There is only one word to describe the current market in wood pellets – unprecedented. Many of the changes that have happened in the pellet industry have been brewing for years, but the effects have really been felt by consumers since last spring. The appeal of wood pellet fuel has never been stronger, but that has driven some changes that every buyer of pellets will see.

New Stove Sales

Pellet stove sales continue to grow by leaps and bounds. The comfort and warmth generated by a pellet stove, combined with the run-up in heating oil prices and propane last winter, has convinced many households in New England to install a pellet stove. Many of the stove shops we work with in have let us know that their installations of new stoves are up as much as 50% so far this year and sales continue to be strong this fall. Anyone buying a new stove can see a wait time of several weeks for installation as the stores work to keep up with sales. These new stoves mean more people looking for pellets this fall.

Exports Continue to Soar

Pellets aren’t just used by people burning them in the pellet stoves in their homes. In fact, that’s that smallest part of the overall market for wood pellets – with international exports leading the uses of pellets at this point. The U.S. Energy Information Administration is reporting that “U.S. wood pellet exports have doubled in 2013 in response to growing European demand.”

Exports aren’t just going to power plants, though. Italy continues to grow its residential wood pellet heating market. Because Italy produces just a small fraction of its pellet needs, the country’s imports have escalated from 500,000 tons in 2009 to over 2.5 million tons in 2013. The majority of the pellets that Italy imports come from North American pellet producers. And with many Italian consumers moving away from traditional fossil heating fuels, the demand for wood pellets is expected to grow by 15% (again) this year.

Inventory on Hand

After the harsh winter last year, many folks found themselves running out of pellets in February and March – causing a short term shortage of pellet fuel. Everyone in the industry, from the mills to the retailers to the people burning the fuel, ran through their entire inventory last spring. Many mills (and retailers and consumers) take the spring to stock up on pellets in anticipation of the fall sales of pellets. Since all the pellets produced last spring got sold in the spring, this meant that almost everyone was running behind in stocking up for this fall. Call this the hang-over effect from last winter. No one wants to be caught short of fuel in the middle of winter again this year, so people are buying early and stocking up now, increasing the demand for pellets this winter.

Polar Vortex or Mild Winter?

After a few years of mild winters, the winter of 2013 will go down as one of the coldest in many years. The question now turns to the future and to the winter of 2014. Will it be mild winter or a repeat of last year? That depends on who you ask.

Sadly, the Farmer’s Almanac is predicting another harsh winter, both in terms of temperature and precipitation. Significant snowfalls and many winter storms are predicted across the northern zones. However, the Department of Energy is taking the opposite stance and predicting a mild winter. The EIA, using forecasts from the National Oceanic and Atmospheric Administration, predicts the number of heating degree days – a measure of heating demand – will fall 12 percent this year.

As you can see, the forecasts are still all over the place, but after last year, we are seeing that people want to ensure they have enough fuel on hand going into this winter.