Over 22 million tons of wood pellets were shipped globally in 2018. The US, Canada, Vietnam, Latvia, and Russia, accounted for 69 percent of global exports in 2018, reports the North American Wood Fiber Review (NAWFR). Europe continues to be the major destination for globally traded wood pellets while Asia has increased its importation of pellets over the past three years. Japan and South Korea imported a record volume of 4.5 million tons in 2018 mostly from producers in South East Asia (SEA).
According to the North American Wood Fiber Review (NAWFR) report, published annually by international forest industry consultants Wood Resources International LLC, the global trade of wood pellets jumped more than 21 percent year-over-year in 2018 when a new record of 22.3 million tons was shipped. The five major pellet exporting countries – the United States (US), Canada, Vietnam, Latvia, and Russia – have remained the top exporters for over five years. They accounted for about 69 percent of the world’s export volume in 2018.
Following the “big five” in 2018 were Estonia, Austria, Malaysia, Denmark, and Germany, in descending order. Pellet production in the US South continued at a record pace in, driven by a European move away from fossil fuels and towards renewable energy. From the 1Q/18 to the 4Q/18, exports from the region were up almost 50 percent, further manifesting US’s role as the world’s largest producer and exporter of wood pellets, reports the NAWFR.
The US ships practically all its pellets to three countries: the United Kingdom (UK), Belgium and Denmark. Only a small share of the pellet production in the US is consumed domestically. Demand for imported pellets in Japan and South Korea continued a three-year growth trend in the 4Q/18 when import volumes reached new record highs of 339 000 tons and 993 000 tons, respectively.
In 2018, the total annual import volume for the two countries was just over 4.5 million tons, more than doubling in just two years. With the increased trade, prices for pellets landed in both Japan and South Korea have moved upward over the past three years.
In the 4Q/18, the price for pellets imported to Japan averaged US$182/ton, up almost six percent from the 4Q/17. Pellet import prices to South Korea, which were nominally lower than those in Japan, rose almost 25 percent during the same period. The lower average cost for South Korea can be explained by that country’s reliance on pellets from low-cost countries in nearby Vietnam and Malaysia.
This is unlike Japan, whose major pellet supplier is British Columbia, Canada, a more expensive producer of high-quality FSC and SFI certified pellets.