Slow sales cause pellet maker to cut back

[peakbagger]

I saw this in the Bangor Maine newspaper and thought it may be of interest.

http://bangordailynews.com/2015/12/...ce-aroostook-county-pellet-maker-to-cut-back/

 

[UpStateNY]

Maybe they need to lower the price from last year rather than increase the price.

 

[billb3]

The loonie at 75¢US must make Canadian pellets economically attractive

 

[Pellet-King]

You can screw the people only for so long..........Payback's a B%$@#!

 

[chken]

I saw this in the Bangor Maine newspaper and thought it may be of interest.

http://bangordailynews.com/2015/12/...ce-aroostook-county-pellet-maker-to-cut-back/

They're probably doing the right thing by cutting hours in order to get thru this slow year. Good luck to them.

 

[BrotherBart]

They got hit with a double whammy. Popping for the 1/2 mil dollar expansion after the shortage in the same year they lost a customer that had been taking 15% of production. A little of what happened to Harman the year pellet stoves were flying out the door like hamburgers and they expanded big time and the next year it didn't get cold.

 

[alternativeheat]

They got hit with a double whammy. Popping for the 1/2 mil dollar expansion after the shortage in the same year they lost a customer that had been taking 15% of production. A little of what happened to Harman the year pellet stoves were flying out the door like hamburgers and they expanded big time and the next year it didn't get cold.

Triple whammy, oil prices crashed. For pellets to be competitive with fuel oil, they have to get down around $160 a ton, or the very least under $200. And there are millions of people with central heat that is oil fired right here in New England, even if it's not the norm up in the mountain states, it is at least among the norm down south and east. I can fill my oil tank for under $300 right now from about the 1/4 mark, why would I buy pellets for nearly $300 ? As a matter of fact, I can top off the oil tank here and there for about $150- $175. No, pellets right now are just a pretty looking flame in the living room that I don't always need going. Obviously I'm speaking of oil and NG, if people have higher cost central heat like propane or electric that is a different matter.

HD and crap pellets at that (right now) are $259 a ton minus delivery. Or fill my tank, oil delivered for around $200 if I pick the right point to call in the delivery.. And the independent dealers are getting even more for pellets around here. I'm envious of the guys who can go to a farm stand and get pellets for under $200 . That surely is not the case in New England, at least not SE. Ma. But these plants I'm sure know their low end, seems like they have to reduce production cost if they want to compete and sell product..

 

[Pellet-King]

Triple whammy, oil prices crashed. For pellets to be competitive with fuel oil, they have to get down around $160 a ton, or the very least under $200. And there are millions of people with central heat that is oil fired right here in New England, even if it's not the norm up in the mountain states, it is at least among the norm down south and east. I can fill my oil tank for under $300 right now from about the 1/4 mark, why would I buy pellets for nearly $300 ? As a matter of fact, I can top off the oil tank here and there for about $150- $175. No, pellets right now are just a pretty looking flame in the living room that I don't always need going. Obviously I'm speaking of oil and NG, if people have higher cost central heat like propane or electric that is a different matter.

HD and crap pellets at that (right now) are $259 a ton minus delivery. Or fill my tank, oil delivered for around $200 if I pick the right point to call in the delivery.. And the independent dealers are getting even more for pellets around here. I'm envious of the guys who can go to a farm stand and get pellets for under $200 . That surely is not the case in New England, at least not SE. Ma. But these plants I'm sure know their low end, seems like they have to reduce production cost if they want to compete and sell product..

Just delivered oil monday for $1.38 gal, pellet stove sits still with ash from last yr...forgotten...good to place my beer or a tv remote

 

[STANG302]

Have Pellet mill suppliers (sawdust/wood scraps) finally caught up to the fact that they can increase there bottom line by increasing there prices?
Pushing cost of pellet production higher?

It took a while for this to happen with bio-diesel. Eventually the demand for veggie oil out weighed the cost savings of giving the stuff away. So they started charging and prices near me are constantly on the rise.

 

[alternativeheat]

Have Pellet mill suppliers (sawdust/wood scraps) finally caught up to the fact that they can increase there bottom line by increasing there prices?
Pushing cost of pellet production higher?

It took a while for this to happen with bio-diesel. Eventually the demand for veggie oil out weighed the cost savings of giving the stuff away. So they started charging and prices near me are constantly on the rise.

One Mainer I know very well said that he felt when everyone got hooked on pellets or at least enough people invested in stoves vs wood stoves then the prices would start climbing. His view being the captive audience theory more or less.

