Could this upcoming season be a repeat of 05' ?

[GVA]

I hope all the veteran burners are remembering the price increases and shortages after Katrina.
In reading many recent threads I sense this will again be a banner year for pellet stove sales.
Get your pellets now.....
I'm not trying to start a panic... I just remember trying to get a ton and being told I had to reserve them.

Thoughts?
Opinions?
Anyone think we'll have a shortage this year?
Any predictions on price?

It's been a LONG time since I started a post..... Mods feel free to move this where you see fit......

 

[Shane]

I think it's coming. This should be a banner year for the stove industry!

 

[mkmh]

If you asked me 3 months ago I would have said no. However, in the last 3 months i've had 4 of my white-collar friends pick up stoves, and my mother bought one too. I'm sure i've had some influence there, but i've really tried to limit my "sales pitch" since pellet stoves are definitely not for everyone.

So yeah I think a lot of people are freaking out about oil prices and buying up stoves. My sense is that there are far more pellets being produced today then in 05, but I could see pellet supply falling short in January and February.

I have just under 3 tons on hand and am keeping my eyes out for a good deal on 2 more tons. Also looking for a deal on a 3rd stove

 

[smirnov3]

that's right now.

oil prices will drop in the fall:

1) the insanely high prices have already decreased consumption (number of vehicles on the roads in Florida fell something like 5% this winter. First decrease in 20 years)

2) Also, some commercial buyers tried to hold off on buying in the fall due to high prices & were forced to buy this spring. But they are mostly done now.

Once the oil brokers realize that the demand is weak (which can take a while, those guys have a herd mentality. Each one does what everybody else does), prices will drop some

 

[kinsmanstoves]

Just my $.02

Look at what fuel has done in the past 10 days, 10 weeks, and 10 months. The media is feeding the fire (hahaha) with rumors of $4.50 a gallon gasoline by July 4th. I said this before and I will say it again, fuel plays the second biggest role in the making of pellets. From when the tree is dropped it was done by a chainsaw. That will drive the price of the saw dust up and it does from there. I will guess pellets will cost at least 10% more this year than last. I supply a few stores with pellets and at this time compared to last year I have moved almost double the amount of pellets. Get them early if you can. One of the stores I supply has sold more tons in the last three weeks than they did last year, period.

Eric

 

[Czech]

As I've mentioned before, I have never bought early, I simply don't want to store them. That said, I have never paid more than around $180 or so a ton. I believe the main reason is my location in MN, seems like a good place to be. If it gets too high (like corn did this year), then the natural gas comes on. All and all, I've heard the hype before and I don't buy it, it was not true in this area.

 

[ugenetoo]

As I've mentioned before, I have never bought early, I simply don't want to store them. That said, I have never paid more than around $180 or so a ton. I believe the main reason is my location in MN, seems like a good place to be. If it gets too high (like corn did this year), then the natural gas comes on. All and all, I've heard the hype before and I don't buy it, it was not true in this area.

i really cant quite understand why pellet prices are so low in minnesota and michigan compared to maine. any insights for this Gotz?

 

[smoke show]

As I've mentioned before, I have never bought early, I simply don't want to store them. That said, I have never paid more than around $180 or so a ton. I believe the main reason is my location in MN, seems like a good place to be. If it gets too high (like corn did this year), then the natural gas comes on. All and all, I've heard the hype before and I don't buy it, it was not true in this area.

i really cant quite understand why pellet prices are so low in minnesota and michigan compared to maine. any insights for this Gotz?

That's what they sell for here(WI) also. My guess is demand?

 

[Don B]

I just bought 4 tons for 200/ton. This is $40 CHEAPER/ton than last year. I will take delivery in June, just as I did last year.

 

[richg]

Well, don't laugh, but I'm sitting on seven tons. Got a great price on some pellets locally from a lumber yard that stumbled upon a truckload. I think there will be similarities to 2005, but some important differences as well. Yes, there will be a stampede to pellet stoves as the hysteria over high oil prices grows. The key difference is that there are many more pellet mills and suppliers than 2005. We are going into the summer, a time in which pellet stockpiles will balloon. My guess is that there will be a massive run on pellets in the fall, with the only bottleneck being how quickly the mills can replenish dealers. I would expect prices to be psycho due to the high cost of diesel and local profit taking. By then, we may just see the oil bubble burst, newbies will idle their pellet stoves as there won't be much in terms of "savings", and round and round and up and down we go again...

 

[Wet1]

that's right now.

oil prices will drop in the fall:

1) the insanely high prices have already decreased consumption (number of vehicles on the roads in Florida fell something like 5% this winter. First decrease in 20 years)

2) Also, some commercial buyers tried to hold off on buying in the fall due to high prices & were forced to buy this spring. But they are mostly done now.

