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There are a number of factors that may impact the production and trade of wood pellets in 2023. The first factor is the global wood pellet supply and demand situation. At present Vietnam represents the 2nd largest supplier of wood pellets in the world (after the US) and therefore the fluctuation in supply and demand of this biomass fuel in the world will have a direct impact.<\/p>\n
In 2023, the supply of Canadian and US wood pellets to the EU market may expand after a recent period of scarcity of sources due to the Russian invasion of Ukrainian as well as the increased maritime freight rates.<\/p>\n
In the first half of 2022 North American pellet manufacturers redirected their supply flows from the Japanese and Korean markets to the EU to capture the much higher prices in the EU markets.<\/p>\n
The sharp drop in supply from North America, thus, forced Japanese and South Korean businesses to find alternative sources. This created opportunities for Vietnamese businesses to expand export markets.<\/p>\n
Because of the instability in energy supplies the result of the Russian aggression Japan and South Korea stockpiled pellets. Up to now the wood pellet stock in these two markets is at a high level. Against this backdrop Vietnamese exporters will hardly have the opportunity to expand their markets in these two markets in 2023.<\/p>\n
The switch to biomass fuel in Japan and South Korea is directly affecting prices of wood pellets from Vietnam.<\/p>\n
Currently, the export price of wood pellets from Vietnam is on a downward trend. Information from some exporters shows that in the coming months, the export price to Korea may drop down to US$125-135\/tonne FOB and to Japan down to US$150-160\/tonne FOB. This will lead to a very sharp reduction of wood pellet exports from Vietnam.<\/p>\n
Large stocks also allow Japanese consumers to tighten standards for quality and sustainability requirements. Certain Japanese traders are asking Vietnamese suppliers to strictly follow environmental and quality requirements.<\/p>\n
The power crisis in the EU in 2022 created an over optimistic expectation of the market potential for Vietnam's wood pellets.<\/p>\n
Statistics from the General Department of Customs show that by the end of 2022 Vietnam's wood pellet exports to the EU stood at just US$15.2 million, equivalent to 1.9% of the total exports.<\/p>\n
The major reason behind this modest shipment of Vietnamese wood pellets to the EU is the quality and environmental standards that this market sets including the sustainability certification that very few local wood pellet businesses can meet.<\/p>\n
The expanding export market in the first half of 2022 has boosted investment in wood pellet production in Vietnam. From the beginning of 2023 export prices have been falling rapidly and this is likely to have a huge negative impact especially for new or under construction wood pellet plants.<\/p>\n
In 2022 alone, about 70 new wood pellet factories were built. Of these newly built factories about 20 are large, using EU technology, while 50 factories are using Vietnamese and Chinese technologies.<\/p>\n
From the beginning of 2023 the export price of wood pellets has been falling while the price of logs, mainly of acacia planted by thousands of Vietnamese farmers, after a period of \"price fever\", has also sharply decreased.<\/p>\n
These fluctuations in wood pellet markets and production may negatively impact the entire supply\/value chain of Vietnam\u2019s wooden products. Vietnamese operators have been urged to scrutinise their wood pellet business and to reshape the industry.<\/p>","protected":false},"excerpt":{"rendered":"
There are a number of factors that may impact the production and trade of wood pellets in 2023. The first factor is the global wood pellet supply and demand situation. At present Vietnam represents the 2nd largest supplier of wood … Continue reading