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Interesting read from NEWP

Post in 'The Pellet Mill - Pellet and Multifuel Stoves' started by beerwizza, Aug 13, 2008.

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  1. beerwizza

    beerwizza New Member

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  2. Wet1

    Wet1 Minister of Fire

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    I agree, good read.
  3. Ductape

    Ductape Member

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    Interesting read for sure.

    Now, I'm admittedly new to the pellet game...... but i have to disagree with a portion of that info.

    Work with my pellet dealer to take delivery of my pellets through the heating season?? And leave myself hostage to them charging much more per ton in the winter? They've gotta be kidding. I see an increase in price already over just a month ago. That might be reasonable if the price of pellets stayed the same year round AND there was some guarantee there wouldn't be major issues within the supply chain (like, say...... a FIRE at a major pellet producing facility in New England). I can assure everyone i will have my 09-10 pellets on hand before August next year also. I have absolutely no intention of paying any more to heat my house than i have to. If someone is less prepared, and must pay more for their pellets in November than i paid in July.... that is their problem. Blame me if you want.
  4. in-control

    in-control New Member

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    The way that I read that was to buy early, save $, and try to get delivery later. Which is what I am doing. I paid the lower summer prices, early bird, and will be getting my pellets delivered in December. This spreads out the capacity strain on the mfg. system and gives you the pellets when you need them at the best price. When talking with my dealer they proposed this arrangement and made the statement "why would you want them earlier then you need them".

    :smirk:
  5. Wet1

    Wet1 Minister of Fire

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    Ducttape,

    I think this year is going to be a lot different than the normal historical buying/pricing pattern. Panic has driven existing pellet users to buy early, plus there's a significant new user base as well which is buying early for the same reason. Supplies are limited now as the pellet manufacturers are scrambling to fill orders, which is driving up prices.

    So what do you think is going to happen this winter or even next year? My guess is there will be far lower demand since a lot of people already have their pellets. With suppliers likely still pushing forward cranking out pellets this winter, after seeing a huge spike from this summer, and low demand from the consumers (since they already have their pellets), I would expect to see pellet prices lower this winter compared to today's prices... Especially if the oil bubble continues to deflate, which I think it will. Looking forward to next year, I don't think demand will be nearly as high for pellets. The oil crisis will have likely loosened and since many people bought extra pellets this year, there will probably be many folks who don't need all that much for 2009... Not to mention a good percentage of the new folks will not continue using pellets.
  6. Ductape

    Ductape Member

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    I don't believe in paying for a product i need to heat my house when there is no way the seller can guarantee delivery in December when i need it. The only way for that to happen is for the dealer to have the warehouse space and physically have posession of those pellets when they were sold. Where are the peoples pellets coming from now that NEWP needs to make fire repairs? So the people affected by this setback have paid for their pellets, are out their money, and will either have to spend more money on pellets from somewhere else...... or spend more money on heating oil or gas. If NEWP is (was) operating at 100% to try to meet demand, that makes the pellet business the same as the oil business..... more demand than supply. This is exactly what kept me from buying a pellet stove instead of a woodstove five years ago. One of the stove shops i was shopping at had stopped selling their pellet stoves because they simply couldn't get any pellets to sell their customers.

    Call me a pessimist....... this is why i keep my firewood supply (i cut/split myself) two heating seasons ahead, and why i have two 275 gallon heating oil tanks in my basement (though i hope to burn less than a gallon this year).
  7. Ductape

    Ductape Member

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    Wet1, i hope you are right ! I don't believe it will happen, but i sure hope it will.
  8. Red Sun

    Red Sun New Member

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    Pellet Cost Past Ten Years

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  9. stoveguy2esw

    stoveguy2esw Minister of Fire

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    i found it interesting and forwarded it around the office for general consumption. its interesting to me that NEWP apparantly seems to be happy to disseminate information to the public, i applaud them for that.
  10. Red Sun

    Red Sun New Member

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    What the chart does not show is total production of pellets and in the ten years of the chart, pellet production is likely 10 times greater, or at this point might even double every few years?

    In terms of the supply chain, what I found most interesting in researching pellet mills is that for now, Florida, is home to the largest pellet mill in the world. Southern pine as a resource for pellets is at this point in time supplying the EU and not so much the US. I expect because of distribution networks most of the pellets at Wal Mart and HD are sourced from the pellet mills in the southeast although, I don't know absolutley.

    There are however, more pellet mills being constructed in the Florida panhandle region into Georgia and Alabama, that are all out to claim the title as having the world's largest pellet mill. When a pellet mill opened in Corinth, Maine, is was for a short time the worlds largest, and now each new mill that is brought online is making the same claim.

