Page 40 - FDMASIA JanFeb 2024

38 FoCUs Jan/Feb 2024 FDM AsiA | www.fdmasia.com

Freepik Key takeaways
South Korea and Japan are the two largest wood pellet import
markets of Vietnam. The volume of wood pellets exported
from Vietnam to these two countries accounts for over 95
percent of the total volume of wood pellets exported from
Vietnam to all markets.

The source of raw materials for the production of pellets
exported to South Korea and Japan is different. Wood pellets
exported to Korea are mainly made from the by-products of
the wood processing industry such as sawdust, shavings
and wood chips.
Enterprises exporting pellets to South Korea are mainly
In the frst 11 months of 2023 exports of wood and wood located in the Southeast region, where furniture factories are
products to Japan are estimated at US$1.5 billion, down 12 concentrated. Pellets exported to Japan have to be made
percent over the same period in 2022. from domestic plantation timber with FSC certifcate.

Exports of offce furniture in November 2023 were valued This material is only available where there are large regions
at US$23.9 million, down 10 percent compared to November of plantation forests, especially from the Central region to
2022. the North of Vietnam. From the second quarter of 2022, the
In the frst 11 months of 2023, offce furniture exports export market for wooden furniture has declined.
are estimated at US$245 million, down 28 percent over the The by-products of the wood processing industry used for
same period in 2022. producing wood pellets have also decreased. This created a
Vietnam's NTFP exports in October 2023 reached US$57.37 shortage in raw materials for pellets exported to South Korea.

million, up nine percent compared to September 2023 and The energy crisis caused by the Russian-Ukraine confict has
up nine percent compared to October 2022. Over the frst caused the demand and price of pellets in the world market
10 months of 2023 NTFP exports earned US$596.19 million, to increase sharply. This has led to a wave of investment in
down 14 percent over the same period in 2022. wood pellet production not only in Vietnam but also in other
countries.
Wood pellet production and exports This wave has increased the competition between wood
Vietnam has now become the second largest wood pellet pellet enterprises in Vietnam and between Vietnamese enterprises
producer in the world, only after the US. and enterprises in other countries such as Malaysia, Thailand
Most of the pellets produced in Vietnam are exported, and Indonesia in the future.

with over 95 percent of the export volume going to Korea At the beginning of 2023, the Korean market experienced
and Japan as input materials for power generation. very strong fuctuations. The price of pellets exported to Korea
The Vietnamese government released a report ‘Wood from Vietnam fell below US$90/tonne (FOB) in April, which
pellet production and export of Vietnam - Current dynamics was below the production cost of many enterprises. Many,
and market trends’. Customs data on pellet export volumes especially small-scale businesses, had to stop operating.
and values were reviewed by a Research group from Forest Import volume also dropped sharply.
Trends and Vietnam timber associations. In the frst fve months of 2023 (5M/2023), the volume of