 

[peakbagger]

Welcome to the world of commodities, 10 years ago everyone was betting that natural gas would price itself out of the market and for years others have said that heating oil would do the same. Wood pellets made sense with high priced natural gas and 90 buck a barrel oil but its hard to justify them now.

 

[Harman Lover 007]

This thread looks familiar.......
https://www.hearth.com/talk/threads/northeast-pellets-llc-cutting-production-at-maine-plant.151192/

 

[bags]

I was on HD's web site this AM and noticed they have marked down their crappy pellets to $239 a ton. They are advertising saving 8%. Whoppie! I hope the loss of demand gives these pellet suppliers and manufacturers a good reality check. IMHO I do not see any pellets really ever being worth more than $225 per ton.

Granted that's pricing here and not in the north east and major cities where prices increase on everything usually. I still could not justify paying for ANY pellet brand no matter how great at $275 to $300 or more. That is just not cost effective no matter how you cut it unless some day oil, gas, etc; go insanely higher. And if I still wanted a fire it would be cord wood for next to nothing vs. some over priced pellets.

My Harmans would be sold and if I could not get a decent price they'd be in my truck going to my friends fab shop to convert to wood burners some how. I'm sure it could be done with some modifications. Just my buck fifties worth and how I feel about greedy producers and sellers pricing themselves out of the game. Karma.

I also hope these manufacturers do not continue games and set fair prices each fall. The jacking up and price gouging just because it's a little colder some winters is a joke and rubs me the wrong way big time. I get businesses are in it to profit but there is a fine line between screwing consumers and being fair. I feel they were all trying to maximize profits last year and the last several really. My friend who has heated with pellets for 7 years now never paid more than $200 a ton until the last couple of years when suddenly pellet prices jump drastically all of the sudden. No reason to other than profits.

I think these producers and suppliers are getting a little pay back now as people are sick and tired of taking it in the rear on per ton prices and have opted out altogether heating with other sources and cheaper or easier for the same price even. Last year and by the pricing this fall these idiots thought they had everyone over the barrel. I hope they wake up and this forces them to play fair.

I get supply and demand but I can also see right thru BS. By the way they and others always love the excuse of gas prices went up so we had to jack our prices up too. Fine! However we never see them reduce prices since gas is so cheap now. Have they? I know that's not always the determining factor but they surely never hesitate to use it as another price increase excuse.

What I see as a nice part of the problem is that many others have realized Hey we can make some money at this pellet game and once they turn it into a for major profit business instead of a good way to get rid of waste etc and make a bit doing so it taints the market.

Pellets have gone from a means of getting rid of a waste product and turned into a big business. I have zero sympathy for these guys losing business nor shelling out $500K on a for now bad investment. Trust me they were not worried about that when they were rubbing their hands together and laughing about the high prices folks were paying. They can take their pity party and shove it as far up their butts as they can reach. I actually enjoyed reading about their big money plan that back fired. I hope pellets get back to the point to where they almost have to give them away in order to get rid of them.

And another point: I find it funny that a local school has chosen to buy from a farther away pellet producer. They went to another country. Maybe not real far way but obviously they switched for a reason. Probably spending less money so that alone prove these pity party fools are price gouging. How in the world can they buy from farther away and likely for less money than from a producer right in their own state. These morons priced themselves out of the game Hahahahaha! That's what they get and deserve.

 

[Funnydirt14]

I was on HD's web site this AM and noticed they have marked down their crappy pellets to $239 a ton. They are advertising saving 8%. Whoppie! I hope the loss of demand gives these pellet suppliers and manufacturers a good reality check. IMHO I do not see any pellets really ever being worth more than $225 per ton.

Granted that's pricing here and not in the north east and major cities where prices increase on everything usually. I still could not justify paying for ANY pellet brand no matter how great at $275 to $300 or more. That is just not cost effective no matter how you cut it unless some day oil, gas, etc; go insanely higher. And if I still wanted a fire it would be cord wood for next to nothing vs. some over priced pellets.

My Harmans would be sold and if I could not get a decent price they'd be in my truck going to my friends fab shop to convert to wood burners some how. I'm sure it could be done with some modifications. Just my buck fifties worth and how I feel about greedy producers and sellers pricing themselves out of the game. Karma.

