The reason for the decline in wood pellet exports
According to the Vietnam Wood and Forest Products Association, in 2022, Vietnam's wood pellet exports will reach over 787 million USD, an increase of more than 90% compared to 2021. However, in 2023, with factors affecting the market Vietnam's import, forecast, and export of wood pellets will decrease by about 15 - 17% compared to 2022.
As an enterprise that produces pellets for export to the Japanese market, Mr. Le Van Tuyen - Director of Cam Lo Energy Pellet Factory (Quang Tri) - said that last year, the market situation was "quite good". This year, on the contrary, sales are very slow. Even though the order was signed, the customer delayed picking up the goods.
The reason is that last year, this market imported more goods than needed, there was still a lot of inventory, and it was not used up yet. The warehouses in Japan are full, and they don't know where to put the imported goods. Besides, through discussions with some customers, it is known that some factories converted from thermal power plants burning other materials such as coal,... to pellets. This transition has not yet been smooth, factories still have problems, so they have to stop to fix the problem.
"Currently, the price of pellets is at 140 - 145 USD/ton with newly signed contracts, but with previously signed contracts, this price is only about 130 - 140 USD/ton. Notably, at one point, the price of exported wood pellets dropped to 100 USD/ton, down nearly half compared to the highest point in 2023.", Mr. Le Van Tuyen said.
Similarly, according to Mr. Nguyen Van Hien - Director of Tam Phuc Gia Lai Company, previously the business also exported to Korea, but could not compete with Russian products. The price of pellets exported to Korea is very low. Currently the selling price is 120 USD, while the cost price is 125 - 130 USD, orders are few, the market situation still lacks positive factors.
According to shares from some export businesses, the decrease in the amount of Vietnamese pellets exported to the Korean market is not due to a decrease in demand in this market but because Korean businesses import pellets from other sources. including supplies from Russia.
Diversify customer files, seize market opportunities
Vietnam, the second largest country in the world in exporting tablets, over 2% of Vietnam's tablets are exported to Japan and Korea.
According to estimates, the wood pellet industry currently has the participation of 400 - 500 businesses participating in production and export trade. Among them, there are about 100 enterprises directly involved in the export process. This means that the majority of businesses in the industry play a production role, providing input products for export businesses.
Wood pellet exporters believe that it will take until the second quarter of 2024 for the export market situation to improve. That's the prediction, but the reality is unknown. “We also believe that the consumption rate of Japanese thermal power plants will stabilize again, and by 2024 the market will be better than the previous period of 2023.", Mr. Nguyen Van Hien said.
The global wood pellet market is expected to reach about 31 billion USD by 2030. Businesses believe that market difficulties are only short-term, in the long term, the potential is still huge. Therefore, diversifying customer files is also a direction that businesses consider.
"We have also invested in a new factory in Kom Tum with a capacity of 1 thousand tons/year, running from the beginning of the year until now with a capacity of 80 - 30% to wait for market opportunities," Mr. Nguyen Van Hien said.
Regarding Japanese customers, Mr. Le Van Tuyen said that the business is currently looking for partners and signing long-term contracts of 5 - 10 years. Regarding price, businesses are also negotiating in a way that must partly float according to the market. No matter how much the market fluctuates, the business will adjust the price. However, this has not yet found common ground with Japanese customers.
With the EU market, according to Mr. Tuyen, export prices to this market will be better than to Korea. However, the EU market has quite strict standards, exporting businesses encounter certification barriers. In addition to FSC, they require social responsibility standards and many other standards. In addition, Vietnamese wood pellets will face great competition with Russian wood pellets in terms of quality and price. Therefore, to be successful in the EU market, businesses need to follow the chain, or go through commercial businesses.
Policy analyst Forest Trends said that the sustainability of Vietnam's pellet industry in the future depends on many factors, including market demand and the sustainability of input wood materials. .
Vietnam's pellet industry still has opportunities to expand export markets, especially in Japan. According to assessments of pellet businesses, the demand for wood pellets in Japan will expand 3 times compared to the present.
Tablets exported to Japan require sustainability certification. Because the supply of palm oil shell (PKS) pellets originating from Indonesia may not be certified and therefore cannot meet the requirements of the Japanese market. If this happens, Vietnamese businesses have the opportunity to replace the supply of PKS from Indonesia.
In the Korean market, there is not much room for development for Vietnamese businesses in the future. The size of this market has not changed much. This is a relatively forgiving market, accepting supplies with low quality and standards.
According to a number of Vietnamese businesses currently exporting pellets to Korea, some major buyers of this market are starting to require evidence of traceability. So in the next 4-5 years, product traceability requirements may be mandatory when exporting to Korea.
Source: https://www.vietnam.vn/en/nam-2023-xuat-khau-vien-nen-go-du-kien-sut-giam-17-so-voi-nam-ngoai/#:~:text=However%2C%20in%202023%2C%20with%20factors,%2D%2017%25%20compared%20to%202022.
#worldexport #pellet #powder #sawdust #rubber #mixed #wood #fsc #pine #acacia #quality #export #vietnam #premium #vietnam #bedding #horse #flour #dairycow #wpc #bedding #biomass
World Export is currently the market leading supplier in Vietnam. We have products available in quantities ready to meet your requirements.
Contact to receive product information and quotation:
