First Argus-indexed biomass deal concluded
October 21, 2010
By Argus Media
Oct. 21, 2010, London, UK – German utility RWE and U.S.-based commodity management firm Gavilon have concluded the first physical supply contract to be priced against Argus' European industrial wood pellet index.
2010, London, UK – German utility RWE and U.S.-based commodity management firm
Gavilon have concluded the first physical supply contract to be priced against
Argus' European industrial wood pellet index. The one-year supply deal was
brokered by Geneva-based Starsupply Commodity Brokers.
pellets will be delivered on a cost, insurance, and freight (cif) basis to
Amsterdam-Rotterdam-Antwerp (ARA). Supply will start in the fourth quarter of
2011 and will be priced against the Argus weekly spot European industrial wood
it is pleased with the first trade against the Argus index. "Trading wood
pellets physically or financially versus the Argus index gives us another tool
to manage our price risk in our biomass portfolio. Also, it will drive
liquidity and transparency in the wood pellet market," vice-president of
biofuel origination Martin de Wolff says.
says that it expects rapid growth in the over-the-counter pellet market in
is committed to providing the biomass market with robust price references that
can form the basis of spot and term contracts, and enable effective risk
management," says Argus chairman and chief executive Adrian Binks.
launched its coverage of the industrial wood pellet market in May 2009 in
response to demand from the market. It added a weekly index for wood chips in
October 2010. Wood pellet and wood chip price indexes and forward price
assessments are published in Argus Biomass Markets, a weekly report that
provides analytical market commentary, news, and analysis of generation
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