I also hope these manufacturers do not continue games and set fair prices each fall. The jacking up and price gouging just because it's a little colder some winters is a joke and rubs me the wrong way big time. I get businesses are in it to profit but there is a fine line between screwing consumers and being fair. I feel they were all trying to maximize profits last year and the last several really. My friend who has heated with pellets for 7 years now never paid more than $200 a ton until the last couple of years when suddenly pellet prices jump drastically all of the sudden. No reason to other than profits.

I think these producers and suppliers are getting a little pay back now as people are sick and tired of taking it in the rear on per ton prices and have opted out altogether heating with other sources and cheaper or easier for the same price even. Last year and by the pricing this fall these idiots thought they had everyone over the barrel. I hope they wake up and this forces them to play fair.

I get supply and demand but I can also see right thru BS. By the way they and others always love the excuse of gas prices went up so we had to jack our prices up too. Fine! However we never see them reduce prices since gas is so cheap now. Have they? I know that's not always the determining factor but they surely never hesitate to use it as another price increase excuse.

What I see as a nice part of the problem is that many others have realized Hey we can make some money at this pellet game and once they turn it into a for major profit business instead of a good way to get rid of waste etc and make a bit doing so it taints the market.

Pellets have gone from a means of getting rid of a waste product and turned into a big business. I have zero sympathy for these guys losing business nor shelling out $500K on a for now bad investment. Trust me they were not worried about that when they were rubbing their hands together and laughing about the high prices folks were paying. They can take their pity party and shove it as far up their butts as they can reach. I actually enjoyed reading about their big money plan that back fired. I hope pellets get back to the point to where they almost have to give them away in order to get rid of them.

And another point: I find it funny that a local school has chosen to buy from a farther away pellet producer. They went to another country. Maybe not real far way but obviously they switched for a reason. Probably spending less money so that alone prove these pity party fools are price gouging. How in the world can they buy from farther away and likely for less money than from a producer right in their own state. These morons priced themselves out of the game Hahahahaha! That's what they get and deserve.

Can I get an Amen brother!!

 

[peakbagger]

The supply will match the demand at some point as higher cost producers shut down. Once the surplus goes away, the next time it gets cold the price of pellets will skyrocket as there will be fewer suppliers. That's one of the reasons I have stuck with firewood instead of pellets. I have access to trees and don't have worry about a middleman.

Wonder when someone will come up with a adaptor plate to add an oil gun to a pellet stove

 

[alternativeheat]

Wonder when someone will come up with a adaptor plate to add an oil gun to a pellet stove

Conversion kits, a couple of us have mentioned that here. No takers, reminds people of staring at their furnaces in the basement. But a wick, now we might have something ! Nice gentle flame, good sized wick in my p61 would take. I can see 50 to 60k btu happening that way. Certainly 40k.

 

[alternativeheat]

I was on HD's web site this AM and noticed they have marked down their crappy pellets to $239 a ton. They are advertising saving 8%. Whoppie! I hope the loss of demand gives these pellet suppliers and manufacturers a good reality check. IMHO I do not see any pellets really ever being worth more than $225 per ton.
.

I read this and called my local HD and TSC, still priced the same here $259 a ton. And $5.18 a bag at HD, $5.39 at TSC. TSC can't move a pellet but HD is moving quite a few. I told teh guy at TSC when he said the warm weather this year killed sales, I said so has oil prices. I can fill my tank for less than your ton of pellets costs. You gotta lower your price, then you will sell them. Not that he can do anything about it, he is a floor jockey but hey if they hear it enough maybe they will move. He didn't know HD had them cheaper per bag than they do !

 

[bags]

My TSC has really crappy pellets with nothing but poor reviews everywhere. Fiber Energy or something like that. I looked them up and everyone said they are terrible in all ways. TSC has these priced at $259 a ton here. LOL! Got luck moving that saw dust bark bits.

All the TSC around here was selling for $215 a ton pre-buy and you had to pay but they would NOT tell you what they were getting.

 

[alternativeheat]

My TSC has really crappy pellets with nothing but poor reviews everywhere. Fiber Energy or something like that. I looked them up and everyone said they are terrible in all ways. TSC has these priced at $259 a ton here. LOL! Got luck moving that saw dust bark bits.

All the TSC around here was selling for $215 a ton pre-buy and you had to pay but they would NOT tell you what they were getting.

TSC here has mostly their own brand, supposed to be Maine Woods ( = ashy but good heat).. They have another brand too, crappy, 7800 btu.

