London, UK (February 07, 2017): Evolution Markets announces today it has facilitated the first futures trade in residential wood pellets on the Euronext exchange. The trade between Swedish utility Vattenfall and ENGIE, a global energy company, was arranged over-the-counter and executed on Euronext as an Exchange for Swap (EFS) transaction. The trade was cleared by LCH SA.
“Biomass market participants are seeking the means to hedge price risk, especially as it relates to the weather, and the Euronext futures contract offers this opportunity,” said Ben Gibson, Vice President of Biomass Markets for Evolution Markets Ltd. “We are delighted to draw upon our deep knowledge of the biomass industry to arrange the first cleared EFS trade for residential wood pellets.”
Recent cold weather has created tight supply chains and rising prices for the wood pellets, which are traded internationally and then typically sold to consumers as bulk deliveries or via retail outlets in smaller 15kg bags. The Euronext Residential Wood Pellet Future allows biomass market participants to manage forward price risk of EN+ A1 wood pellets, which are primarily used for domestic heating across Europe.
As large utilities seek to add renewable heating products to their portfolios, the Residential Wood Pellet Futures Contract allows them to hedge price movements in this volatile, weather sensitive market.
“Vattenfall is a strong supporter of sustainable biomass use in both the industrial and residential heating sectors,” said Christian Joore, Senior Biomass Trader for Vattenfall Energy Trading. “As both biomass market segments see strong growth, new financial instruments like the Euronext Residential Wood Pellet future are valuable tools to manage biomass price, credit, and liquidity risk more effectively.”
“Evolution Markets brought the first wholesale trade on our wood pellets contract, and we are delighted to see the contract gaining traction,” said Olivier Raevel, Head of Commodities at Euronext. “We are focused on assisting introducing brokers and our members in enhancing the liquidity of the Residential Wood Pellets futures contract in the medium and long term.”
“As a key player in the biomass-to-power and heating markets, ENGIE views the Euronext futures contract as an important and welcome development, facilitating the provision of risk management solutions to our residential heating customers in Europe,” said Fabien Mehu, Head of Biomass Trading at ENGIE.
“We are proud to promote the development of the Euronext Residential Wood Pellet Futures Contract that contributes to the expansion of renewable energy in Europe and is in line with ENGIE’s strategy to be a leader of the global energy transition,” added Yoven Moorooven, SVP Energy Markets at ENGIE.
As the leading pan-European marketplace, Euronext’s ambition is to serve the real economy by bringing together buyers and sellers in venues that are transparent, efficient and reliable. Our roots are deep: for four centuries, the exchanges that now comprise Euronext have been at the heart of European capital markets. Formerly known as MATIF in the commodities arena, Euronext’s commodity contracts have long been relied upon as trusted global and European benchmarks for products including Milling Wheat, Rapeseed and Corn, and now Residential Wood Pellets. Euronext operates the exchanges in Amsterdam, Paris, Brussels and Lisbon, and serves clients worldwide through its Trading Member Firms. For more information on our commodities contracts, please visit: https://derivatives.euronext.com/en/commodities.