A Resilient Year
Pellet Mill Magazine reviews U.S. EIA Monthly Densified Biomass Fuel Report data for 2020.
From weathering the coronavirus pandemic, unprecedented wildfires and passage of the BTU Act, the U.S. wood pellet industry experienced an unusual year. But despite a winter that was 7.4% warmer than normal, the U.S. domestic wood pellet industry sold more than 2.18 million tons of wood pellets, just shy of the 2.2 million tons sold in 2019, which was widely acknowledged as a strong year for producers.
Heating Degree Days
Though warmer than normal, the 2020-’21 heating season was 2.5% colder than the previous heating season, according to U.S. National Oceanic and Atmospheric Administration data. February was the only month colder than normal, at 12.5%. The South Atlantic (West Virginia, Virginia, North Carolina, South Carolina, Georgia, Florida), Middle Atlantic (New York, Pennsylvania, New Jersey) and New England (Maine, Vermont, New Hampshire, Massachusetts, Connecticut and Rhode Island) regions experienced the highest variations from HDD averages, at 11%, 10.6% and 10.2%, respectively).
Fiber Prices, Volume
U.S. wood pellet producers purchased just under 17 million tons of fiber in 2020, with the “other residuals” category—bark, logging residue, wood chips, post-consumer wood and unmerchantable wood—representing the largest portion of purchases at 5.7 million tons. Wood product manufacturing residuals contributed to approximately 4.7 million tons of pellet fiber, followed by sawmill residues at 4.1 million tons and roundwood/pulpwood at 2.4 million tons.
Sales, Inventory & Production
Domestic wood pellet sales topped 2.18 million tons in 2020, in comparison to 2.2 million tons in 2019. The average price per ton for 2020 was $173.50, compared to $166.25 in the year prior.
Breaking down pellet sales and prices by region, the East sold 1.14 million tons, at an average price of approx. $186 per ton. The South came in just under 555,000 tons at an average price of $142 per ton, followed by the West at approximately 488,000 tons at $181 per ton.
As for export sales, submitted data indicates nearly 6.9 million tons of wood pellets at an average price $166 per ton, compared to 6.8 million tons at approximately the same price per ton in 2019.
In January 2019 and 2020, domestic inventory levels were very similar, trending between 50,000 and 55,000 tons. Pellets on the ground in February and March of 2020 were nearly double that of 2019, but the numbers began to trend closer in June and July, with September 2020 dipping 30,000 tons below September 2019, and leveling out in November.
As for industrial pellet inventory, the South—currently the only region exporting from the U.S.—averaged roughly 356,000 tons of monthly inventory in 2020. Months with the lowest and highest numbers of inventory were consecutive, with November and December reports indicating approximately 440,000 and 253,000, respectively. Compared to 2019, monthly inventory averaged about 326,000 tons, with January and February representing year lows, at 223,000 and 229,000.
Domestic production in 2019 and 2020 were very close despite the challenges brought by 2020, reaching over 1.98 million tons during the year, compared to just above 2 million tons in 2019. The East manufactured 1.19 million tons in 2020—just 60,000 less than in 2019. The South and West produced 26,000 and 40,000 tons less than the year prior, respectively.
Looking at 2021
Initial data for January 2021 has been published, though it will likely be updated as post-deadline reporting comes in. So far, some observations of the initial data includes the following:
– For the first time since the report’s inception, residential heating pellet producers manufactured more wood pellets in January than in December. Domestic inventory for domestic wood pellets was approximately 80,500 tons in December, jumping to more than 98,000 tons in January. The smallest inventory gap since the report’s inception was in December 2016, when it decreased by about 6,000 tons from December through January. The largest inventory gap was in December 2017, when levels decreased by 70,500 tons from December through January.
– While inventory levels increased from December to January, sales did not. Approximately 177,000 tons were sold in December, with that number dipping to 134,514 in January. The only other year sales decreased from December to January was in December 2016 through January 2017 (216,915 tons to 180,939).
– 391,000 tons of wood pellet export inventory has been reported for January, approximately 25,000 tons more than in January 2020, and 168,000 more than in January 2019.
With the pandemic waning in many countries, projects temporarily paused or delayed—from stay-at-home orders and worksite restrictions to fiber and equipment supply chain issues—are making headway. That progress, coupled with new U.S. consumer incentives to purchase pellet-consuming appliances (i.e., the BTU Act, which could eventually be expanded to include commercial applications), and rising oil prices, it could—if Mother Nature cooperates—set the stage for a better-than-ever season for U.S. wood pellet manufacturers.
Author: Anna Simet
Editor, Pellet Mill Magazine
Printed in Issue 2, 2021 of Pellet Mill Magazine