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Denmark’s Norden forecasts biomass freight expansion

7 Mar 2012, 11.53 am GMT

Denmark's Norden forecasts biomass freight expansion

London, 7 March (Argus) – Danish shipping firm DS Norden forecasts significant growth in its biomass handling operations over the next two years, the company told Argus.

Norden, which started handling biomass cargoes last year, said it expects to triple its 2011 throughputs globally this year, and continue to increase in 2013 and onwards. The company is receiving enquiries from more new players in the market.

“The increased awareness of our activities in biomass has triggered many players to contact us,” Norden vice-president Christian Ingerslev said. “Our main loading areas are the US Gulf, US east coast and west Africa.”

The company said it mainly handles wood pellets and chips, and is accounting for an increase in biomass handling in its fleet by giving preference to having CO2 installed in cargo holds, which is a requirement for wood pellets.

The biggest challenge for the biomass freight market is overcapacity of vessels, Ingerslev said. Freight prices are currently around $20-30/t from the US Gulf to Europe.

“The biomass freight market rates follow general freight market trends and the forecast is that the overall dry cargo market could be challenging in the year ahead because of overcapacity of vessels, which could have a downward effect on freight prices,” he said.

Around 3.5mn-4mn t/yr of pellets and chips are currently being shipped globally of which 1m t/yr moves regionally in the Baltic area on coaster vessels and barges. The most common type of vessel used for biomass cargoes is Handysize — around 25,000-40,000t capacity. But Ingerslev expects an increasing use of Supramax — 50,000-65,000t capacity — as Handysize will not be able to lift the projected volumes out of the US.

Biomass contracts represent the second-largest forward commodity contract commitment after coal for the company.

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