6 month forecast of pellet prices?

[Ossy]

I noticed a dip in pellet prices as of late and I was wondering what others have seen as well. I think there was enough hording (yeah, you pellet pigs) from last year that many have a couple tons left over to burn this year which will probably influence the price as well. My prediction is that prices will drop to $225-$250 per ton on average by December for the following the reasons:

a. More pellet mills coming on line
b. Relatively low oil prices competing against pellets ($/btu)
c. Need to keep the timber industry busy (workers) by shipping product (trees)
d. Many people have a several tons of pellets left over from last year

Anyone got a list of all the wood pellet manufacturers in North America and their capacity?

Ossy

 

[roadrat]

I just ordered 3 tons of bulk pellets for $260.00/ton last week because I was told that the price was going to $280.00 this week.


bill

 

[JustWood]

I noticed a dip in pellet prices as of late and I was wondering what others have seen as well. I think there was enough hording (yeah, you pellet pigs) from last year that many have a couple tons left over to burn this year which will probably influence the price as well. My prediction is that prices will drop to $225-$250 per ton on average by December for the following the reasons:
a. More pellet mills coming on line
b. Relatively low oil prices competing against pellets ($/btu)
c. Need to keep the timber industry busy (workers) by shipping product (trees)
d. Many people have a several tons of pellets left over from last year

Anyone got a list of all the wood pellet manufacturers in North America and their capacity?

Ossy

Dream on Alice.
Checked the price of oil lately.


Posted this in a recent thread .


"I think lower prices are about 3-5 years away depending on several factors.
1. Development of more multi fuel stoves. This should cause for more interest and profitability in manufacturing different biomass pellets.

2. Mill infrastructure is disappearing FAST ! I have been to a dozen mill auctions over the last 2 years and interest in used mill equipment is greatly lacking.The forest products industry has been in decline for 2+ years now and no one has any money. There are some screaming deals out there if equipment buyers don’t show up. I was at a mill auction last fall and talked to an equipment buyer who was buying to ship to Africa. He said there is HUGE demand for cheap used mill equipment in Russia,Africa,and South America. This lack of online ready to produce infrastructure is going to keep prices high .

3 Whole tree chipping operations. The supposed new supply chain for pellet mills. The cost of a one small chipper operation with support equipment new off the showroom floor is close to $2,000,000.
Credit is tight. stumpage prices are low for landowners and forest product industry leaders are scared.I don’t see whole tree chipping operations as the saviour to the pellet industry. They will help but it’s not the answer.

4 Housing . I don’t look for the housing market to be a BIG consumer of wood products for at least 5 years due to credit and the green movement towards smaller more efficient homes. Less lumber produced = less waste sawdust and chips to be had for pellet makers.

5 Price of oil. Lets not forget that the price of oil determines interest and investment in every aspect of all alternative fuels. The quicker oil goes back to $147 the quicker more pellet plants will go up.

I personally feel that if an alternative type pellet (grass ,leaves,pine needles, corn fodder,etc) is developed then wood pellets will get some competition and come down in price."


ALSO, Just recieved a letter from USDA's FS Agency in regards to biomass production, stating they will match dry ton price up to a certain amount for 2 years to producers delivering to qualified biomass conversion facilties for renewable energy. I'm taking an educated guess because I haven't checked into it yet but I believe qualification will be biomass to power plants mostly. This takes a huge supply of chips/sawdust off the market that pellet producers wood have had access to.
Flame on and bash me for fear mongering like last year .

 

[jsvo]

in my area prices are dropping,at the local hardware store,i tried 3 weeks ago to buy lignetics,they were 300per ton .i tried to buy 30 tons for the family and it was still gonna be 280 per ton plus 20 ton delivery.now this week the sale begins at 279 per ton and anything starting at 4 ton is free delivery. so i think they are getting nervous. they have 5 brands starting at 249.00 which is the maine brand pellets. they have aleast 200 tons in stock. the local walmart hasnt got any yet and home depot has very few. so it is a wait and see. i already got my trailer load so im all set. a pellet place 50 miles north is at 239.00 per ton.

 

[Lousyweather]

in my area prices are dropping,at the local hardware store,i tried 3 weeks ago to buy Lignetics,they were 300per ton .i tried to buy 30 tons for the family and it was still gonna be 280 per ton plus 20 ton delivery.now this week the sale begins at 279 per ton and anything starting at 4 ton is free delivery. so i think they are getting nervous. they have 5 brands starting at 249.00 which is the maine brand pellets. they have aleast 200 tons in stock. the local WalMart hasn't got any yet and home depot has very few. so it is a wait and see. i already got my trailer load so im all set. a pellet place 50 miles north is at 239.00 per ton.

Again, will all due respect, one hardware store running a sale doesn't signal a new price trend IMHO. If anything he dropped a $1.00 and gave you break on delivery. Pellet Sales.com does the same thing and they seem to be a very good indication for prices.. Which have gone up in the last 2 weeks on their site.

200 tons for a dealer isn't a large inventory. Using 3 tons per season is only enough product for about 65 homes. Not exactly flooding the market. WalMart and HD not having any product yet really surprises me as I would view that as a lack of supply than not bringing in any product. Both not having any supply this late in the summer really surprises me...

