In 2023, Vietnam’s wood pellet exports earned nearly USD 680 million. The Japanese market continues to play a vital role in Vietnam’s wood pellet industry.
Wood pellet exports rise in Japan and EU but fall in South Korea
In 2022, Vietnam’s wood pellet exports surged, reaching 4.9 million tons and nearly USD 790 million. This marked a doubling compared to 2021, driven by rising pellet prices. However, in 2023, export volume decreased slightly to 4.6 million tons (down 4.3%), with revenue near USD 680 million (down 13.7%).
Average export prices fell to around USD 145.5 per ton in 2023, a 9.7% drop compared to 2022. Prices declined steadily, from nearly USD 190 per ton in late 2022 to USD 135–140 per ton from April 2023.
South Korea and Japan remained the largest markets of Vietnamese wood pellets. These two markets account for 96% of total volume and 96.6% of total revenue.
Japan imported over 2.8 million tons in 2023, valued at USD 438 million, up 12.4% in volume and 14.3% in value. In contrast, South Korea imported only 1.7 million tons worth USD 214 million, a decline of 24.5% in volume and 43.3% in value.
The decline in South Korean imports was due to alternative supplies, such as cheaper wood pellets from Russia.
EU imports show strong growth
The EU accounted for a small share of Vietnam’s wood pellet exports (3.3% of volume and 3.8% of revenue). However, in 2023, EU imports surged, reaching over 155,000 tons worth nearly USD 26 million. This represented a threefold increase in volume and a 3.7-fold rise in value compared to 2022.
Export prices to Japan and South Korea dropped significantly in 2023 compared to late 2022. Prices for South Korea fell more sharply than for Japan.
In December 2023, export prices to South Korea dropped below USD 105 per ton, a 43% fall from December 2022’s peak of USD 185 per ton. Meanwhile, prices for Japan still exceeded USD 148 per ton in December 2023, a 20% decline from December 2022’s peak.
Enterprises need to explore new markets and boost domestic demand
Mr. To Xuan Phuc, a policy analyst at Forest Trends, emphasized Japan’s continued importance for Vietnam’s wood pellet industry.
The restructuring of Enviva, the world’s largest pellet producer and trader, presents both opportunities and challenges for Vietnam. Enviva supplies over 400,000 tons annually to Japan, with a significant share produced in Vietnam.
Vietnamese enterprises could also replace Indonesia’s supply to Japan. Indonesian pellets made from palm oil shells may fail to meet Japan’s sustainability requirements.
However, technical issues causing fires at Japan’s biomass power plants have prompted investigations and temporary shutdowns. High pellet prices also strain Japanese power plants without government subsidies. Thus, Japan’s import demand is unlikely to rise in the short term.
South Korea’s market is expected to remain stable, favoring cheaper pellets, including Russian supplies. The EU market shows potential but imposes stricter requirements, demanding significant investment in equipment and technology.
Challenges in raw material sustainability
The biggest challenge in wood pellet exports lies in the unsustainable supply of raw materials, both in volume and standards. Addressing this requires government policies to balance processing capacity with planted forest resources.
Mr. Phuc advised companies to explore new markets like the EU and boost domestic consumption. Domestic demand for wood pellets is expected to grow due to Vietnam’s emission reduction commitments. Companies are transitioning to lower-emission materials, especially with government incentives.
Competition between export and domestic pellet demand could intensify soon. Additionally, competition for planted forest resources among pellet and woodchip producers is inevitable. Many pellet and woodchip factories are under construction for the next 3–5 years. Enterprises should invest in forest plantations to secure stable raw material supplies for future production and export needs
Vietnamese sources: bao cong thuong