Biomass Exchange review – Year 2019

Heat producers pay increasingly more attention to the management of the price risk

  • In 2019, unlike the preceding several years, most of the market participants hurried to secure the largest share of their heating season demand for biomass under long-term contracts as early as in May. In 2019, the following three key aspects to trade under long-term transactions could be observed: (i) most of the winter season demand was secured under long-term contracts by the beginning of summer, (ii) nearly 59% of the biomass required for the heating season was secured under long-term contracts in advance, and (iii) compared to the contracts concluded for the 2018–2019 heating season, prices were nearly 26% lower.
  • The price of the SM2 product decreased by 29% over the year, and the prices of the other products were also 26% to 30% lower. Accordingly, the turnover of biomass trade at the exchange over the year decreased by 27% and amounted to EUR 62.62 million.
  • The demand for biomass has not changed compared to last year; nearly 432,000 TOE of biomass was purchased, which amounts to approximately 70,000 woodchips vehicles (more than 350 vehicles per day during the heating season).
  • More than 5,254 transactions were concluded, which is a 9% decrease compared to 2018 (5,783). In 2019, the average quantity per transaction was 82 TOE; this figure was 74.5 TOE in 2018.
  • Latvian buyers concluded 87 transactions worth EUR 666,000, i.e. three times more compared to 2018.
  • Transactions were implemented by 75 buyers and 126 sellers from the Baltic countries.
  • The highest value of the BWCS SPOT LT index was recorded during the first auction of 2019 (2 January 2019: 180.22 EUR/TOE); the index continued to decrease until the first summer auction (4 June 2019), when the value of 117.69 EUR/TOE was recorded. The value of the index remained stable throughout the summer until the start of the 2019–2020 heating season when the value of the index shortly increased to 133.48 EUR/TOE (8 October 2019). This increase was temporary however, and the value of the index by the end of the year was similar to that of the beginning of summer, i.e. 116.33 EUR/TOE.
  • The weighted average prices under the concluded transactions were as follows: 143.40 EUR/TOE for woodchips, 347.62 EUR/TOE for wood pellets and 107.27 EUR/TOE for peat fuel.
  • Trade in lignin and timber biomass blend was commenced in Q3 2019; 252 TOE of this was sold by the end of the year for the average price of 101.74 EUR/TOE.

 

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