December 3, 2021. – Yesterday evening I got an email from my electricity seller. The message said that the company will stop delivering electricity after Friday. That’s today. It is -10°C outside and the house will freeze in hours without electricity.
The company is a trader. It buys electricity from the open market, and sells it further to private customers. In November the electricity market price increased so much that the company doesn’t have cash to buy more. Money from customers comes with delay, and with “old” contract prices. The company decided to quit.
Could the same happen to a plywood trader?
Basically it could, but it is very unlikely. The market changes should be really quick combined with binding contracts in purchasing or selling plywood. Plywood traders know how to play the game to mitigate risks. They align the purchasing and selling contracts. However, if the price volatility will be as high as during 2021, the companies will start to favour floating prices instead of fixed periods.
This morning I made a new power contract via the net. I sincerely hope I can start the weekend tomorrow morning with a warm cup of coffee instead of ice tea.