Wet weather, the China trade war and new commercial trucking laws could soon impact fiber supply and prices for some producers, if not already.
When it rains, it pours.
As of late, the saying has had a dual meaning for some U.S. domestic market pellet producers. Not only did many regions in the central and eastern states see the wettest year on record, but a series of market forces have and may continue to impact fiber availability and prices for some.
The effects of excessively wet weather—relentless rainfall that broke many annual precipitation records—first posed challenges for loggers, keeping them out of the woods, thus trucks of wood from mills, and extending what is dubbed as “mud season.” The fewer trucks available, the fewer loads of fiber, and the more competition to get it. “It took until about mid-January to beginning of February before we actually took a hit from the wet weather,” says Jeremy Watson, BioMaxx vice president of production and procurement. “We knew it was coming, though—we have sources in the logging industry. When the saw mills drop log inventory because they can’t get them, that changes production a lot,” he says. That means producers like BioMaxx have to pivot. “We prefer to run on 100 percent sawdust, as it takes less energy and produces a better pellet, but when sawmills can’t produce, we have to switch to wood chips,” Watson says. “So the wet weather was definitely the start of the situation we’re in.”
BioMaxx owns and operates two wood pellet plants—PA Wood Pellets in Ulysses, Pennsylvania, and Dry Creek Wood Pellets in Pittsford, New York. Total, the plants can produce around 80,000 tons of wood pellets annually—notably, hardwood pellets, which the company has been manufacturing for more than 25 years.
“The whole fiber side of the business has changed dramatically in a six-month period, but overall, the story is that there are difficulties out there, based on the fact that where we are sourcing our product from is struggling,” says Dan Wetzel, BioMaxx vice president of sales and marketing. “It’s having an effect on us and other manufacturers, and there are changes we have to make to flex with that.”
The next part of the equation is the ongoing trade war with China, the effects of which began impacting fiber suppliers last fall.
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