Northwest Europe's industrial wood pellet market drifted Friday on a standoff between buyers and sellers, with market sources saying sellers were holding off on offers in hopes of seeing higher prices in September, when greater liquidity is expected in the market.
Platts on Friday assessed the weekly price of CIF Northwest Europe industrial wood pellets basis 17 GJ/mt for delivery within the next 7-45 days, at $181/mt, unchanged from last week.
One European utility trader said he had been offered a 1H October CIF ARA Handymax cargo at $180-181/mt.
Other sources said the tentative sell-side indications were about $185-187/mt for September and October shipments, though buyers were not interested in any deal above $180/mt.
"There's been some cagey selling interest for September cargoes, but there's no real buyers at all -- people are reluctant to show anything to a market that they know is not there," one market source said, adding that he did not expect any substantial increase in "new buyers that would lift prices in Q4."
A second source said sellers were holding back from making firm offers "because they know they're competing against several other cargoes" and estimated that they were around six prompt cargoes available for delivery up to and including November.
Sources said potential winter power shortages in Belgium could prove to be a boost for the biomass industry.
Belgian Energy Minister Catherine Fonck last week said the government will expand new demand reduction measures this winter because of the unplanned outage of the 1-GW Doel-4 nuclear reactor.
One source said the big question is whether the issue would help push through E.ON's application for its proposed 506-MW Genk Langerlo biomass project. But a utility source said the matter is unlikely to change the general context for wood pellet demand as it is essentially driven by regulation, "which takes a long time to adapt and modify."
He added that there is a potential for Belgian plants to be asked to run extra hours.
GDF Suez's currently offline 180-MW Rodenhuize biomass plant is working toward a Q4 restart after its subsidies were cut in the first quarter, sources have said.
"If Rodenhuize comes back online then there's surely going to be some volumes required and I'd expect to see some bids in the market," one trader said.
IRONBRIDGE RETURNING
While some market sources have suggested the seasonality of the wood pellet market will likely translate into a more bullish scenario heading into the fourth quarter, a European trader said any serious upturn in pricing will depend largely on Belgian demand.
E.ON's Ironbridge facility in the UK is said to be ready to return soon from scheduled maintenance, but traders appear skeptical that the extra consumption would draw bids back into the market.
"At best, it might reduce the offers," the utility source said.
In the domestic premium pellet market, prices were said to be dipping with a deal for a prompt-loading 3,500 mt FOB Portugal cargo heard struck at about Eur138/mt.
One trader said he had been offered a 3,000-mt coaster of Baltic-origin pellets at Eur150 CIF ARA, which he deemed as "interesting but it's a new player so we've decided to check them out."
