Vietnam’s exports of wood pellets

1. Exports have boomed since 2017:

On average over the past three years, Vietnam has exported about 3 million tons of wood pellets on an annual basis, valued at nearly US$350 million (Figure 1). Export volumes are expected to reach record highs in 2021, with 2.4 million tons, equivalent to US$273 million, already reported in the fi rst 8 months of 2021 alone. In general, export has been on the rise.

2. Impact of COVID 19 on exports:

While a recent surge of COVID-19 cases in Vietnam beginning in April 2021 has had a signifi cant impact on Vietnam’s export of wood products to major markets like the U.S. and EU, it has had a much lesser impact on Vietnam’s wood pellets export (Figure 2), primarily because the surge took place mostly in the country’s southern provinces where furniture processing clusters are located, while wood pellet manufacturing takes place primarily in northern provinces.

Figure 1. Vietnam’s export volume and value of pellets, 2013 – August 2021

Figure 2. Vietnam wood pellets export, January – August 2021

3. Export Markets:

South Korea and Japan are Vietnam’s two largest markets for wood pellet exports, accounting for over 90% of total export volume each year. South Korea is by far the main destination for pellets in Asia, although Japan has been rapidly increasing its demand over the past three years. In both countries, government programs (subsidies as well as regulations) have incentivized an increase in the use of wood pellets for renewable energy. The South Korean market for wood pellets has historically been nearly twice as large as Japan’s; however, the stability of Japanese imports is higher and growing more consistently. The South Korean market contains some uncertainty, particularly price volatility.