According to Vietnam Timber & Forest Products Association (VIFORES), Korea Republic and Japan are the two largest import markets of Vietnam's wood pellets. The volume of tablets exported from Vietnam to these two markets accounts for over 95% of the total export volume of wood pellets.

According to data from the General Department of Customs, the volume and value of Vietnam's pellet exports have increased by 28 and 34 times respectively over the past 10 years, since 2013. In 2022, Vietnam exported 4.9 million tons of wood pellets, with a turnover of USD 0.79 billion. In the first months of 2023, the export volume reached 1.57 million tons, the turnover reached more than USD 256 million.

Exports are currently on the rise. Demand for wood pellets in the world is forecast to increase by about 250% in the next decade, reaching 36 million tons from 14 million tons six years ago, from 2017. In recent years, the demand for wood pellets has increased mainly in Japan, Korea Republic and European countries.

The energy crisis caused by the Russia-Ukraine conflict made the demand and the price of wood pellets in the world market increased sharply. This formed a wave of investment in tablet production not only in Vietnam but also in other countries.

This wave has increased the competition between wood pellet enterprises in Vietnam and between Vietnamese enterprises and enterprises in other countries such as Malaysia, Thailand and Indonesia.

At the beginning of 2023, the Korean market experienced strong fluctuations. The price of wood pellets exported to this country from Vietnam fell below USD 90D/ton (FOB) in April, below the production cost of many enterprises. Many businesses, especially small-scale businesses, have to stop operating.

In the first six months of 2023, Vietnam's pellets exported to Korea Republic reached about 0.8 million tons. It is expected that by the end of 2023, Vietnam's export volume to this market will reach about 1-1.5 million tons. Vietnam is the main source of tablets for Korea Republic (accounting for 80% of the total demand of this market). However, at present, Korea Republic is diversifying its supply, including imports from Russia.

To date, Vietnam has exported about 1 million tons of wood pellets to Japan. All wood pellets exported to Japan require FSC certificate. Raw materials for pellets exported to Japan are sourced from domestically planted forests, mainly from acacia trees.

It is predicted that in the last months of 2023, Vietnam's production and export of wood pellets will continue to increase. Competition for raw materials to produce wood pellets will also increase, because the export market for wood products has not shown any signs of recovery.

Kylie Nguyen