Highlighting key markets

Sharing about some current issues of the Vietnamese wood industry, Dr. To Xuan Phuc, an expert from Forest Trends, said: The total volume of Vietnamese pellets exported in the first 6 months of 2024 reached 2.6 million tons, with a value of 345.5 million USD, accounting for 4.7% of the total export turnover of the wood industry; an increase of 25.9% in volume and 4.6% in value over the same period last year.

The two largest export markets for Vietnam’s tablets are South Korea and Japan. In the first 6 months of 2024, the volume and value of tablets exported to these two countries accounted for 92% in volume and 89.9% in value of Vietnam’s tablet exports.

In addition, the EU is the third largest export market for Vietnamese tablets, while the remaining products are exported to other markets such as Taiwan (China), PNP, etc. The average monthly export price of tablets in the first 6 months of 2024 decreased sharply in both the Korean and Japanese markets.

Specifically, in Japan, if in the first 6 months of 2023 the average export price of pellets reached 170 USD/ton, with some months reaching 185 USD/ton, then in the first 6 months of 2024 the average export price of this item was only 146 USD/ton, a decrease of 24 USD/ton.

Similarly, in the Korean market, the average export price for the first 6 months of 2023 was 139 USD/ton, while in the first 6 months of 2024 it was only 104 USD/ton, a decrease of 35 USD/ton.

To reduce dependence on the two markets of Korea and Japan, according to experts, tablet manufacturing enterprises need to research and promote consumption in new markets such as the European market (EU) and the domestic market.

According to Dr. To Xuan Phuc, in the coming time, the Japanese market will continue to play an important role in Vietnam’s pellet production. Vietnamese enterprises also have the opportunity to replace Indonesia’s pellet supply for the Japanese market, because the supply of pellets made from palm oil husks originating from Indonesia may not achieve the sustainability certification required by the Japanese market.

Expanding raw material areas and potential markets

“Currently, the demand for wood pellets and wood chips for domestic consumption is likely to increase in the future due to the Vietnamese Government’s commitment to reduce emissions, as well as businesses voluntarily switching from high-emission raw materials to pellets, especially if the Government issues policies to encourage the conversion,” said Dr. To Xuan Phuc.

Mr. Olaf Naehrig, Chief Engineer of KAHL Group in Vietnam, said that the EU market currently accounts for a small proportion of Vietnam’s pellet import markets, accounting for only 3.3% of the total pellet export volume and 3.8% of the total turnover. In 2023, the EU market imported more than 155,000 tons of pellets from Vietnam, reaching approximately 26 million USD, nearly 3 times higher in volume and 3.7 times higher in value compared to 2022, which is a good sign for Vietnamese pellets in the EU market.

Mr. Olaf Naehrig also agrees with the view that the Vietnamese pellet industry needs to promote market opening in Europe. Because this is the region that consumes the most pellets in the world.

According to the Vietnam Timber and Forest Products Association, Vietnam has 83 enterprises directly involved in exporting pellets and over 300 pellet production facilities. Compared to export demand, Vietnam has a rather weak pellet production force, with export scale concentrated in only a few large companies.

However, the pellet manufacturing industry in Vietnam is facing fierce competition from the wood chip export industry for raw materials. Therefore, research on technology to expand the source of input materials for the pellet manufacturing industry is necessary.

Agreeing with this view, Mr. Nguyen Son Ha, representative of KAHL Group in Vietnam, said that raw materials for processing tablets in Vietnam are not sustainable in terms of origin and quality.

“The raw materials for producing pellets are not only acacia trees, but elephant grass, corn stalks or sugarcane bagasse can also be used. All agricultural by-products that can be burned are raw materials for producing pellets,” said Mr. Nguyen Son Ha.

According to Mr. Ha, the advantage of the Vietnamese pellet industry is that there are many enterprises producing wooden furniture, and waste from wood processing is a waste if discarded, which is the best raw material for producing pellets. Using sawdust and wood chips to produce pellets also helps reduce environmental pollution, and businesses do not have to burn them. Pellets produced in Vietnam are popular in the Japanese market because when burned, there is no smoke, which means no CO2 emissions.

Sharing about new raw materials for sustainable pellet production, the representative of KAHL Group in Vietnam said: KAHL is the first unit in the world to produce pellets with bagasse as raw material. Currently, KAHL is the only unit that can produce 10 – 12 tons of pellets/hour. The more modern the technology, the lower the product cost, the higher the product quality to be able to compete in the market.

Sharing about expanding this alternative source of raw materials, Mr. Nguyen Thanh Phong, Chairman of the Vietnam Wood Pellet Association, said: To produce pellets from raw materials from agricultural by-products, the production technology does not have to change much, but businesses need to find suitable customer groups.