This comes as no surprise to any of my customers (dealers)...everyone of them has has to put in advance orders since April and since late spring/summer was just as busy as Sept/Oct and ½ way thru Nov....its very simple. The supply is about the same as the last three years, yet demand has gone up about 20-25%. You do the math....more demand, but not any more real supply...yeah there is probably going to be some spot shortages. If you are running around like a chicken with your head cut off looking for pellets this time of year....look in the mirror...that is who is to blame......sorry, but that is the truth....
agreed, Smokes.....or cleaning up oil spills....but hey, at just south of $300/ton, those two wonderful brands are a bargain, right? Why pay $30 more for a fir pellet when ya can save and buy Old Dominion?!
If there is a pellet shortage of 20-25% then there is nothing on the consumer side that can be some to prevent the shortage. Buying in Aril would not have helped one bit. The mills need to produce more or people need to burn something else.
Part of the supply problem is logistics not a true material based one. There is no steady year round flow. Your place is a better storage location than a pellet mill or LW's yard or Chicago siding in the land of graft and greed. The same thing happens with gasoline and fuel oil, only the bumps get smoothed out somewhat.
I agree there are logistic issues, and these would exist even if there was enough supply at the mills. This is where the problem begins, at the mills.
Douglas Middleton said: This comes as no surprise to any of my customers (dealers)...everyone of them has has to put in advance orders since April and since late spring/summer was just as busy as Sept/Oct and ½ way thru Nov....its very simple. The supply is about the same as the last three years, yet demand has gone up about 20-25%. You do the math....more demand, but not any more real supply...yeah there is probably going to be some spot shortages. If you are running around like a chicken with your head cut off looking for pellets this time of year....look in the mirror...that is who is to blame......sorry, but that is the truth.... IHATEPROPANE said: If there is a pellet shortage of 20-25% then there is nothing on the consumer side that can be some to prevent the shortage. Buying in Aril would not have helped one bit. The mills need to produce more or people need to burn something else. Mr Warm did not say there was a shortage of 20 - 25% he said the demand for pellets went up 20 - 25%, there is a big difference. The stock is likely there to cover the demand but is spread all over the place. Back in 2008 everyone was screaming pellets aren't available when they were. I had no trouble finding pellets, hell I can go out and find all kinds of pellets within 2 miles from the house. Some I wouldn't like to pay the prices being asked, but they are available.
Still plenty of good pellets here. Lots of MWP at Walmart for $219/ton! At least 12 other places around here to buy pellets. The problem comes when you are brand picky. Get a stove that isn't pellet picky and you have a better chance of not having to keep your car out of the garage so you can put a year's supply in there. I live in in a rural area and have a two story, 2.5 bay garage so I have room if I set priorities, but that may not be an option for folks who live on tiny house lots.
So the shortage is greater than 20-25%? If there were not enough pellets since the beggining of the year, and today the demand is greater and the difficulty in getting pellets greater. How can we suggest that the supply is there. I guess I am missing something.
Agreed, I think what we're seeing is the stock isn't being distributed to the area's of higher demand correctly. Yet lower demand area's have plenty to go around and a maybe even a slight surplus. Example: I have about zilch in my area, Yet a drive of less than 80 miles will get me fuel. Luckily I'm not the one that needs it.
Right on that! There is also the export factor and "other uses" factors to work into the supply formular.
Let's take subsailor's instance (I'm not picking on ya subsailor just using what you ran into). His store had 100 tons of pellets that had been ordered out back undergoing distribution, his pellets are going to be delivered in December but the store has them right now. In addition they sold him pellets that day but were likely going to be out that evening. But have another pellet delivery sometime shortly. I have a HD, Lowes, Walmart, and a Aubachon within 2 miles of my doorway and guess what they all have pellets or did a couple of days ago. Now while I won't pay an arm and a leg that sometimes is asked I can easily get pellets. Within 10 miles the selection and price range expands. I was reading all of the gloom and doom reports on here and elsewhere and discovered that one of the Auburn area places seemed to have several hundred tons of pellets at this late date. True a few of them were of the more costly variety and some were of a quality I wouldn't want to clean up after. None the less they were available. Now my friends at a local feed store have had trouble getting their preferred product out of Canada due to shipping issues and were concerned and only selling to existing customers who pre-ordered, their pellet signage was nowhere to be found when it used to be above their counter. The folks I buy from have been adding brands because of the box stores slurping up a lot of the Maine pellets, some of them are only using them to supply their Maine stores but at least one is sending them all over the place. I just checked local delivery from woodpellets.com they are sold out of LG Maximums and temporarily out of Maine Choice, but they have LG and Cleanfire Pacifics.
