EdF Subsidiary Acquires Waste-to-Energy Plant
UK Landfill Tax Arb; RDF-SRF Spread Widens
The latest’s issues of International W2E Market Bulletin have been published.
European RDF enquiries are slowing down, going into the summer period, as demand is limited to Poland and some southern countries. Markets outside of Europe are also being pursued to take SRF material, but so far no long-term contracts have been finalised. RDF prices for shipments in the next 60 days are being directed by GBP vs Euro currency movements.
The uncertainty surrounding the Brexit vote has helped the value of the Euro against the GBP, but it has not triggered any fresh spot deals. Markets in Germany and Holland remain quiet, but stocks are understood to be low and post-Brexit vote should see more interest emerge. RDF prices/fees come are under more pressure than SRF prices/fees.
In Indonesia, thermal coal prices are increasing and this has the potential to open opportunities for SRF shipments from Europe. Other industries in Europe, such as steel, are struggling to increase output in a competitive market and the potential for SRF pellets looks limited here right now. There is nearly 1mt of coking coal lying on the ground in the ARA region.
In other alternative material markets, rising solid fuels prices in Turkey for cement producers are opening opportunities for TDF Shred (shredded used tyres). Cement producers are indicating that they are being offered at around $17/t DAP Marmara, for a very high c.v. >7,500kc NAR material.
Shareholders at Glencore’s recent annual meeting in May held in Zug, Switzerland, voted 98% in favour of requiring more information on public-policy positions and actions Glencore takes on greenhouse gas pollution. Yet another step-change by a major mining and trading house as they follow initiatives taken by other major industrial companies integrating renewable and alternative fuels into their trading strategies and fuel portfolios recognising the benefits attached of producing lower GHG emissions and carbon credits. Alternative Fuel and SRF/RDF production is a Sunrise Industry in both mature and developing economies.
It remains a challenging environment for RDF/SRF markets with uncertainty over currency direction in the run-up to the UK’s Brexit referendum, high stocks in northwest Europe, and falling demand.
For SRF, limited demand is understood to be in seen in France, Portugal and Spain, but some trading sources are suggesting that it is a price-checking exercise. Spanish cement demand is understood to be improving. On the plus-side, prices for petroleum coke solid fuels are very strong and cement producers are looking at other fuels. RDF stocks in Sweden, Germany and Holland are said to be rising quickly, according to trading sources and this is putting pressure on fees. Ireland is also understood to have product to sell to the market.
Another area of uncertainty is Italy, which has about 8 million tonnes of RDF/SRF material in stock, mainly in the south, but without a market, according to trading sources. Historically, Italian suppliers had deals with customers in Germany and Holland, but they did not get paid and the credit issue is still a risk. The government is considering a €600m support package to help solve the problem, and if payment is backed by the government it could calm credit risk fears from receivers. Cultural issues and business practices of companies located in southern Italy will also be a challenge. The inventory is said to be low CV, due to severe degradation.
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