2016 MAY BALTPOOL ENERGY EXCHANGE: TRADE OVERVIEW

2016 06 17

 Attractive prices of long-term contracts boosted the exchange

After the trade slowdown in April, activity in biomass exchange more than doubled in May. The value of transactions reached EUR 3.9 million (it was EUR 1.5 million), while the number of transactions increased to 308 (was 228). The average transaction value increased by 92 percent, to EUR 12.7 thousand.

Prices hit new lows

The average weighted price of short-term transactions at auctions in May dropped by 9.2 percent compared to April, and amounted to 107.37 EUR/toe. The smallest SPOT* price was recorded on 31 May, when the weighted price of biomass dropped to 102.1 EUR/toe. The price under long-term supply contracts decreased by 9.4 percent and amounted to 119.67 EUR/toe. Compared to the same period of 2015, prices decreased by 2.5 percent.

Supply continues to significantly exceed demand

In May, the value of placed purchase orders reached EUR 16.2 million. Rapidly dropping biomass prices caused boiler biomass buyers to increasingly place orders for long-term contracts in order to ensure a cheap supply of fuel for future periods, including the heating season 2016. It should be noted that early trading for the winter season is beneficial also for sellers, because they can start accumulating cheaper stocks of biomass raw material during the warm period. The value of sales orders amounted to EUR 55.8 million.

Long-term contracts start dominating

In May, 33632 toe of biomass was sold though the exchange, 2.6 times more than in April. The largest amount, 65 percent, was bought under long-term contracts. Activation of quarterly contracts was also noticed; 11580 toe of biomass were purchased under such contracts. Taking into account the growing number of contracts and placed purchase orders, also assessing the trends of long-term contracts in the summer of 2015, it can be assumed that the volume of long-term contracts (including for the next heating season) will continue to grow in the total amount in summer months.

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