South Korea and Japan pellet imports at record high
June 26, 2017
By Wood Resources International LLC
June 26, 2017 - Wood pellet imports to Asia reached an all-time-high in the 4Q/16 when Japan and South Korea together imported 630,000 tons of pellets. Although import volumes were down slightly in the 1Q/17, they were still over 40 per cent higher than in the 1Q/16, as reported in the latest issue of the Wood Resource Quarterly (WRQ).
South Korea is by far the main destination for pellets in Asia, and in 2016, the country was the world’s third largest importer of pellets, trailing only the United Kingdom and Denmark. Although import volumes to Japan have tripled from 2014 to 2016, the usage of pellets is still at a relatively low level (see WRQ for detailed trade data).
Consumption of pellets in Japan and South Korea has increased quite rapidly the past four years because of new government requirements which favour reducing carbon
emissions and increasing the usage of renewable energy. The recent trend in pellet usage is likely to continue in the future and is driven both by incentives (subsidies) and regulations (renewable energy portfolio standards). With an urgent need to replace nuclear energy and generous feed-in-tariffs, it is expected that Japan will increase importation of wood pellets quite substantially over the next five years.
Vietnam has been the major supplier of pellets to the Asian market for the past three years, accounting for almost two-thirds of the shipments to Japan and South Korea in 2016. Canada was an early supplier to the Asian market, but its market share dropped from 22 per cent in 2014 to 14 per cent in 2016. However, in the 1Q/17, Canada increased shipments to Asia to the second the highest quarterly level on record and the market share was up to 21 per cent.
Import prices for pellets to South Korea fell dramatically from early 2014 to the summer of 2016, according to a recent WRQ Trade Snapshot report. The two-year long price decline ended in the 3Q/16, when prices slowly started to recover. The import prices continued their upward trend during the first four months of 2017 with Malaysian pellets increasing the most.
Global lumber, sawlog and pulpwood market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, which was established in 1988 and has subscribers in over 30 countries, tracks sawlog, pulpwood, wood chip, lumber and pellet prices, trade and market developments in most key regions around the world. To subscribe to the WRQ, please go to www.woodprices.com
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