Once the oil brokers realize that the demand is weak (which can take a while, those guys have a herd mentality. Each one does what everybody else does), prices will drop some

Unfortunately, supply and demand has little to do with todays oil prices. It's speculators on Wall St. and the weak US dollar that are what's jacking the price of oil up. If someone told me oil would be $125 a barrel six months ago I would have said there were nuts and people wouldn't pay the corresponding fuel (heating oil, diesel, gas, etc) prices. Well, here we are six months later and people are still driving their SUVs at 85 miles/hr down the road and burning oil in their houses when outside temps drop below a chilly 75* F. Surprisingly, people haven't cut back nearly as much as economist have predicted.

I know I just topped off my vehicle with a measly 14 gallons of diesel today, it cost me $67. That ought to get me by for about 2 days, and this is not elective driving... I have no choice, I must pay these prices in order to survive myself.

I do agree this isn't sustainable, but when will it pull back... and how much when it does? Some annalist are predicting we'll see $185 to $200 barrels of oils by the end of the year. Will this happen? God, lets hope not as I can't afford to buy diesel at $8.50 a gallon! My guess is we'll probably hit somewhere around $135 to $140 a barrel before this is over, but I don't foresee oil ever going back to the levels we've come to enjoy in the past. I'll be surprised if it ever gets back down below $90 a barrel, but let's hope I'm wrong.

Either way, it's not the fundamentals that are driving today's oil prices, so let's hope it does take too long to correct.


BTW, I do expect to see high pellet prices later in the year as I expect demand to be at record highs. The question is, will supple be able to meet demand... I have no clue. Even if it can, I expect suppliers to get greedy based on the much higher alternative oil prices.



Edited for spelling

 

[JustWood]

that's right now.

oil prices will drop in the fall:

1) the insanely high prices have already decreased consumption (number of vehicles on the roads in Florida fell something like 5% this winter. First decrease in 20 years)

2) Also, some commercial buyers tried to hold off on buying in the fall due to high prices & were forced to buy this spring. But they are mostly done now.

Once the oil brokers realize that the demand is weak (which can take a while, those guys have a herd mentality. Each one does what everybody else does), prices will drop some

Unfortunately, supply and demand has little to do with todays oil prices. It's speculators on Wall St. and the weak US dollar that are what's jacking the price of oil up. If someone told me oil would be $125 a barrel six months ago I would have said there were nuts and people wouldn't pay the corresponding fuel (heating oil, diesel, gas, etc) prices. Well, here we are six months later and people are still driving their SUVs at 85 miles/hr down the and burning oil in their houses when the outside temps drop below a chilly 75* F. Surprisingly, people haven't cut back nearly as much as economist have predicted.

I know I just topped off my vehicle with a measly 14 gallons of diesel today, it cost me $67. That ought to get me by for about 2 days, and this is not elective driving... I have no choice, I must pay these prices in order to survive myself.

I do agree this isn't sustainable, but when will it pull back... and how much when it does? Some anaylist are predicting we'll see $185 to $200 barrels of oils by the end of the year. Will this happen? God, lets hope not as I can't afford to buy diesel at $8.50 a gallon! My guess is we'll probably hit somewhere around $135 to $140 a barrel before this is over, but I don't forsee oil ever going back to the levels we've come to enjoy in the past. I'll be suprised if it ever gets back down below $90 a barrel, but let's hope I'm wrong.

Either way, it's not the fundamentals that are driving today's oil prices, so let's hope it does take too long to correct.


BTW, I do expect to see high pellet prices later in the year as I expect demand to be at record highs. The question is, will supple be able to meet demand... I have no clue. Even if it can, I expect suppliers to get greedy based on the much higher alternative oil prices.

More mill shutdowns here in the last few weeks. Just went to a mill auction last Sat. and got some screamin' bargains. The sawdust supply is not looking healthy for the next year or two.

If oil keeps climbing and more people buy stoves I'm willing to bet you'll see $300+/ton by next winter.

 

[smirnov3]

Unfortunately, supply and demand has little to do with todays oil prices. It's speculators on Wall St. and the weak US dollar that are what's jacking the price of oil up. If someone told me oil would be $125 a barrel six months ago I would have said there were nuts and people wouldn't pay the corresponding fuel (heating oil, diesel, gas, etc) prices. Well, here we are six months later and people are still driving their SUVs at 85 miles/hr down the road and burning oil in their houses when outside temps drop below a chilly 75* F. Surprisingly, people haven't cut back nearly as much as economist have predicted.

Like I said, the speculators on Wall St. are like cattle. but demand IS dropping (I quted the decrease in driving in florida because they are the only state that rigerously keeps track of how much people drive) and once one of the 'moo-folks' on Wall St. gets that into their head, they will panic & stop driving up prices, as they will run off to speculate in something else.

With the weak dollar, we will never see cheap oil like in the 90's, but prices will stop going up & I think they may even drop a bit as well.

on the plus side, $4 a gallon is the break even point for converting bio waste (such as from meat packing plants, sewage & farms) into #2 oil

 

[begreen]

CA keeps track too. And fuel consumption for the first time in a long time it's not climbing. It's at something like 97% of the previous year if I remember right.

