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Wood pellet to be Vietnam’s next billion-dollar export product

Wood pellet to be Vietnam’s next billion-dollar export product

Friday 23, 09 2022
Wood pellets have the potential to enter the group of export agro-forestry products with an export turnover of over 1 billion USD in Vietnam.

Forecast a turnover of 700 billion USD

Dr. To Xuan Phuc, an expert from Forest Trends, said that wood pellets are a product that has only appeared for less than 10 years, but the export value has grown significantly. In 2018, the export of wood pellets increased by 67% in volume and 120% in value over the previous year, marking an export value of more than 362 million USD.

According to the Vietnam Wood and Forest Products Association, citing data from the General Department of Customs, in 2021, the volume of pellets exported from Vietnam will reach 3.5 million tons with a turnover of more than 413 million USD.

Vietnam Wood and Forest Products

In the first 6 months of 2022, the export volume reached nearly 2.4 million tons with a turnover of 354 million USD. If the growth rate keeps up at the current rate, Vietnam's wood pellet export turnover in 2022 could reach around 700 million USD.

In the future, pellets have the potential to enter the group of export agro-forestry products with an export turnover of over 1 billion USD.

The export price of wood pellets has also increased strongly in the first half of this year, soaring to an average of nearly 150 USD/ton, equivalent to an increase of more than 27% compared to the average price in 2021.

Dr. To Xuan Phuc assessed that the quantity and price of export wood pellets increased sharply in recent times mainly due to the sudden increase in demand for wood pellets in EU countries. EU countries turned their back on gas from Russia when the Russia-Ukraine conflict broke out earlier, which was imported to serve heating needs.

Imported pellets are being used to replace this lost gas supply. The demand and price of wood pellets in the EU market increased, creating attraction from large suppliers, especially from the US - the largest wood pellet exporter in the world. Although Vietnam is not a big supplier of wood pellets to EU countries, the high demand and price of wood pellets in the international market create opportunities for Vietnam's pellet industry to expand production and export.

With the winter approaching, the EU is increasing the import of pellets for people to use as materials to burn furnaces. As the world's second-largest wood pellet exporter, Vietnam's wood pellet industry will continue to benefit from the change in supply and global demand for this product.

wood pellets

Besides, the Governments of Korea and Japan are continuing to convert from coal power to clean electricity, including biomass power, so the demand for pellets in these countries will continue to increase in the coming time.

In addition, the Chinese Government is also making moves to switch part of the electricity and coal-fired heating systems to pellets, causing the demand for pellets in China to increase sharply.

Chances for Vietnam’s wood pellets

Experts commented that nearly 100% of Vietnam's wood pellets are exported to Japan and South Korea. Export volume to the remaining markets is not significant. Before 2018, the proportion of Vietnam's wood pellets exported to Korea was much larger than Japan's. However, the difference gradually narrowed after that.

Specifically, the import volume of the Japanese market only started to increase sharply from 2018. That was also when the import demand of both these markets increased dramatically due to preferential policies on the purchase price of biomass electricity. Wood pellets are an important fuel source to aid the goal of converting from coal-fired power to clean electricity.

The Japanese market

The Japanese market will maintain a very high growth momentum at an average of over 90% in the next period (2019-2021). In 2022, it is expected that Japan will continue to increase the number of wood pellets imported from Vietnam to approximately the level of South Korea.

Meanwhile, according to the Vietnam Wood and Forest Products Association, the number of enterprises participating in exporting has increased rapidly since 2021. In the first 6 months of 2022, the number of exporting enterprises increased sharply. The number of enterprises participating in exporting has increased rapidly, showing the attractiveness of this industry in recent times.

The demand for wood pellets in the world is increasing, especially in the EU market. Vietnam's wood pellet industry is standing before great opportunities to expand production and export. However, Mr. To Xuan Phuc assessed that there are still several factors that would directly impact the industry's sustainability. That requires the companies in the industry and current policy mechanisms to adjust and adapt in the future.

 

Source: congthuong.vn, vneconomy

Compiled by VietnamCredit

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