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Asia now accounts for 1/3 of wood pellet trade

17 May 2023

Worldwide trade of wood pellets remained practically unchanged year-on -year about 29 million tons in 2022. This year was the first time shipments failed to rise year-on -year since 2017, when wood pellets became a globally traded commodity. Despite the minimal global volume change, there were some noteworthy shifts in trade flows on a country-level basis in 2022.

Asia, represented by Japan and South Korea, has continued to grow import volumes at the expense of European buyers and, in the 4Q/22, accounted for one-third of the world’s import volume, up from only 18% five years ago. Note. More recent data is available on the new forest products market platform WoodMarket Prices at ResourceWise.

Demand for biomass, including wood pellets, has increased remarkably quickly in Japan, from 1.0 million tons in 2018 to 4.4 million tons in 2022. The upward trend is expected to continue, and Japan will be the fastest-growing market in the world in the next 5-10 years. Vietnam is currently the primary pellet supplier to Japan, followed by Canada and the US. With Japanese power companies writing long-term offtake agreements with larger suppliers in North America, the most considerable pellet supply expansion in the coming years will likely be in the US and Canada.

Pellet producers in the US South have historically shipped all their production to European power companies, and as late as 2021, there were no exports from the US to Asia. However, in 2022 Asian demand picked up, and in the 1Q/23, 10% of the total volume from the Southern states was shipped to Japan. This recent and sudden change in trade flow will likely continue to expand, with increasing long-term sales to Japanese power companies and a declining share of European shipments.

Source: Wood Resources International

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