First Contracts between Latvian Participants on the Biomass Exchange

In February 2018, the first contracts between Latvian participants were concluded on BALTPOOL Biomass Exchange. Under one-week contracts, the buyer from the Latvian Kurzeme region will be supplied by 5 Latvian sellers at the weighted average price of 206.83 EUR/toe. The contract’s value is EUR 7,446.

The results of this year’s trade on the Exchange show that Latvian sellers tend to become more active in the Exchange. In February, their trade volumes amounted to 5 percent of the total biomass traded on the Exchange, i.e. 1,848 toe. Under these contracts, Latvian sellers will sell biomass in Lithuania at a weighted average price of 235.76 EUR/toe. During the first two months of this year, Latvians concluded contracts for supply of 3,882 toe for 0.93 million EUR, while the contracts concluded throughout 2017 amounted to 8,928 toe for 1.42 million EUR.

The total turnover in the Exchange dropped by 18 percent in February, to 7.137 million EUR. In total, 34,231 toe of biomass was purchased, i.e. 14 percent less than in January (39,857 toe). The decline in sales volumes is associated with a shorter month: four auctions took place in February, while five were held in January.

In February, most contracts (87%) were short-term ones, by which heat producers compensated the increased demand for biomass due to cold weather. The remainder was traded under one-month contracts.

Biomass prices, which had been increasing for a long time, changed their direction in February – the weighted average price of concluded contracts dropped by 5 percent, to 208.50 EUR/toe. The largest change was recorded in the trade of wood chips under one-week contracts – the weighted average price dropped by 6 percent, while the price of one-month contracts increased by 1 percent. The decrease in short-term contract price indicates that favourable weather conditions allowed suppliers to carry out more efficiently biomass preparation work in forests, therefore the supply of biomass has increased on the market.