Export of wood pellets under downward pressure

VCN - Currently, the export price of wood pallets is decreasing, and the price of input materials has also decreased but is still at a high level. Bank interest rates are at a high level. Factories that have been or are in the process of being completed but have to use bank loans are currently under tremendous pressure.
More and more enterprises are producing wood pallets, causing export prices to decrease gradually over the years. Photo: N.Thanh
More and more enterprises are producing wood pallets, causing export prices to decrease gradually over the years. Photo: N.Thanh

Export prices hit a record in 2022

According to statistics of the General Department of Forestry (Ministry of Agriculture and Rural Development), the export value of wood pellets will increase sharply in 2022, with the export volume reaching over 4.88 million tons, up 39.35% compared to the previous year. As a result, the export value in 2022 will reach over USD 787 million, an increase of more than 90% compared to 2021. As a result, monthly export volume and value in 2022 will almost increase sharply compared to the same period in 2021.

Notably, the average export price of pellets in 2022 is at a record high compared to the past 10 years. Tablet prices have increased continuously since January and showed signs of slowing down from June to September, rebounded after that and reached a record of more than 189 USD/ton in December 2022.

Regarding the market, almost all wood pallets from Vietnam are exported to Japan and Korea. In 2022, the volume of wood pallets exported to these two markets accounted for 97.5% of the total volume and 96.7% of the total export turnover of Vietnam's wood pallets in the year, respectively, and the volume exported to the Japanese market had a significant increase compared to 2021.

Forecasting the output and production market situation in 2023, the research team of the Vietnam Timber and Forest Products Association, Forest Trends, said that Vietnam is currently a major supplier of pellets in terms of supply and demand. 2nd in the world (after the US), the supply-demand picture of this commodity will directly affect Vietnam's production and export activities.

Specifically, in 2023, the supply of wood pallets to the EU market from the US and Canada tends to expand again after a supply scarcity period due to the Russia-Ukraine war and high shipping rates. In the first half of 2022, North American manufacturing enterprises must redirect their supply flow from the Japanese and Korean markets to supply to the EU to capture the advantage of high prices from the EU. As a result, supply from North America dropped sharply, forcing Japanese and Korean businesses to find alternative sources. This creates opportunities for Vietnamese businesses to expand their export markets here. In addition, war-related uncertainties and high freight rates created stockpiling sentiments in Japan and Korea. Up to now, the quantity of goods in these two markets is at a high level. In this context, Vietnamese exporters will hardly have the opportunity to expand their markets in Korea and Japan in 2023.

More stringent requirements in many markets

In contrast to the average export tablet price in 2022, which reached a record high in the last 10 years, in 2023, due to abundant supply, the amount of goods available in markets, especially in Japan and Korea The high level is directly affecting the export price level. The export price of wood pallets from Vietnam is on a downward trend. According to information from some exporters, in the coming time, the export price to Korea may drop to 110-120 USD/ton and Japan 150-160 USD/ton. This will be an extreme reduction compared to the current export price.

In addition, extensive inventories and abundant supply also allow businesses in Japan to tighten standards for quality and sustainability. In 2022, when the supply to these markets is in short supply, many importers here under supply pressure have no choice but to accept products of lower quality than expected. This creates opportunities for many Vietnamese manufacturers and traders with products of limited quality to enter the market. However, up to now, some Japanese enterprises are asking suppliers from Vietnam to standardize quality standards, including sustainable products. As a result, some ships from Vietnam to Japan were returned because they did not meet the requirements.

In addition, the energy crisis in 2022 in the EU has formed great expectations for Vietnam's pellet industry in accessing and expanding with this potential export market. However, statistics from the General Department of Customs show that by the end of 2022, Vietnam's pellet export turnover to this market is only under 15.2 million USD, equivalent to 1.9% of the total turnover of Vietnam's wood pellet exports. This figure shows that pellets from Vietnam have not been able to break into the market, and the industry's expectations about this market cannot come true, at least in the short term. The reason is because of the strict quality standards set by the EU, including the requirements for products with sustainability certification that very few businesses from Vietnam can meet. These standards are the biggest barrier for businesses in Vietnam.

The expanding export market has created a wave of investment in the production of this item in Vietnam, especially from the second half of the year. However, the market has passed the "fever" period, with export prices falling rapidly, which can have a substantial negative impact, especially for new or under-construction factories. According to unofficial statistics from some enterprises in the industry, in 2022, about 70 tablet factories will be built.

Among these 70 factories, about 20 large factories use EU technology; 50 factories use Vietnamese and Chinese technology. Currently, the export price of wood pallets is decreasing, and the price of input materials after a period of "fake fever" has also decreased but is still at a high level. Bank interest rates are at a high level. Factories that have been or are in the process of being completed but have to use bank loans are currently under great pressure. Factories without capital, especially small-scale ones, may be at risk of closure. Therefore, according to some businesses, 2023 may be a year of purification for businesses in the industry.

By Xuan Thao/ Huu Tuc

Related News

Vietnam kicked off the year with a strong start in trade, exceeding US$63 billion in the first month

Vietnam kicked off the year with a strong start in trade, exceeding US$63 billion in the first month

VCN - Data from the General Department of Vietnam Customs indicates a softening of both exports and imports in January 2025, relative to the same month in 2024.
Exports witness a rise of US$1 billion in the first 15 days of 2025

Exports witness a rise of US$1 billion in the first 15 days of 2025

VCN - Compared to the same period in 2024, exports in the first half of January 2025 increased by more than 6%, equivalent to nearly USS$1 billion.
US or China: Who will lead in Vietnamese Tra fish imports?

