EDITOR'S NOTE

Anna Simet

EDITOR asimet@bbiinternational.com

Commodities, Inflation and the Upcoming Heating Season

As we close out November with producing the final Pellet Mill Magazine of 2021, I decided to look back to see what we were reporting in the same edition in 2020. One of the features reviewed the virtual Pellet Fuels Institute Annal Conference, which had quite a bit of focus on initial implications of the pandemic. One of the main challenges at the time was simply sustaining operations, and most pellet producers were able to do so with minimal interruptions, though staffing challenges have persisted. One year later and those same challenges remain, on top of inflation and ballooning commodity prices, as well as supply chain interruptions. As such, I decided to conduct a survey to gauge the degree to which producers were being affected, and provide some kind of basis for comparison. While I didn’t get quite as many respondents as I had hoped to, I think the sampling is a good representation of where things are at—10 different heating pellet producer companies responded to questions about the prices of commodities essential to their operations, including pallets, grease and fiber, as well as other issues that are presenting challenges for some. “Surveying Costs,” page 12, shares the results of the survey. A sincere thank you to those who took the time to answer these questions.

While the aforementioned feature is focused on the domestic wood pellet industry, our page-16 feature, “Assessing the Global Supply Landscape,” pivots to global markets. In it, you’ll find commentary from two biomass consultants at Hawkins Wright who share insight about spot market prices and buying trends, soaring natural gas, carbon and power prices and implications on pellet consumers, as well as policy developments and other interesting market influences. Overall, it is expected to be a pretty tight market through the winter, especially so if the cold comes early or persists into spring. That said, as noted by Rachel Levinson, biomass research manager, lessons were learned during the last “shortage” that occurred a few years ago, so it is unlikely that utilities will find themselves in the same positions.

Finally, we just sent the 2022 North American Pellet Producer Map to print. While there were considerably fewer projects under construction this year than last, it’s not surprising given the circumstances. It will certainly be interesting to see what happens a year from now. Our goal is to ensure that data on the map is as accurate as possible, so please reach out with any additions, modifications or other changes.

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