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Production and export of wood pellets from Vietnam, current situation and trends of product output market

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Current Status, Export Trends, and Market Outlook

  • Vietnam has now become the second largest wood pellet producing country in the world, after the United States. Most wood pellets produced in Vietnam are exported, with over 95% of exports going to South Korea and Japan as input materials for electricity production. A small amount is consumed domestically in Vietnam as fuel for boilers, drying kilns, etc. From 2013 to 2022, the volume and value of Vietnam’s wood pellet exports increased by 28 and 34 times, respectively.
  • According to the General Department of Customs, in 2022, Vietnam exported 4.9 million tons and the turnover reached 0.79 billion USD. In the first five months of 2023 (5M/2023), the export volume reached 1.57 million tons, the turnover reached about 256.5 million USD. Exports are currently on the rise.
  • Global demand for wood pellets will increase by about 250% in the next decade, reaching 36 million tons from 14 million tons in 2017. In recent years, demand has increased mainly in European countries, Japan and South Korea. However, the Vietnamese wood pellet industry has the opportunity to expand its market as demand in Vietnam has begun to show signs of rapid growth as the Government is making efforts to implement its commitments to reduce greenhouse gas emissions and use clean energy, including wood pellets to replace coal in energy production. The Power Plan VIII approved by the Government on May 15 prioritizes the development of renewable energy sources, including biomass power to replace coal power with high emissions. Therefore, the demand for wood pellets in the domestic market can expand very quickly in the future.
  • This newsletter updates the recent export situation of wood pellets in Vietnam, focusing on market changes in the first 5 months of 2023. The statistics on export volume and value are compiled by the Forest Trends Research Team and wood associations from the statistical data of the General Department of Vietnam Customs. Qualitative information on recent export market fluctuations and upcoming market trends is collected from discussions with leaders of the Wood Pellet Association and information from other reliable sources. The comments in the newsletter are those of the author.

Key information:

  • South Korea and Japan are the two largest wood pellet import markets of Vietnam. The amount of wood pellets exported from Vietnam to these two markets accounts for over 95% of the total amount of wood pellets exported from Vietnam to all markets.
  • The difference in raw wood sources for wood pellet production exported to Korea and Japan includes: wood pellets exported to Korea are mainly made from wood by-products of the wood processing industry such as sawdust, shavings, and excess wood scraps. Wood pellet enterprises exporting to Korea are mainly located in the Southeast region, where wood manufacturing factories are concentrated. Wood pellets exported to Japan require wood raw materials from domestically planted forests with FSC certification. This raw material is only available in places with a large concentration of planted forests in Vietnam, especially from the Central region to the North.
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  • Starting from the second quarter of 2022, the export market for wood products will decline. By-products of the industry as raw materials for wood pellet production will also decrease. This creates a shortage of raw material supply for wood pellets exported to Korea.
  • The energy crisis caused by the Russia-Ukraine conflict has caused the demand and price of wood pellets in the world market to increase sharply. This has created a wave of investment in pellet production not only in Vietnam but also in other countries. This wave increases competition between wood pellet enterprises in Vietnam and between Vietnamese enterprises and enterprises in other countries such as Malaysia, Thailand and Indonesia in the future.
  • In early 2023, the Korean market fluctuated strongly. The price of wood pellets exported to Korea from Vietnam fell below 90 USD/ton (FOB) in April, below the production cost of many enterprises. Many enterprises, especially small-scale enterprises, had to stop operating. Import volume also decreased sharply.
  • In the first 5 months of 2023 (5M/2023), the volume of wood pellets exported from Vietnam to Korea reached 0.65 million tons, equivalent to 96.1 million USD in turnover, down 41% in volume and 45% in turnover compared to the same period in 2022.
  • The Japanese market has high stability in both volume and price. In the first 5 months of 2023, the volume of wood pellets exported from Vietnam to Japan reached 0.87 million tons, with a turnover of 151 million USD. The export volume decreased by 5.7% while the turnover increased by 19.7% compared to the same period in 2022.

Note: The information in this article is for reference only and may change depending on the manufacturer and source of raw materials. For the most accurate information, you should consult experts, wood pellet suppliers or contact Overc.vn to answer your questions and problems related to wood pellets and wood chips.

Source: 

  • Goviet org
  • Overc Team synthesise, analyse and write articles.

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OVERC was established in Vietnam, which has 17 FTA (Free Trade Agreement).
Vietnam is one of the countries with the most FTAs in the world. 

Our main activities are manufacturing and distributing Wood Pellets and Wood Waste. Our wood pellet products, which are made from Acacia veneer residual 100% or wood waste (logs, sawdust, wood chips, wood shavings,…), have been exported to many countries around the world such as Japan, Korea, EU, etc. 

OVERC Co.,Ltd would like to wish you all the best at this time.
For more information on our products, please visit our website at OVERC.VN – Renewable World.