I imagine they bought into these things and are stuck with the price and with a winter long delivery system as well. Unless the manufacturer offers some kind of rebate program or some such thing they're gonna lose their shirts on this years pellet supply. TSC next will be filling the customer parking lot with them if they get many more deliveries this winter. And Feb generally the deliveries start slowing down but don't stop. My wild imagination ( whether it's accurate or not is another matter) sees them holding on to this stock till next year !! They have pretty much a whole years worth of stock there that hasn't moved. Now that's a cluster. This whole situation doesn't bode well for pellet suppliers on any end of the business. They really need to get their heads on straight and realize they are not a main stream fuel supply but alternative heating and keep the pricing accordingly ! But hey, the customers bought them too.

I can tell you this though, watch out for future supplies ( a year or two down the road) because big business doesn't take many hits like this and stay with that product for a second round. Yeah, we might see a fire sale and then what ? No stock headed into winter 2017 ?

 

[bags]

That thought has crossed my mind about the BBS and TSC places etc; getting stuck and then not buying more but that would also be a gamble on their part by not keeping supplies too. For instance if they don't order and then there is a cold winter with higher demand look at the money they would loose possibly. Tough call. Depending on how much places are stuck with and need to store also will determine sales this spring. I can see them holding onto some but commercial real estate is valuable and so is the business' storage areas. Many need to move out seasonal stock to make room for the next.

I am just hoping the BBS and such call the pricing shots with manufacturers and say sell them reasonably where we can make money and move them or keep them if you think they are gold plated. The article cited above is a good sign that this over pricing isn't the correct answer for the pellet business and they have possibly shot themselves in the foot with their home run pricing. If you think about it the mild winter is simply an inaccurate and lame excuse. Yes it is probably slowing sales some but the main reason sales are slow is because pellet burners are sick and tired of getting it cracked off in their butts price wise. Until these fools recognize that they are spinning their wheels.

Customers simply move along to the next best thing.
I am already researching currently and looking at buying a new more efficient wood stove. I'll be buying one soon if not definitely by this spring at a sale price. I'm doing this for two main reasons: 1. To protect myself if pellet costs get stupid and right now they are lacking some serious IQ. 2. To have another option just in case of extended electrical outages and also to add something else to my heating arsenal. IMO one can never have too many options there and the more the merrier.

My best guesstimate is that manufacturers were doing more of the price setting but also the BBS and suppliers were adding some fluff also while both were hoping to hit a home run with another cold winter this year. Sadly surprised I'd say, but they can still hope the winter really kicks in and gets very cold to still drive their sales. Possible but not looking good.

I think they will hold tight price wise but if January is pretty mild or even average I can see places doing some quick discounts at the end of Jan. to try to move them then. If not the price will need to drop quite a bit to entice people to buy them and get them out of the way but also a good enough deal buyers would be willing to buy very early and store them taking up their valuable or limited space at home. It's going to be interesting but I really hope a mild winter ensues. That would help every pellet burner I believe.

I'd also say they will always sell pellets but many places may go with more of a pre-buy type selling point. That way they sell them and are not stuck with them. I feel the BBS and manufacturers both grossly over estimated the worth of their over the top pricing on pellets and demand. Especially the lower end crap they are selling.

I don't care how cold a given winter is. When pellets price themselves out people will still go to alternative energy sources even to save just a little just like many did this year with oil and such. Bonus with oil is that currently for some it is a lot cheaper than pellets and even many break even prospectors are choosing it for other reasons over pellet heat.

Those reasons are sometime more about principle than price. Also many are choosing break even oil prices because flipping a switch is easier than humping 40 pounders and cleaning although not bad and well worth dealing with for properly priced pellets. Bottom line here is that I think many are expressing what they think and how they feel about the huge price increases in what is an alternative heat choice and not main stream by any means by letting manufacturers and suppliers sit and spin on there abundant over priced tonnage.

Many seem to be boycotting pellets mainly because they feel they are over priced and no longer a cheaper alternative heating option. I'm still good but if the price goes up to $250 or more a ton here and I am OUT! I also have better AND CHEAPER options.

 

[bags]

That thought has crossed my mined about the BBS and TSC places etc; getting stuck and then not buying more but that would also be a gamble on their part by not keeping supplies too. For instance if they don't order and then there is a cold winter with higher demand look at the money they would loose possibly. Tough call. Depending on how much places are stuck with and need to store also will determine sales this spring. I can see them holding onto some but commercial real estate is valuable and so is the business' storage areas. Many need to move out seasonal stock to make room for the next.

