Page 11 - FDMASIA JanFeb 2023

Market Beats 9
www.fdmasia.com | FDM AsiA Jan/Feb 2023

investment decisions for new production capacity that targets suspensions were imposed on Russian timber owing to the
the current shortage in the EU heating markets. Russia-Ukraine confict.
Growth prospects for pellet industry The Russian sanctions
Asian wood pellet demand to diverge have created opportunities.
Wood pellet demand in Asia is likely to diverge in 2023, with South Korean imports of Russian wood pellets have
Japanese consumption set to rise as new capacity is brought increased by a factor of about seven from the long-term

on line, while South Korean demand could remain stable, monthly average.
according to Argus. In terms of price, the average price for pellets imported
Asian wood pellet supply tightened in 2022, but is likely to into the UK from US and Canadian producers shot up in
ease in 2023. But increased scrutiny of Vietnamese suppliers October 2022 by nearly $70/tonne from the recent average.
could cause a shift in trade fows, with wood pellet availability The uncertainty generated by high-infation and by the war
increasing for South Korean buyers and remaining tight for in Ukraine (and the follow-on impacts from sanctions) makes
Japan. predicting the duration and ultimate consequences of market
A shortage of raw materials and an increase in demand disruptions impossible for the near and medium terms.
from Europe tightened wood pellet supply in Asia in 2022, However, the proven carbon beneft and economic value

pushing FOB Vietnam wood pellet prices to historical highs. of using a renewable solid fuel for heat and dispatchable
Supply is likely to increase in 2023 because of a recent decline power generation, and emerging new markets for densifed
in European demand as a result of high stocks, along with biomass as feedstock in biochemical and sustainable aviation
lower Chinese wood chip demand given ample inventories. fuel production, means that the rest of this decade and into
The Japanese and South Korean markets are likely to the next will see continued growth in the sector.
see different levels of wood pellet availability in early 2023.
Forsta bv
Japanese demand is set to rise on the year as new generation
capacity is brought online.
South Korean demand is likely to be stable, with no new
100pc biomass generation capacity scheduled to start up.
But there could be a shift in supply fows between the two
countries, with certifcation issues in major supplier Vietnam
likely to result in more wood pellets being redirected to South
Korea, which has different certifcation requirements compared
with Japan.
Vietnamese wood pellets that meet the requirements of

Japanese utilities under the country's feed-in-tariff (FiT) scheme
hit historical highs in 2022, with the Argus-assessed price
reaching $204.75/tonne on 16 november.
The market was supported by tight raw material supply
caused by strong demand for wood chips from Chinese pulp
and paper producers, along with tighter north American supplies
as European demand frmed after sanctions and certifcation