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Looks like pellets might not be selling quite so good

Post in 'The Pellet Mill - Pellet and Multifuel Stoves' started by rowerwet, May 19, 2009.

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  1. rowerwet

    rowerwet Minister of Fire

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    I get emails from pelletsales.com, the latest is free shipping on orders over 6 tons and flat $39 for all other orders.
    I wonder if pellets aren't selling quite so good, and they are piling up at the mills, or how much is the price we're paying inflated so that they can offer "free" shipping. Trucks don't run for free.
    The pellets being offered are LG's at $275/ ton, good pellets, not so good price in my book.

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  2. Bxpellet

    Bxpellet Feeling the Heat

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    Got the same email, now they are willing to deliver to the Bronx, All other times they said at this time we do not deliver to your area

    last year when they got caught up to the demand they called and said they would deliver @$375.00 a ton.
  3. iceman

    iceman Minister of Fire

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    werent the prices cheaper about month and a half ago? sounds like they are just doing a different marketing scheme as i think they were 245 plus delivery not so long ago... but i could be wrong
    the pellet industry is going to take a big hit if they dont fugure out ways to cut the prices.... they dont benefit unless gas/oil/propane are extremely high.... i know the housing market is hurting them but the prices are making a lotta people turn back...
  4. OldDedHed

    OldDedHed Member

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    I think you're right, ice. I paid $260 per ton delivered for 6 tons back then. Just a different way to make the same (or a little more) money. Right now that's the same price for me as corn not delivered, so pellets make sense. I ripped my oil boiler out and gave it away--tired of having oil companies screw me every time they feel like it. Time will tell how long it takes the biomass guys to start doing the same thing.
  5. Deed

    Deed Member

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    The producers of pellets have pushed the limit on what people will pay for them. Over the last two years the prices has risen more then 30 % in some areas, more. With oil much lower and able to lock in at around $2.00 a gallon it doesn't make sense to heat with pellets, as you still have to pay extra to heat your water. Greed is a big deterrent to what these people think other people will pay for there pellets. This is why the pellets are just piling up and the cost have to go down.
  6. defield

    defield New Member

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    ROWERWET,

    Re: ".. . pelletsales.com . . . . . I wonder if pellets aren’t selling quite so good, and they are piling up at the mills, . . . "

    When I look at pelletsales.com's web site for price and availability, for my south central Maine town, they list their May offering as "Sold out". It is only slightly past the middle of the month. Why would they miss the possibility of sales if pellets are piling up at the mills? June-July shows as the next available pellet purchase option.

    Old ranger

    P.S. I did an early spring purchase from them for $259.00 a ton, delivered, and was very pleased with the service and the LG Granules pellets.
  7. MCPO

    MCPO Minister of Fire

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    My local supplier claims that pellet prices will not fall and are expected to rise even more *IF* oil prices rise significantly.
    I think he`s right. Right now they are holding at $315.00 a ton delivered.
  8. TboneMan

    TboneMan Member

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    I talked to my supplier last week. I hadn't received the early-buy postcard (likely a USPS issue) so I called. Unfortunately I missed the early-buy allotment, they had 600 tons $235/ton), thanks USPS. They have another allotment of 650 ton at $250 (Aug. delivery), she only had 60 ton remaining in that allotment.

    I'd say, at least in my area, people are buying them up pretty fast.
  9. summit

    summit Minister of Fire

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    pellet prices are not going to come down significantly, unless the housing industry starts to boom again. Many of the plants just had to process kiln dried sawdust leftovers from lumber mills in order to make their pellets. now, there are many who have to get raw stock (i.e. whole trees) and process that into pellets. processing the raw stock is more labor and cost intensive than turning already dried and ground sawdust into pellets - especially to produce a quality pellet - you do not want a pellet where they chew a tree up, bark, leaves, and all.
  10. iceman

