Baltics export pellet prices now reported in weekly newsletter
Sparked by demand from the market, Argus Media has expanded its pellet pricing coverage to include the Baltics, long considered a key supply hub of Europe's growing pellet demand.
The weekly spot price index will be based on exports from Riga, Latvia, with differentials supplied for the ports of Klaipeda, Lithuania; Liepaja, Latvia; St Petersburg, Russia; Tallinn, Estonia; Ventspils, Latvia; and Vyborg, Russia, according to Argus. Latvia and Estonia have been regarded as major suppliers to European utilities, but with the arrival of new large plants, considerable volumes will be exported in Europe from across the Baltic region, according to Brodie Govan, Argus Media editor. In the past it was just the Scandinavian buyers that were importing from the Baltics, but now Argus is also seeing large volumes exported into Northwest Europe, he added.
“The intent for this project, and all our other biomass indices, is to help increase liquidity and transparency in the market,” Govan said. “We speak to all sides of the market every week and we’re still seeing some major discrepancies in terms of what price some producers receive for their pellets.” The difference between two lots of similar pellets sold on the spot market can be as much as $6-9 per metric ton, he cited, adding that having an independent party assessing the market gives market participants confidence. “It also gives the market opportunities to hedge their pellet volumes and ultimately gives them more optionality.”
The weekly Argus Biomass Markets report contains assessments of delivered prices for industrial pellets and chips delivered to Northwestern Europe and export and domestic prices from North America. The export prices for wood pellets are assessed for the U.S. Northeast, Southeast and Northwest, and Southwest Canada. It provides analytical market commentary, news, analysis of generation economics and project tracker tables for new plants.
“In terms of our new Baltic index, we’ve already had a lot of interest in it from North America,” Govan said. Right now, he added, the key global supply hubs are the Baltics, Southeast U.S. and Canada’s West Coast. “These three regions all keep a close eye on what their competitors are doing, and are all competing for the same contracts from European buyers. So the launch of our new Baltic index gives North American suppliers the chance to see pricing trends for one of their major competition hubs, and an insight into what their customers are paying for Baltic wood pellets.”