Exports increase sharply, Vietnam wood pellets aim for $1 billion

According to the Timber and Forest Product Association (Viforest), in the first 10 months of 2022, the export volume of pellets reached nearly 3.9 million tons, up 34% over the same period in 2021. It is equivalent to more than 111% of total exports in 2021. The export value of pellets in the 10 months of 2022 reached $602.7 million, up 81% over the same period in 2021. It is equivalent to nearly 146% of the total turnover of 2021.

With the above export volume of pellets, Vietnam is currently the second-largest exporter of wood pellets in the world.

The export of wood pellets has increased very strongly this year, this is due to the energy crisis in Europe. Mr. Vo Quang Ha, Chairman of the Board of Directors and General Director of Tan Vinh Cuu Joint Stock Company - a leading supplier of wood materials in Dong Nai. He shared: “The conflict between Russia and Ukraine is still tense, Europe is a cold country, and it is entering winter, so it is in great need of fuel for heating. They are in high demand for pellets because this is considered a green energy source. The Korean and Japanese markets, which account for more than 90% of Vietnam's exported wood pellets, also increased, so the export of pellets is very favorable".

High demand from European countries is pushing up the price of this product on the world market, creating attraction from large supply sources, especially the US - the world's largest pellets exporter.

Although not among the major suppliers of tablets to the EU, the increasing demand and price of tablets in the world have created opportunities for Vietnam's pellet industry to boost production and export. The price of Vietnam's export pellets has increased continuously since June 2021 and peaked at more than $170/ton in October 2022, an increase of nearly 60% compared to the price of May 2021.

Mr. Do Xuan Lap, Chairman of Viforest, said that due to high demand in the world market, pellets production in Vietnam is developing very strongly. This brings great value to the value chain of the forestry industry. Wood pellets are currently ranked 4th in terms of export value in 8 key wood and forest products (behind the wood interior and exterior furniture, raw materials wood, and wood chips). As a by-product of planted forest wood, the pellets have great significance in enhancing the value of afforestation in Vietnam. Mr. Do Xuan Lap said that Vietnam's wood pellet exports could reach more than $1 billion in 2023.

Dr. To Xuan Phuc (Forest Trends) commented on the market prospect of wood pellets in the near future. He said that the policy of EU countries in switching from gas imported from Russia to using alternative sources of raw materials, including pellets, is and will continue to have a great impact on the supply and demand of pellets in the world.

In addition, the Governments of Japan and Korea are continuing to switch from coal power to clean electricity, including biomass power. As a consequence, the demand for tablets in these two major markets will continue to increase in the future.

The Chinese government is also making moves to switch part of its electricity and coal-fired heating systems to pellets. Therefore, the demand for tablets will increase in China in the near future.'

With the above factors, Dr. To Xuan Phuc said that, in general, the demand for tablet consumption in the world will increase in the future. This is a great opportunity for Vietnam - the second-largest pellets exporter in the world.

According to Dr. To Xuan Phuc, Vietnamese pellets are currently mainly for export. However, domestic demand will increase in the near future when many businesses consider the possibility of investing in biomass power production using pellets as input materials. The Vietnamese government is also making efforts to convert production and business activities to low-emission models, in order to fulfill the commitment to achieve zero net emissions by 2050. In the coming time, if the Government has policies to encourage and prioritize the conversion from coal power to biomass power, Vietnam's pellet industry will have more opportunities to thrive.

Currently, Vietnam's pellets are still mainly exported to Japan and Korea. In the first 10 months of 2022, Japan bought 2 million tons of wood pellets from Vietnam, worth $303 million, accounting for 52.64% in volume and 50.28% of total pellet export turnover. Also during the above period, Korea bought nearly 1.7 million tons of Vietnamese pellets, worth $270 million, accounting for 43% in volume and 44.83% of the total export turnover of Vietnamese pellets in 10 months.