    One railroad car can hold 40 tons of pellets, or, 4 times that of one 40' tractor trailor.
  11. Ductape

    Ductape Member

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    Interesting numbers, since around here tractor trailers deliver 22 tons/load.
  12. Red Sun

    Red Sun New Member

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    Thanks Ductape. Here is one source for wood pellets using rail car to send pellets to NE.

    .....Prince said 21 boxcar loads of wood pellets were shipped out of the port in July to various wholesalers in the Northeast.

    "I think right now it's their busy season for building their inventory," Prince said. "We anticipate it to stay pretty constant through the end of the year. Their demand is real high. The indication I'm getting is they can sell everything they can get their hands on."

    http://www.timesdaily.com/ (Business Section)

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  13. Ductape

    Ductape Member

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    I find it incredible that they can manufacture pellets there at a profit, ship them all the way to New England, and they are still cheaper than pellets made right here.
  14. Red Sun

    Red Sun New Member

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    Same product from the Southeast delivered to Europe wholesales @$150/ton.

    Only rail is 4 times less expensive per mile than trucking and apparently in whatever fashion container shipment to the EU is practical. Although, I read some where that freighters are running at 20% less power in order to conserve fuel.

    ......"Europeans are paying roughly $150 a ton wholesale for pellets landed there,...."

    http://biopact.com/2007/04/us-wood-pellet-industry-eyes-exports-to.html
  15. Wet1

    Wet1 Minister of Fire

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    ^ I didn't read the link you attached, but the reason they might be so cheap over there might be because the US dollar is so weak against the euro.
  16. hoverfly

    hoverfly Minister of Fire

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    I would have to agree, a week dollar will give better deal for Europe and others.
  17. richg

    richg Minister of Fire

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    Nowhere in this article does it address the staggering amount of pellets being shipped to Europe. While it may be other pellet manufacturers doing it, and not NEWP, Europe is getting the lions share of our pellets while we put up with shortages and $340.00 quotes from pelletsales. The pellet manufacturers are looking to Europe for growth. Hmnnn.....this smells of a Sherman AntiTrust situation, a conspiracy in restraint of trade. Where are the class action lawyers when we need them?
  18. Wet1

    Wet1 Minister of Fire

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    These guys are will sell their product to whoever is willing to pay the most for their product, it's business. With the high European demand and our large supply and weak dollar, it's no surprise these guys are shipping overseas...
  19. in-control

    in-control New Member

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    If I were running a Pellet Mfg. plant I would sell my product to the whom ever gives me the highest return while increasing mark share and diversifing. Every business dose it - if they don't they will go out of business when local conditions change. People in countires like Ireland are used to using bag'd fuel, peat & coal, and picking it up at their local convience store when they get a litre of milk. Peat is now becoming expensive and coal is typically imported from Poland. So the infrstructure, delivery system and cultures are is in place in alot of Europeon countries to use pellets. Additionally many countries do not have ready sources for raw material so they need to find alternate fuel sources.

    You could also make the aurgument that the people in these countries are used to high fuel prices and are accustommed to using, non oil, based solutions to heat their homes and businesses. I think that it is good as it creates a market for US products, puts the US at the forefront within that reagion before countries like Russia, Germany and France ramp up capacity. With all this demand small pellet mfg.'s are starting to pop up, creating jobs and stimulating the local economies which were depressed. This competion forsters price wars and ultimatly defines what you and I pay - capitalism 101.

    Just my 2 cents
  20. billb3

    billb3 Minister of Fire

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  21. Red Sun

    Red Sun New Member

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  22. itworks

    itworks New Member

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    Thanks for the link. I also thought it was a good read. I kind of think all us wood and pellet burners are in a club that I'm proud to be in for many, many reasons. I've been burning pellets since 05, and never had any concerns about supply or prices. It seems to me to be a no- brainer (especially after your 1st burning season) to calculate your needs, and buy it in the Spring. I burn about 4 1/2 tons a season, and buy 5 tons each Spring for delivery in Sept or Oct. Yup I take somewhat of a risk by paying in advance, but my dealer is very reputable, and I trust him. This year he called me and asked me as a favor to him, to take delivery in early Aug, which I did, and he thanked me. He even gave me an extra 5 bags for the courtesy. I kind of think, just an opinion, he had more pellets than storage capacity, and he has lots of property and wear houses. This year I paid $225 per ton delivered into my garage. In my area this is considered a very good price. The box stores around here are currently charging $300-350 per ton sans delivery, and even if you pay for delivery, it's "curbside" and you'll have to hand carry it into your garage. I urge all my fellow club members to be strategic and plan for your needs in advance. Get to know your dealer, and if you feel you can't trust him, find another dealer. I think this approach will eliminate sudden bursts in demand, and in the long run will save our club $$$'s.

    Just my opinion.
  23. Ductape

    Ductape Member

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