However, LEEs is correct. New construction is way down and the local mills here are idle. I've never seen so much milled wood stacked up in the yards. That means less tree cutting which means less sawdust. I'd stock up whenever a good price shows up.

 

[Czech]

Not sure why cheap here, but like others have said there must be enough raw product around, supply and demand I guess. In fact, there are 3 more large plants going on line next fall up north. I get a little panicky because I'm only buying a ton at time during the season, but haven't gotten caught yet (fingers crossed!).

 

[smirnov3]

One factor that has been overlooked in the USA is Canada's lumber situation:

they have vast tracts of forest dieing from boring insects.

If they don't harvest those trees, they will rot & lose all value. They also pose a Wildfire hazard, and could result in the destruction of the remaining healthy forests. the Canadian governemnt is starting to subsidize lumber companies to take those trees out. FAST.

And once those trees are harvested, something has to be done with them. Several companies have proposed turning the whole tree into wood pellets (again, with Canadian subsidies)

 

[Czech]

Good point Anton. You should see the trainloads of timber heading south from CA in northern MN. If we could just harvest in the Boundry Waters storm blow down area in northern MN, we'd have cheap pellets for years to come. The tree huggers have other ideas, they would rather it go up in smoke from lightning strikes like it has been doing the last couple of years. Shame, esp for the people who have lost their property because of it.

 

[GVA]

Yeah LEES touched on the other factor with pellet supply the wood manufactures sell off most of the sawdust to the papermills down here and we've slowed down in manufacturing so weyerhauser has to go elsewhere for thier needs. Half our sawdust goes to paper and half to a woodchip fired boiler..
I would suspect that some of the smaller pellet mills that have popped up since 05 will not survive due to the shortages of sawdust... sort of a catch 22 eh?

 

[compressedwoodsupplier]

I know as a supplier of wood pellets the price is going to go up a little but not like you think. The only thing that will drive the price up higher is the price of freight. I am currently buying pellets out of PA and things look good, but am going to buy a load next week out of the new plant in Atherns Maine. Looks like pricing is going to be $250.00 a ton really good qaulity product. If anyone in maine needs anything let me know. 207-542-0834

 

[Willman]

More mill shutdowns here in the last few weeks.

Just went past the Celotex plant in Lisbon Maine. The loading area (about a football field) is overfull with product ready to ship. The long length round stock pile is shrinking to almost nothing. prolly be laying off shortly. The wood they used to buy will have to go into something. The loggers will take it to the pellet mills if they are the only ones buying. Same goes for the saw mills. All the pellet mills have to do is create sawdust.
Will

 

[compressedwoodsupplier]

yeah they do have a lot of raw material there. The mill in Atherns is pretty spectacular they have quite a bit of raw material. I think we should be ok in maine this year

 

[begreen]

More mill shutdowns here in the last few weeks.

Just went past the Celotex plant in Lisbon Maine. The loading area (about a football field) is overfull with product ready to ship. The long length round stock pile is shrinking to almost nothing. prolly be laying off shortly. The wood they used to buy will have to go into something. The loggers will take it to the pellet mills if they are the only ones buying. Same goes for the saw mills. All the pellet mills have to do is create sawdust.
Will

I can see that. But doesn't that add another process and add cost to the final product?

 

[ugenetoo]

More mill shutdowns here in the last few weeks.

Just went past the Celotex plant in Lisbon Maine. The loading area (about a football field) is overfull with product ready to ship. The long length round stock pile is shrinking to almost nothing. prolly be laying off shortly. The wood they used to buy will have to go into something. The loggers will take it to the pellet mills if they are the only ones buying. Same goes for the saw mills. All the pellet mills have to do is create sawdust.
Will

I can see that. But doesn't that add another process and add cost to the final product?

yes, but it also removes one of the variables from the equation. there are a lot more roundwood suppliers than there are waste wood suppliers.

 

[JustWood]

More mill shutdowns here in the last few weeks.

Just went past the Celotex plant in Lisbon Maine. The loading area (about a football field) is overfull with product ready to ship. The long length round stock pile is shrinking to almost nothing. prolly be laying off shortly. The wood they used to buy will have to go into something. The loggers will take it to the pellet mills if they are the only ones buying. Same goes for the saw mills. All the pellet mills have to do is create sawdust.
Will

I can see that. But doesn't that add another process and add cost to the final product?

yes, but it also removes one of the variables from the equation. there are a lot more roundwood suppliers than there are waste wood suppliers.

Round wood supplies also depend on a healthy lumber market so don't look at round wood to be answer to stable pellet prices for now. Not to many loggers are going to work at a loss just to cut roundwood (pulp) IF there are any left after this downturn. The price of fuel,equipment and labor has risen substantially in the last few years. For a long time mills have thought of loggers as expendable and their pay has not increased accordingly. With this downturn it should eliminate alot of mills ,but mostly loggers and make the market a whole lot healthier and profitable on the logging end. DO NOT count on prices going down all the pieces of the puzzle are in place for increased prices and it boils down to fuel. If not fuel it will be supply issues.