2016 05 11

Spring in the biomass exchange

After the record leap of trade in the biomass exchange in March, a sharp drop was observed in April: trade volumes decreased over four times – from EUR 6.5 million to EUR 1.5 million, with the number of concluded contracts dropping more than twice – from 499 to 228. According to biomass experts, these results were expected after the end of the heating season since the need for biomass has decreased dramatically. Some heat suppliers reduced their heat production volumes, with their boiler houses operating to produce hot water only or suspended.

Greater activity expected in summer

The decreased number of concluded contracts has also resulted from the expiry of the term set for concluding long-term contracts for the 2016 summer season. Although some buyers concluded long-term contracts for the forthcoming heating season as early as in March, most buyers are waiting as they expect prices to fall. With all the factors in mind, any increase in the trade activity in the nearest future is unlikely and any increase in the need for biomass is only expected in the second half of the summer when biomass prices are normally the lowest.

Biomass prices continue to drop

Current trends also allow expecting lower prices. In April, the average price under short-term contracts dropped by 22% to 118 EUR/TOE. The lowest price under short-term contracts was recorded during the 19 April auction – on that day, the average price per TOE of woodchips was EUR 114.15 and the lowest price of biomass recorded was 100 EUR/TOE.

Biomass supply remains stable

Although the number of concluded contracts has dropped more than four times, the value of orders to buy biomass amounted to EUR 7 million, which is only a 50% decrease compared to March. Most orders (with the value exceeding EUR 5 million) accounted for attempts to purchase biomass under long term contracts. Most of the orders did not transform into contracts due to excessively low prices offered. The value of orders to sell has remained adequate to the number of orders to buy and has exceeded the supply nearly 4 times.