2008 Update
Please be aware that this page is being put together rather quickly and we are not trying to cause additional urgency in this unusual time, but we do want to make people aware what is going on in our part of the world with oil, LP (propane), and metals prices at historic high prices.
Pellets Availablility
As our main news page indicates, we had to limit pellet sales to non FlameWorks customers for a period of time and also discontinue pellet sales to the public entirely so as to ensure our have an adequate supply of fuel for this season.
The main reasons we feel wee need to take action at this time are summarized below.
- People are nervous. About 35% of our customers get there fuel spaced (basically) evenly over the year, but right now many that usually buy three tons over many months are purchasing 4 tons at once... just in case. As you would imagine, this really changes things.
- People were driving from great distances for pellets. We get hundreds oh hits per day on the website and dozens of calls about pellet prices. The major metro areas are really having challenges with the cost of commodities and they seem to be directing the masses to the heartland.
- There are many new stove buyers. Pellet stove sales are at historic levels. People need a less expensive way to heat.
- Some of the mills we work with have had sawdust availability issues.
We do not feel like this is likely to be a long term problem. The owner has sold pellets and pellet stoves for well over two decades and these surge demands are always temporary and new mills open up to fill the need.
Again... FlameWorks has never had to turn away one of our customers for pellet fuel at any time in our history. We have also never had to ration fuel. We watch the market symptoms and effectively cut off the public to our fuel supply if there is a hint that there will be supply issues that could effect our customers.
To those of you who did not purchase your pellet unit from FlameWorks, we are NOT trying to punish you or hurt you in any way. It is actually quite the opposite. The vast majority of the time we have offered pellets to everyone, and in the process, have influenced the Cumberland Valley market to significantly lower prices than many other nearby areas. We hope to resume the influence soon. Thanks for your understanding.
(if you are still upset, why not find a positive way to direct your frustration at your stove dealer)
Pellet Costs
In the past several years, our country has
seen steep increases in the price of everything from oil to eggs.
Through this period, pellet pricing has been very stable...
sometimes even dropping below industry norms. Although we will
not go into details here (competitors don't need to know everything)
you, as our stove (insert, furnace) customer know our two fold
commitment to provide you reasonably priced fuel. The
challenge with holding the price down with any low margin item is
there is very little flexibility to absorb additional costs.
As detailed in the Wall Street Journal recently, the slow-down in
home construction nationwide has impacted the supply of sawdust and,
coupled with increased demand – including that of the pellet heating
market – is driving up raw material prices, quadrupling the cost of
sawdust in some markets. (Read
article)
The costs of wood pellets is also strongly driven by transportation
costs. The costs of bringing raw wood to pellet plants, and then
moving finished pellets out to dealers are being driven up by the
escalating diesel prices. Furthermore, as demand grows, we now
are attempting to bring in fuel from more distant sources, in order
to keep up.
For all these reasons, we (as always) recommend buying your pellets
early this "pellet" season.
BUT we beg you to not getting more than you need and to not get too concerned about getting all of your fuel in one snapshot in time, if that is not your normal pattern. You have bought your pellet unit from a dealer who does everything possible to "protect you" from the market craziness... let the others fret.
Steel
The steel costs are dramatically changing. We are receiving several notices of price increases every week, sometimes more than one a day.
This Supply Chain Digest article discusses the tremendous pressures the manufacturers are feeling at this time. We have heard of industry prices increases as high as 35% "effective immediately".
This does not always come to mind, but material substitutions are possible for many products, but hearth products take quite a bit of time and resources to redesign and test. Not too many things perform like steel as it relates to heat and structure.
Even manufactures who really aren't selling anything now (decorative gas fireplaces) are posting price increases... it is not just the manufacturers who are experiencing tremendous sales increases.
We will have more here later about steel, but we wanted to give a overview as to what is going on now.
Outlook
We have taken some time with the history books lately. There is no record of any period in our countries history where we have not risen above the problems of the day.... even when the problems were much more than "problem". We believe the long term outlook is good, but are fully aware that there are some unprecedented challenges in the immediate future.
We strongly encourage you to take time and look at the number of things that are not crashing around your feet and are lasting. Focus on what is truly important and true, keeping in mind that our forefathers went through times that make nearly everything that we are struggling with now seem trivial.