I am just hoping the BBS and such call the pricing shots with manufacturers and say sell them reasonably where we can make money and move them or keep them if you think they are gold plated. The article cited above is a good sign this over pricing isn't the correct answer for the pellet business and possibly shot themselves in the foot with their home run pricing. Customers simply move along to the next best thing. i am already researching currently and looking at buying a new more efficient wood stove. I'll be buying one soon if not definitely by this spring. I'm doing this for two main reasons: 1. To protect myself if pellet costs get stupid. 2. To have another option just in case of extended electrical outages and also add something else to my heating arsenal. IMO one can never have too many options there and the more the merrier.

My best guesstimate is that manufacturers were doing more of the price setting but also the BBS and suppliers were adding some fluff also both hoping to hit a home run with another cold winter this year. Sadly are they surprised but they can still hope the winter really kicks in and gets very cold to still drive their sales. possible but not looking good. I think they will hold tight price wise but if January is pretty mild or even average I can see places doing some quick discounts at the end of Jan. and try to move them then. If not the price will need to drop quite aa bit to entice people to buy them and get them out of the way but also a good enough deal buyers would be willing to buy very early and store them taking up their valuable or limited space at home. It's going to be interesting but i really hope a mild winter ensues. That would help every pellet burner I believe.

I'd also say they will always sell pellet but many places may good with more of a pre-buy type selling point. That way they sell them and are not stuck with them. i feel the BBS and manufacturers both grossly over estimated the worth of their over the top pricing on pellets and demand. I don't care how cold a given winter is. When pellet price themselves out people will still go to alternative energy sources even to save just a little just like many did this year with oil and such. Bonus with oil is that currently for some it is a lot cheaper than pellets and even many break even prospectors are choosing it for other reasons.

Those reasons are sometime more about principle than price. Also many are choosing break even oil prices because flipping a switch is easier than humping 40 pounders and cleaning although not bad and well worth dealing with for properly priced pellets. Bottom line here is the I think many are expressing what they think and how they feel about the huge price increases in what is an alternative heat choice and not main stream by any means by letting manufacturers and suppliers sit and spin on there abundant over priced tonnage.

 

[alternativeheat]

That thought has crossed my mined about the BBS and TSC places etc; getting stuck and then not buying more but that would also be a gamble on their part by not keeping supplies too. For instance if they don't order and then there is a cold winter with higher demand look at the money they would loose possibly. Tough call. Depending on how much places are stuck with and need to store also will determine sales this spring. I can see them holding onto some but commercial real estate is valuable and so is the business' storage areas. Many need to move out seasonal stock to make room for the next.
.

Time will tell on the whole ball of wax. Hey, I could end up back on coal before it's done, at least it's easy to store being basically weather proof material..

 

[bags]

Seems they all get you coming and going one way or another any how. If I had access to coal I'd seriously entertain that. I do like my pellets and stoves but as I have repeatedly said there comes a point where it might no longer be the best option nor money spent. I hope not and speculating doesn't do us much good.

What does is having options. At least me. I think it will be interesting to see how the whole pellet scenario plays out.

 

[chken]

And another point: I find it funny that a local school has chosen to buy from a farther away pellet producer. They went to another country. Maybe not real far way but obviously they switched for a reason. Probably spending less money so that alone prove these pity party fools are price gouging. How in the world can they buy from farther away and likely for less money than from a producer right in their own state. These morons priced themselves out of the game Hahahahaha! That's what they get and deserve.

I'm guessing you're talking about a division of the University of Maine that is buying from Canada instead of Northeast Pellets. Canada is right next door to Maine, geographically, kind of like buying from New Hampshire or Vermont. Anyhow, the likely reason is that the exchange rates between the US and Canada have changed quite a bit in the US' favor, so buying Canadian product is a lot cheaper than in years past. I'm just surprised we haven't seen local pellet retailers pricing their Canadian pellets lower. They should be buying them cheaper, and passing the savings on to the consumer.

 

[DMKNLD]

I'm guessing you're talking about a division of the University of Maine that is buying from Canada instead of Northeast Pellets. Canada is right next door to Maine, geographically, kind of like buying from New Hampshire or Vermont. Anyhow, the likely reason is that the exchange rates between the US and Canada have changed quite a bit in the US' favor, so buying Canadian product is a lot cheaper than in years past. I'm just surprised we haven't seen local pellet retailers pricing their Canadian pellets lower. They should be buying them cheaper, and passing the savings on to the consumer.

Agreed. With the Loonie exchange rate at $.72 now, and delivery costs down with the lower diesel prices, there is no way Canadian pellets should cost what they do here in the states.