Pricing Outlook - Spring 2009
We fully expect this to be another strong year for pellet demand, with spring buyers enjoying the lowest prices of the year.
Several factors are expected to contribute to higher wood pellet prices this year. The first is the continuing slowdown in the construction and building materials industries. Decreased output from lumber mills and other wood processing plants has led to short supply of dry sawdust. This doesn’t affect all pellet manufacturers, but its impact is significant for those plants solely reliant on that raw material stream for their wood pellets. For those manufacturers who can process a broader array of waste material (e.g. wet wood chips), competing demands for wood fiber have led to increased manufacturing costs, which in turn raises the price of pellets.
We are already seeing these factors at work – the prices we pay manufacturers are higher this spring than they were at this same time last year. And with typical seasonal buying patterns, prices will most likely increase in the coming months. Last fall, many retailers were not able to maintain sufficient inventory to meet demand. PelletSales.com was able to keep supply, but only by shipping product long distances at much higher costs.
All is not gloomy – the long-term outlook is positive, with new wood pellet plants being built near abundant sources of raw material and the ongoing adoption of other biomass feedstocks for pellets, such as grasses and agricultural waste. However, additional supply will take time to come to market and is not expected to be in place for the fall of 2009.
In light of these dynamics and their likely affect on pricing, and with the possibility of demand exceeding available supply again this year, we strongly recommend purchasing during our Early Buy program. Early Buy Specials are available on a first-come, first-serve basis for a limited time – we sold out our entire inventory of Early Buy product in a few weeks last year.
We here at PelletSales.com take a long-term view of the biomass heating market – which is why we will continue to do our best to bring you a steady supply of high-quality products at affordable prices. However, we do recommend that you buy early this year and take some comfort in knowing that your fuel needs are met for next winter.
The PelletSales.com Team