Biomass Exchange review – January 2020

With biomass becoming cheaper, January heating prices in Lithuania were the lowest since 2012

After the price of biomass at the Baltpool biomass exchange in January dropped to 124.77 EUR/TOE (10.73 EUR/MWh), compared to December, the lowest prices of heating were recorded in the country since 2012. Accordingly, the turnover of Baltpool in January decreased from EUR 2.66 million to EUR 2.51 million. These trends were mostly due to the very warm winter.

“Nearly 70% of heat in Lithuania is produced using biomass. Accordingly, the biomass prices, which were 25% lower in January compared to the same period last year, have reduced heat prices. Heat prices are very favourable for end consumers this year. Compared to January 2019, in January 2020 the price of heat in Lithuania decreased by 13.27%.^[1] In the first month of 2020, heat was the cheapest since 2012, and this trend is likely to persist in the remaining two months of this heating season,” said Vaidotas Jonutis, Trade Manager at the Baltpool biomass exchange.

According to data published by the Lithuanian Hydrometeorological Service, the first winter month in Lithuania was the warmest over the past 70 years. The average January temperature in the country was 2.8°C (6°C above the average). The decreased demand for heating has reduced the demand for biomass in all cities of the country. Sixty per cent of important information notices concerned the decrease in the demand for biomass due to the effect of weather conditions on the needs of market participants.

In January, heat producers purchased 19,244 TOE (223.81 GWh) of biomass at the exchange, which is a 6% decrease compared to December (20,394 TOE or 237.18 GWh). Most of the biomass (70%) was purchased under SPOT contracts, and 30% was purchased under one-month transactions. The weighted price under the concluded woodchips transactions in January decreased by 1.6% from 126.74 EUR/TOE (10.90 EUR/MWh) to 124.77 EUR/TOE (10.73 EUR/MWh) and, compared to the price under woodchips transactions last year, decreased by 26% (from 167.89 EUR/TOE or 14.44 EUR/MWh).

The demand for biomass deliveries decreased by nearly 3% in January compared to December (49,669 TOE or 577.7 GWh). A total of 48,245 TOE (561.1 MWh) of biomass was delivered in January, which is a 19% decrease compared to January 2019 (690.5 GWh or 59,369 TOE). The price of biomass delivered in January 2020 decreased by 3% (141.78 EUR/TOE (12.19 EUR/MWh)), and the price of biomass delivered in December was 146.02 EUR/TOE (12.56 MWh). In January 2019, biomass was delivered for a price that was 32% higher (207.32 EUR/TOE or 17.83 EUR/MWh) compared to the price of January 2020. In January, the greatest share of biomass (40%) was delivered under half-year transactions.

The exchange price of biomass in Latvia is 20% lower than on the off-exchange market

In January, 17 transactions were concluded in Latvia for the record amount of 720 TOE (8,374 MWh), which is a 2.5 times increase compared to December (270 TOE or 3,140 MWh). The weighted price under these transactions was 150 EUR/TOE (12.90 EUR/MWh). All the transactions concluded in January were one-week transactions, and their price was equal to the price of the transactions concluded in December (150.18 EUR/TOE or 12.91 EUR/MWh).

The price under the transactions concluded at the biomass exchange in Latvia, with the trading volumes increasing, is approximately 20% lower than the prices under off-exchange transactions calculated and published by MeKA (see graph below). In December, the average price under the transactions in Latvia concluded at the exchange was 12.90 EUR/MWh, whereas, according to data from MeKA, the price on the off-exchange market was 16.06 EUR/MWh. This trend resembles the one recorded in 2015 in Lithuania, when approximately one half of transactions were concluded at the exchange and the remaining transactions were concluded off the exchange. At that time, the prices under the transactions concluded at the exchange in Lithuania were on average 20% higher than the prices on the off-exchange market.

Please find Baltpool Biomass Exchange review – January 2020 =>>