A West Coast Rebound

Unfortunately, the wet and cold conditions that delivered good, or by some accounts, even great, years in the U.S. West weren’t experienced all across North America, particularly in the Northeast, which experienced another soft winter.
By Tim Portz | March 16, 2017

While in the final stages of producing this issue of Pellet Mill Magazine, I found myself on the phone with editorial board member Chad Schumacher of Superior Pellet Fuels, Alaska’s only pellet producer. After an unseasonably warm 2015-'16 winter, Schumacher and his team at Superior entered the 2016-'17 heating season with significant concern. Superior began the season with inventory on hand, fully aware that its customers, too, had inventory waiting to be burned. As Schumacher expected, sales were slow to come. As the season progressed, however, winter in Fairbanks felt more like winter.
During our conversation, he told me that every day in the 10-day forecast for Fairbanks included zero and below-zero temperatures. Schumacher’s customers are burning pellets, and buying more. The relief in his voice spoke volumes. A survey we conducted in the months leading up to this issue make it clear that, regionally speaking, he is not alone. Of our respondents from the Pacific Northwest, 90 percent reported that sales are up when compared to last season. Half of those classified sales as “up significantly.” The pellets Superior is producing now will be burned within days of their purchase, and Superior’s customers will exit this heating season with few, if any, pellets on hand. For Superior, this means that the slow start that plagued this year is unlikely, and challenges like wood yards full of material yet to be utilized can be avoided.

Unfortunately, the wet and cold conditions that delivered good, or by some accounts, even great, years weren’t experienced all across North America. Producers in the Northeast endured another lackluster winter, and survey responses indicated everything one might expect from anyone in the business of delivering Btus: softer sales, reduced production and growing on-hand inventories.

For producers with tenure, these are the realities of the pellet business. During a group interview, portions of which appear inside this issue, Ken Tucker, a 30-year veteran in the space, emphasized the discipline required to weather the warm years, so that when weather patterns such as the one that has Fairbanks in a deep-freeze descend upon the market, a producer can be there to capitalize. For Tucker, priority one has been working closely with feedstock suppliers to ensure that when demand for pellets comes back, he has the raw material available to meet it. Tucker and Lignetics will be back next year, hopeful that prolonged, colder temperatures are widespread, and that the strong years posted by their plants in the West will do more than simply balance out the off-years of their sister plants back East.

Author: Tim Portz
Vice President of Content & Executive Editior