Vietnam’s export of wood pellets peaked in 2022 and is likely to experience little expansion in 2023, according to the Vietnam Timber and Forest Product Association (Viforest).
Vietnam exported 4.88 million tons of wood pellets worth $787 million in 2022, up 39.35% and 90% year-on-year, respectively, Viforest reported.
The average export price reached a new decade-high of $161.21 per ton in 2022, including a record of $189 per ton last December.
Viforest attributed the achievement to the U.S. and Canada expanding their exports to the EU amid limited supply due to the Ukraine-Russia conflict, which prompted Japan and South Korea to find an alternative source, Vietnam.
The two Asian countries accounted for 97.49% and 96.74% of Vietnam’s export volume and value of the products, respectively.
Additionally, fear of instability due to the Ukraine-Russia conflict and high delivery costs triggered South Korean and Japan to stockpile the products.
As a result, Vietnam’s export of the goods in 2023 may fall and some firms have anticipated the export prices may drop to $110-120 per ton for the South Korean market and $150-160 for the Japanese market.
Meanwhile, Vietnamese firms are likely unable to approach the EU market due to its high requirements like rules on sustainable growth. The EU market accounted for only 1.9% of Vietnam’s wood pellet export revenue last year, or $15.2 million, according to customs data.
The market “fever” prompted businesses to invest in this sector in the second half of last year, but the fever is set to fade away, making 2023 a harsh year for the sector, Viforest warned.