it provides to capture pictures of our industry and its people. I took well over 300 photos on my recent trip and I look forward to sharing them here over the coming months.
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