US or China: Who will lead in Vietnamese Tra fish imports?

VCN - Given that tra fish is a key export commodity for Vietnam's seafood industry, the question arises whether the United States will surpass China as the leading importer of this product in 2025.
Vietnam, Korea Customs sign AEO MRA

Vietnam, Korea Customs sign AEO MRA

VCN- The Director General of the General Department of Vietnam Customs (GDVC), Mr Nguyen Van Tho, and the Commissioner of Korea Customs Service (KCS), Mr Ko Kwang Hyo, signed the Authorized Economic Operator Mutual Recognition Agreement (AEO MRA) on the afternoon of December 24, at the GDVC’s headquarters.

Latest News

Embracing green exports: a pathway to enter global supply chains

Embracing green exports: a pathway to enter global supply chains

This shift presents both a challenge and an opportunity for Vietnamese businesses to innovate and enhance their competitive edge in the international arena.
New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises

New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises

The ministry proposes to issue a decree on the establishment, management and use of the Investment Support Fund to stabilise the investment environment, encourage and attract strategic investors and multinational corporations.
Việt Nam’s durian exports to China plummet by 80%

Việt Nam’s durian exports to China plummet by 80%

This sharp decline has had a direct impact on Việt Nam’s fruit and vegetable export revenue, which stood at US$416 million in January 2025, marking a 11.3 per cent decrease month-on-month and a 5.2 per cent drop year-on-year.
Coconut exports reach 14-year high

Coconut exports reach 14-year high

In 2024, fresh coconut and coconut product exports surpassed US$1 billion, marking the highest figure in the past 14 years.

More News

Shrimp exports grow in the first month of 2025

Shrimp exports grow in the first month of 2025

According to data from the Việt Nam Association of Seafood Exporters and Producers (VASEP), shrimp products recorded a 13 per cent increase in export value in January 2025, reaching a total of $273.3 million.
Rice export prices drop, but decline expected to be short-term

Rice export prices drop, but decline expected to be short-term

Việt Nam’s rice export prices have declined, reaching their lowest level in three years.
Key agro products expected to maintain export growth this year

Key agro products expected to maintain export growth this year

At present, agricultural exports, such as rice, coffee and seafood, have steadily secured a stable place in major global markets.
EU issues 12 warnings against Việt Nam’s food and agricultural exports

EU issues 12 warnings against Việt Nam’s food and agricultural exports

The Việt Nam SPS Office has reported that some Vietnamese export products failed to meet the EU’s stringent standards.
Việt Nam to impose VAT on low-value express-imported goods

Việt Nam to impose VAT on low-value express-imported goods

Việt Nam will end a previous policy that exempted imported goods valued under VNĐ1 million (US$39.4) from taxes when shipped via express delivery.
Exchange rate risks need attention in near future

Exchange rate risks need attention in near future

VCN - Exchange rate developments in 2025 are considered to be quite complicated due to US policies related to trade and investment.
Import and export turnover reaches about US$29 billion in the second half of January 2025

Import and export turnover reaches about US$29 billion in the second half of January 2025

VCN - Vietnam's total import and export turnover in the second half of January 2025 (January 16-31, 2025) reached US$28.9 billion, the latest preliminary statistics of the General Department of Vietnam Customs reported.
Market edges up slightly as liquidity remains low

Market edges up slightly as liquidity remains low

Market breadth remained positive, with 161 gainers outnumbering 144 decliners.
Business regulations must be trimmed for development of enterprises: Experts

Business regulations must be trimmed for development of enterprises: Experts

The General Statistics Office (GSO)'s socio-economic report for January 2025 reveals that while over 33,400 newly established or resumed businesses entered the market - marking a 15% increase compared to January 2024 - more than 58,300 businesses withdrew from the market, representing a growth of 8.1% on year.
Read More

Your care

Latest Most read
Embracing green exports: a pathway to enter global supply chains

Embracing green exports: a pathway to enter global supply chains

This shift presents both a challenge and an opportunity for Vietnamese businesses to innovate and enhance their competitive edge in the international arena.
New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises

New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises

The ministry proposes to issue a decree on the establishment, management and use of the Investment Support Fund to stabilise the investment environment, encourage and attract strategic investors and multinational corporations.
Việt Nam’s durian exports to China plummet by 80%

Việt Nam’s durian exports to China plummet by 80%

This sharp decline has had a direct impact on Việt Nam’s fruit and vegetable export revenue, which stood at US$416 million in January 2025, marking a 11.3 per cent decrease month-on-month and a 5.2 per cent drop year-on-year.
Coconut exports reach 14-year high

Coconut exports reach 14-year high

In 2024, fresh coconut and coconut product exports surpassed US$1 billion, marking the highest figure in the past 14 years.
Shrimp exports grow in the first month of 2025

Shrimp exports grow in the first month of 2025

According to data from the Việt Nam Association of Seafood Exporters and Producers (VASEP), shrimp products recorded a 13 per cent increase in export value in January 2025, reaching a total of $273.3 million.
Mobile Version