Part of the issue here might actually be the difference in what is PERCEIVED as to be needed by the pellet mill versus the ACTUAL need, which is dictated in whole by the consumer. Don't forget, the EU generally pays more to our pellet manufacturers than we in the states do. If I owned a mill, I'd sell to the highest bidder. Considerable production goes to the EU. Now production is going toward oil cleanup/horse bedding/kitty litter as well. For instance, I have one customer who now has 2 years of supply in her basement. She wont buy next year....that puts 4 extra tons on the market. The mill doesn't know that. Another guy might not buy at all this year, because he has plenty from last year. the mills don't know this either. And the weather would also factor in usage. Heck, the weatherman cant tell you what's going to happen tomorrow, and you think the pellet companies can better predict what the weather/pellet usage will be this winter? Not likely. The one for sure is that pellet demand has certainly increased, while, like Doug said, there really isn't additional supply. Why? I don't know. Maybe the availability of raw material? Maybe the availability of credit to the mills and the retailer? There really isn't a good way to predict what the required usage will be this year or next, but I'm pretty sure the mills have to contract for a certain amount of raw material, and anything beyond that might make said material unavailable. Its not as simple as running out and cutting down more trees. We have a wood guy somewhere here who pointed that out awhile ago..... All I know is that this business changes every year. The metrics which seemed to work last year wont necessarily (and probably wont) work this year. Makes it hard to plan. We cant simply ask the banker for 25% more financing, spend a lot of money on a new truck, more personnel, etc., just GUESSING we will sell 25% more product, because that's unlikely we would do that. And what happens if we sell the same, or less, than last year? Maybe there's new competition, the Big Boxes decide to be really aggressive, or, whatever? Then I am sitting on pellets, a truck, and a driver....pellet co still wants their money, etc....this is not a formula for success. Folks who operate that way tend not to stay around very long. Which leads me to my brother dealers running out of product/credit cut off/lack of foresight in planning which further depresses MY supply....more unknowns..... Pretty hard to predict what we need, or what will be available next year.
Meanwhile back at the ranch it is time for the bear to go outside and check out the ice thickness on the pond.
Unfortunately, The company I work for did just that. We geared up for large volume production and spent large sums of cash on equipment, Staff and raw materials. It really bit us in the azz as the sales(blamed on the economy) seemed to tank. Our customers started the year with large orders that we might have struggled to fill. Sometime mid season they started to scale down the orders as their supplies grew in their warehouses. We now have large overhead, more equipment and excess material in our warehouse. Stuff we'll have to pay for and not much for orders to fill out the season. This may have burdened us to a point we may not be able to recover from. In hind sight, We should have stayed lean and not bought so much fat.
My family had a neighborhood store. They had a deli in it with a lot of perishable food ar risk. It is called retail. Sometimes you do well, sometimeps you just break even , and sometimes you run at a loss. One thing for sure, they needed to keep up with the demand of the public, or the public went elsewhere. How well you respond to the changing wants and how well you interact with the vendors is the store manager's responsibility.
People get old, retire and pass on. My brother took it on for a while, then sold it. The bussiness is still there and seems viable. Just as when our family had it, the store has changed. What started off as a small store with gas, groceries and a snack bar, now has gas, convience foods, a large sandwich and pizza deli, ice creame and a Dunkin doughnut franchise. My brother and his wife are now doing closings on bank refinancings. Much better hours and no "help" helping themselves to the cash, beer, cigs etc.
