The number of wood pellet exporters in Vietnam fell from 152 in 2022 to 119 in May 2023 as exports to major markets Japan and South Korea reduced significantly.
In its January-June report, the Vietnam Timber and Forest Product Association (Viforest) noted that South Korea and Japan were the two largest export markets for Vietnam’s wood pellets, accounting for 95% of export revenue.
In the first five months of this year, export volume reached 1.57 million tons for revenues of $256.5 million.
During the same period, the country earned $96.11 million from exporting 652,273 tons of wood pellets to South Korea, down 45% and 41% year-on-year, respectively.
Corresponding figures for Japan were $151.06 million and 871,356 tons, down 19.7% and 5.7%.
The report said that prices rose sharply from $140 per ton in early 2022 to $180-190 per ton in late 2022 and early 2023, amid the Ukraine-Russia conflict. They cooled down to $110 per ton in June for exports to South Korea and $145-165 per ton for exports to Japan.
For the rest of this year, Vietnam’s export volume to the South Korean market is likely to reach 1-1.5 million tons. Vietnam is currently the main supplier of wood pellets to South Korea, meeting 80% of the total demand. However, South Korea has begun diversifying its supply, particularly from Russia. Before the conflict with Ukraine broke out, Russia was delivering three million tons of wood pellets annually.
The Japanese market is considered much more stable than the South Korean market with long-term orders of 10-15 years and exporting prices of $145-165 per ton. The demand for pellets in Japan is expected to grow strongly soon, from eight million tons at the moment to 20 million tons in 2030.
In June, Itochu Corporation, a Japanese multi-sector business, expressed its intention to plant a timber plantation and build a wood pellet factory in the central province of Binh Dinh, aiming to export one million units a year.
Kenji Tanaka, Itochu CEO for Asia and Oceania, said the project, in cooperation with Binh Dinh-based Phu Tai Bio-Energy Corporation, aimed to serve Japan’s growing demand for wood pellets, which is estimated to double in three years.