    iceman Minister of Fire

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    i think where many people screwed up is
    we all got pellet stoves and didnt need them... we convinced ourselves it was good ... whether it was for the fire, convenience, money whatever...
    what we shoulda done was invest in new furnaces whether gas,oil,pellet,propane, whatever ...
    the price of these stoves are running neck and neck with a high eff furnace... most people could either have zoned out the house or close vents..... in my case my furnace is to new to replace (about 86% eff) but i shlda got a pellet or wood add on
    as i have a hydronic forced air system... so a wood/pellet boiler gasifier whatever wlda been great for a add on or even a wood/pellet furnace as i still could tie that into just my basement....
    at least getting back to the point.... we clda started getting bulk delivery which is a lot cheaper per ton than buying bagged
    and then we wouldnt feel so bad because its not buying a ton for my "stove" its buying tons for the "furnace"
    i know some of you guys will claim your stove will heat your house.. which may be true but in most cases a furnace will heat the entire house better...
    so if i would bought a pellet furnace i prolly wouldnt mind buying tons at 300 compared to filling an oil tank at $2 a gallon 662 for a tank full
  11. SmokeyStover

    SmokeyStover New Member

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    Hello all. I am new this forum and in the interest of full disclosure, I am a hearth retailer and have been for 25 years. I know in my store the pre season interest in pellets is the lowest it has been in years. We have been a Dry Creek dealer since '94 and even with the reduced demand we have not been able to get product delivered. As others have mentioned the slow down of the housing industry has crippled many of the pellet mills. My best advice is to decide soon if you want pellets for next season and if you do, lock up your supply ASAP. If the price of fuel goes up again I believe that by October or November there simply won't be any fuel out there at any price. Most mills can not store large amounts of fuel. If it's not moving out they have to cut back on production and many producers are already sold out or struggling to fill orders.

    I hope this helps!
  12. Wet1

    Wet1 Minister of Fire

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    Welcome to the forum SS!
  13. iceman

    iceman Minister of Fire

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    welcome and thanks for the advice!!!!
    with el nino coming for the northeast we will prolly have milder temps and less precip
  14. Stentor

    Stentor Member

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    Useful perspective. I've had my pellets delivered already but I'd like to see how the energy supply situation plays out as the economy (hopefully!) improves over the next couple of years.

    If you don't mind this question, I'd like to know how much flexibility a retailer like yourself has. Do you contract with your suppliers from year to year in your business or over multiple years? Could you have other suppliers from XYZ as long as you meet your volume commitments with your current product? Finally, and most important, how far ahead can retailers see? For example, could most retailers give me the same kind of prediction you are making for the whole season?

    Thanks and of course if these questions are prying too much into your business, just ignore them.
  15. iceman

    iceman Minister of Fire

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    wow thanks and well said
    guess i will buy 1 ton now
  16. iceman

    iceman Minister of Fire

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  17. SmokeyStover

    SmokeyStover New Member

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    There are many dealers and many suppliers, but I'm happy to explain my own situation. When we started with Dry Creek in '94, they were just getting started. Life was so much easier then. We would order 10 truck loads in April and by he end of June they would be in our storage facility. By August we would have room so we would order another 4-5 truckloads and usually be set until the following spring. There was no reason to carry another brand as the quality was always very good and I was happy to let the box stores deal with the customers who would only buy the cheapest priced fuel. The market was very stable for years and there was nothing more than a handshake agreement in place. The problems with supply started post Katrina and have been getting worse every year. Lately Dry Creek has been encouraging us to find another supplier because they know that they are going to have a difficult time keeping up with the demand. Freight is the biggest issue with us as we are well off the beaten path in Northern NY. In '94 freight accounted for about 3% of our total cost. Last year the figure was closer to 18% and when we had to order from a new supplier, the freight cost was very close to 50% of the total bill. We were paying as much, or more for a product that was not as good. The choice was sell a less desirable product for more money or let our customers be cold. I am trying to stick with Dry Creek exclusively, but it is not as much about meeting our quota as it is them being able to fill our orders.

