US wood pellet producer Enviva has renegotiated a long-term offtake contract with Japanese trading house Sumitomo, with amendments made to contractual volumes, base pricing and shipping arrangements, it said in a court filing on 21 October.
The new deal includes modifications to "purchase option terms related to volume and pricing", Enviva said in the filing, without specifying the direction of the changes.
The parties will probably have some flexibility on pricing, as they have agreed on "additional functionality to discuss updating the base price to account for changes in end-user financial condition and production costs", Enviva said. No base price was specified in the court filing, although contracts signed with Japanese counterparties in 2018-19 were typically priced near the $200-205/t cfr Japan range.
The original contract signed in January 2019 was for about 400,000 t/yr, for 18-year offtake to supply Sumitomo's biomass plant in Fukushima, with deliveries starting from 2022, but the renegotiated annual volume is thought to have been reduced.
The parties have also agreed on the revision of the shipment price, including "specified annual escalations", updates to the bunker fuel adjustment calculation, modification to provisions regarding laytime and demurrage, and updates to certain logistics specifications, including applicable ports and delivery schedule.
The renewed contract will take force 14 days after the court filing, barring any objections and pending court authorisation.
Enviva rejected two contracts with Sumitomo earlier this year under the ongoing bankruptcy court proceedings, for supplies to the Kaita and Sendai power plants.
