Review of North American Pellet Hea5ng Markets Walker.pdfNew England Heating Oil Prices $/gallon and pellet equivilent 205 255 305 355 405 455 505 1.80 2.30 2.80 3.30 3.80 4.30 Oct-2011

ReviewofNorthAmericanPelletHea5ngMarkets

SethWalkerSeniorEconomist

DirectorofBusinessDevelopmentFutureMetrics

FutureMetrics

IntelligentAnalysisandStrategicLeadershipforthePelletSector

8AirportRoad Bethel,ME04217,USAwww.FutureMetrics.com

CanadianPelletIndustryExposuretoNorthAmericanHeaNngMarkets

•  Lastyear,bothmarketswere~170kmt

•  CanadiandemandremainsfairlysteadydespitepoormarketcondiNons

•  USexportsdown22%fromhighsin2014(219,000mt)

©2017FutureMetrics,LLC

-

50

100

150

200

250

300

350

400

450

12-13 13-14 14-15 15-16 16-17

ThousandMT

CanadianPelletDemand ExportstoUSA

WhyissomuchoftheUSwoodpelletmarketconcentratedinthe

Northeast?


84%ofhea:ngoilsalesintheUSareintheNortheastOil+Propanearetheprimarytargetsforpellets

Lowoilprices?Thepelletindustryhasanaturalgasproblem…

Historicallylowhea:ngoilpricesares:llsignificantlyhigherthannaturalgasprices


USPelletStoveSales


•  Boomyearsforpelletstoveshipmentscorrelatestronglytowhennaturalgaspriceswerehistoricallyhigh

•  FutureMetricsesNmates~900kstovesincirculaNonintheUS

HeaNngMarketDrivers:OilPrices


Source:EIA,FutureMetrics

NewE ng landHeating OilP ric es$/gallonandpelletequiv ilent

205

255

305

355

405

455

505

1.80

2.30

2.80

3.30

3.80

4.30

Oct-2011

Jan-2012

Apr-2012

Jul-2012

Oct-2012

Jan-2013

Apr-2013

Jul-2013

Oct-2013

Jan-2014

Apr-2014

Jul-2014

Oct-2014

Jan-2015

Apr-2015

Jul-2015

Oct-2015

Jan-2016

Apr-2016

Jul-2016

Oct-2016

Jan-2017

$/tonpe

llete

quivilent

$/gal

HeaNngMarketDrivers:Weather


70

80

90

100

110

120

130

98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17

US Pellet HDD Index Long term average = 100

E. N. Central Middle Atlantic Mountain New England Pacific W. N. Central

Source:FutureMetrics

US R es identialPe lletDemandF orecas tMillionMT

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18est

80

85

90

95

100

105

110

115

120

Adjusted

PelletD

emand

HDDInde

x

AdjustedPelletDemandPelletHDDIndex

EsNmaNngUSPelletDemand


CanadianResidenNalPelletMarketGrowth


Source:HPBA,FutureMetrics

C anadianPelletS toveS tockandS hipments

-

2

4

6

8

10

12

-

10

20

30

40

50

60

70

80

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018est

Shipmen

ts-Thou

sand

s

Stock-Tho

usands

StoveStock

StoveShipments

•  SNllanemergingmarket

•  GeneralupwardtrenddespitedifficultmarketcondiNons

•  AccordingtoHPBA2015wasthehighestyearforCanadianstovesales

•  UShasn’tcomeclosetohighsreachedinthemiddleofthelastdecade

Source:FutureMetrics

C anadianR es identialPe lletDemandF orecas tThous andMT

80

85

90

95

100

105

110

115

120

-

50

100

150

200

250

08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18est

HDDInde

x

Adjusted

PelletD

emand

CanadianResidenNalPelletDemand


CurrentMarketCondiNons:ProducNon

•  2.3millionstofinstalledcapacityinUSNortheastandNorthCentral

•  CapacityUNlizaNon“recovered”to34%inJune

•  Upfrom22%inApril

•  Healthylevels>70%forthisindustry


0

20

40

60

80

100

120

0

0.5

1

1.5

2

2.5

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-1

6Au

g-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Prod

uc5o

n–Th

ousand

ST

Capa

city–M

illionST

EIASurvey:“USEast”PelletCapacityandProduc5on

CurrentMarketCondiNons:Inventory

•  Inventorygrowthhaspickedupmarginallyoverthelastfewmonths

•  Overallproducershavedoneamuchbeierjobcontrollinginventorybuildakerthesecondmildwinterinarow

•  Inventorylevels8%lessinJune‘17thantheywereinJune‘16


-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

300

350

400

450

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-1

6Au

g-16

Sep-16

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

%Cha

ngeinIn

ventory

Inventory–Th

ousand

ST

EIASurvey:US“East”PremiumPelletInventory

FutureMetricsNewEnglandPelletPriceSurvey

•  FutureMetricsisnowcollecNngdetailedretailpricingdataonamonthlybasisinNewEngland,including:–  Retailer–  Brand–  State

•  Insightslike:–  Dougfirpelletscarryan$81premiumoverblendedorspeciesnotspecifiedpellets


255262 266

336

$200

$220

$240

$260

$280

$300

$320

$340

$360

Blend/NS Hardwood Sokwood DougFir

NewEnglandRetailBaggedPrices–byspeciesUSD/ST

ShortTermOutlookforNorthAmericanPelletHeaNngMarkets

• Lowoilprices• Comingoff2warmwinters

ChallengesRemain

• ProducershavebeenmorecauNousthisyear• Capacityexpansionhasbeenvirtuallynon-existent

OntheBrightSide

• Areturntoa“normal”wintermeans~200,000tonsofaddiNonaldemand

• Shorttermoutlookforoildoesn’toffermuchhelpOutlook


ThankYou!

[email protected](617)702-2418@BioEconomist

NewContactInfo


Review of North American Pellet Hea5ng Markets Walker.pdfNew England Heating Oil Prices $/gallon and pellet equivilent 205 255 305 355 405 455 505 1.80 2.30 2.80 3.30 3.80 4.30 Oct-2011

Documents