    As for being a visionary, I have no idea what plan others may have or if my own projections are valid. I have been in the business long enough to watch the wheel spin full circle from wood, to pellets, to gas and now back to wood and pellets. Over the past few years I have made dozens of calls to pellet suppliers and in each case was told that they were sold out months in advance and were not even considering taking on any new customers. Some of the plans for expansion have been put on hold due to the lack of raw material. Increased productivity is useless without the basic raw material to make the product.

    Personally I am a true believer in the concept of pellet heat. Everything about it, from the environmental impact, to the ease of use to the feel of the heat just makes sense to me. If it didn't I would no longer be in that area of the industry. The distributor who sells me stoves has made a commitment to purchase hundreds of tons of pellets so that his dealers will be able to sell new stoves confident in the fact that fuel for them will be available. It irks me to see big oil companys at home and in foreign countries raking in record profits when many pellet mills are struggling to stay afloat and when retailers, like myself, are busting their butts to make 5 or 10 cents a bag on pellet fuel.
  18. Stentor

    Stentor Member

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    Thanks for the details. I'm committed to pellet heat like many who use this forum. But it's helpful to get some understanding of the back room side of the business from you and some others who post here. I want to learn enough to make reasonably informed decisions about what I buy and when.
  19. iceman

    iceman Minister of Fire

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    really.... ummmmmm dry creek?????
    fill me point me in the right direction.....
  20. Amaralluis

    Amaralluis Member

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    I understand your point but then we have to ask ourselves who is raking the money?
    I have a hard time believing that 20Lbs of compressed sawdust costs $6 or more to be produced and transported to retailers if indeed what you say is true that you only make a few cents per bag!
  21. cdodge04

    cdodge04 Member

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    I just got 4 tons for $240 a ton delivered. I saw a place about an hour from here had them for $235 but that was cash and carry.
  22. SmokeyStover

    SmokeyStover New Member

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    From a retailers viewpoint, here are some of the "hidden" costs that have to be factored in.

    The time it takes for someone, usually me, to unload and store the pellets. Typically 1 1/2 - 2 hours per load.

    Loss of product due to damage and occasionally theft. We salvage what we can and burn it in our display stoves but every season we lose 8-10 tons of fuel that can't be saved. This year was the worst as we had a canine chase a varmint under our pellet stacks and the critter proceeded to claw at every point he could get to. We lost about 5 tons in that incident alone.

    Insurance. Our insurance cost is based on inventory. Cost of the pellets adds significantly to that total.

    We have 2000 square of space dedicated to storing pellets. The local officials call that "improved commercial property" and tax it as such. It is about 20% of my total tax bill.

    We don't deliver fuel but we do provide free storage for our customers. This allows them to pay for their pellets when the price is the lowest and pick them when they need them. That creates additional bookkeeping for me and all the employees.

    As to why the manufacturing costs have skyrocketed, you don't have to look any farther than BIG OIL
    Yea the shortage of raw material is a big factor but consider this. Just about everything that moves in this country moves by rail or truck. It was not that long ago that diesel fuel was less expensive than gas. What changed that it is now more expensive than gas? Could be greed on the part of big oil?

    Sawdust and chips have to be moved to the pellet mills by trucks using diesel fuel.
    Pellet mills don't make the pallets they ship fuel on. They have to buy them and pay the freight.
    They don't make the bags. The price of oil has driven the cost of plastic up and of course somebody has to pay the freight.
    The cost of running the machinery in the mills has gone up. Diesel, electricity natural gas.

    GM and Chrysler are all but gone. American workers are losing their jobs, their homes their lives. But oil companies are still recording record profits. Something is wrong with this picture and it might be something to consider the next time you start to feel like you pellet stove is too expensive or too much work.

    Ok I'm stepping off my soapbox now. Thank you for listening.

    SS
  23. mnkywrnch

    mnkywrnch Minister of Fire

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    well said :)
  24. iceman

    iceman Minister of Fire

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    never heard of that before... interesting do they sell them in mass????
  25. Stentor

    Stentor Member

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    I tried a few bags of the Okanagans last month and like them, so I bought a couple of tons for next season. And BTU deserves a round of applause - - he hustles out there and promotes his product! :)
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