Having some of the lesser known or lower quality brands (OK the junk on the market...there I said it...!!) priced at $239-249 has been available all season, so that isn't anything new...tell me you can buy it for $210--215 in the NE or quality product (the better brands) for $225-230 and then you have some price reductions, but getting free delivery or a dealer here or there running a week special isn't downward price pressure on the whole market...I could be wrong..I have been in the past (just ask my ex) ...but I'm not really seeing it yet....sorry

200 tons for us is about a 4 day supply during the season. These days we are delivering roughly 50 tons per day. As BTU says, WallyWorld and HD and Lowes arent really big factors in the market either...they dont sell in the off-season as any good pellet retailer does, and as such, they arent very proactive. They dont tend to purchase their pellets on quality either, rather, on whats the cheapest, and which suppier's arm they can twist the most. They use them as loss leaders to pull in traffic. heck, I wont support a supplier who supplies them if I can help it. If I see one of my pellets in their place, you can bet Im making a couple phone calls! By supporting that supplier, I am supporting the big boxes....


here's my take: we are on the cusp of an early season shortage, with prices starting to slowly walk up. The $300/ton price is inflated, unless the pellet being sold is a super-premium, which tend to cost a bit more due to where they get produced (shipping). What I see happening is due to many reasons (price of oil, lack of money, worry abt the economy, etc), many consumers just havent bought product...yet. In late August to early September, the procrastinators will flood the market, putting strain on supply, but more strain on the logistical end of the supply chain. Those trucks delivering pellets tot he retailer have to be loaded, shipped, and unloaded, then, in about half of our customer's cases, they have to be staged and delivered....none of these things happen overnight, but the orders pour in. The folks this year who wait till the last minute might be surprised indeed about what they cost, and how long they might take to get. I think now is the time, if you havent decided to buy yet, to fall off the fence, pull the trigger, and make the buy...be it an oil future (prepay), or buy pellets.

 

[imacman]

......Export demand is extremely strong and that is something that most people just never factor in their understanding of the supply/demand issues of this industry. We may not like it, but if we as American's don't buy the pellets, the Asians and Europeans are more than happy too...That in itself creates a floor for the product.......

I agree with BTU on this.....most pellet burners in the US either don't know that pellets made here get shipped overseas, or just don't realize what that does to the price of the ones that DO stay here. It's the same old supply/demand thing.....

 

[Stentor]

Export demand is extremely strong and that is something that most people just never factor in their understanding of the supply/demand issues of this industry. We may not like it, but if we as American's don't buy the pellets, the Asians and Europeans are more than happy too...That in itself creates a floor for the product. Not until the economy picks up and lumber mills start back working on a more full time basis, will you see excess supply on the market and then you will see some downward pressure on prices...and IMHO, is still a ways off.

How much demand is there from Asia? Is it large enough to affect pellet supply from west of the Rockies, including Canada? I assume that there is little effect on the Northeast so far.

 

[Lousyweather]

PS..Have no idea who you are Louseyweather, but sure hope you stock our product if we are in your area.............. Shameless plug....

No, Im afraid I dont stock your product, but not due to the fact that I dont believe its a good one.....in fact, I pick up concrete mixes in Oxford, MA, and see ALOT of your product owned by a competitor, stocked and ready to go! We have very close ties to our suppliers now, and dont want to spread ourselves too thinly among suppliers, thereby having less volume leverage when some day we might need it. Ive sold BC pellets before, and its a good product......I think youve two things to overcome here in the northeast:
1. The fact that many consumers up here believe hardwoods are better (not true, IMHO)
2. The high cost of shipping, as I noted before....not much you can do about that, its an inherent cost...my customers tend to be a frugal bunch, and tend to balk at higher prices, even in the face of quality. We try to bring in pellets, balancing supply, price, and quality. Actually, I think we compete with one of your larger accounts.

 

[ogb1]

$215 for clean burn to $250 for Bear Mountain in Western Washington State

 

[Stentor]

Export demand is extremely strong and that is something that most people just never factor in their understanding of the supply/demand issues of this industry. We may not like it, but if we as American's don't buy the pellets, the Asians and Europeans are more than happy too...That in itself creates a floor for the product. Not until the economy picks up and lumber mills start back working on a more full time basis, will you see excess supply on the market and then you will see some downward pressure on prices...and IMHO, is still a ways off.

How much demand is there from Asia? Is it large enough to affect pellet supply from west of the Rockies, including Canada? I assume that there is little effect on the Northeast so far.

Here is a very good article on this very subject just published last month......http://online.wsj.com/article/SB124691728110402383.html

Thanks. I think we discussed this article in an earlier thread. What's interesting is that it doesn't have any information on Asia, nor does the NYTimes article that came out around the same time. The EU is creating an artificial market for pellets with their new biomass goals, but that requirement isn't something that is going on in Asia, as far as I know. Given population size, demand from the Far East could some day be huge. We've been talking about much smaller places like Austria. From your reply, I'm guessing that Asia is not on the radar screen for the BC pellet industry.

 

[JustWood]

Export demand is extremely strong and that is something that most people just never factor in their understanding of the supply/demand issues of this industry. We may not like it, but if we as American's don't buy the pellets, the Asians and Europeans are more than happy too...That in itself creates a floor for the product. Not until the economy picks up and lumber mills start back working on a more full time basis, will you see excess supply on the market and then you will see some downward pressure on prices...and IMHO, is still a ways off.

How much demand is there from Asia? Is it large enough to affect pellet supply from west of the Rockies, including Canada? I assume that there is little effect on the Northeast so far.

Here is a very good article on this very subject just published last month......http://online.wsj.com/article/SB124691728110402383.html

Thanks. I think we discussed this article in an earlier thread. What's interesting is that it doesn't have any information on Asia, nor does the NYTimes article that came out around the same time. The EU is creating an artificial market for pellets with their new biomass goals, but that requirement isn't something that is going on in Asia, as far as I know. Given population size, demand from the Far East could some day be huge. We've been talking about much smaller places like Austria. From your reply, I'm guessing that Asia is not on the radar screen for the BC pellet industry.

Wait till China wakes up and starts controling emissions. Then look out.

 

[ogb1]

locked in 3 1/2 tons of clean burn at $207 a ton today on sale