Pellet Exports to Europe: A Potential Market for Vietnamese Businesses

In the first half of 2024, Vietnam’s pellet exports reached over 345 million USD, accounting for 4.7% of the total export turnover of the wood industry. According to Dr. To Xuan Phuc, the total volume of exported pellets reached 2.6 million tons, an increase of 25.9% in volume and 4.6% in value compared to the same period last year. This impressive growth is largely due to the efficiency of export services, helping businesses access new markets and optimize transaction processes.

South Korea and Japan remain Vietnam’s two largest pellet export markets, accounting for 92% in volume and 89.9% in value of exports in the first 6 months of 2024. The EU ranks third with 1.9% in volume and 2.8% in value. To meet the surge in transportation demand in key markets, logistics companies have had to continuously innovate and expand their cargo transportation capacity.

To date, Vietnam has over 300 factories and production facilities for wood pellets.

However, the average monthly export price of pellets in the first 6 months of 2024 dropped sharply in both the South Korean and Japanese markets. In Japan, the average price decreased from 170 USD/ton to 146 USD/ton, while in South Korea, the price fell from 139 USD/ton to 104 USD/ton. Dr. To Xuan Phuc believes that the Japanese market will continue to play an important role in Vietnam’s pellet production. Vietnamese businesses have the opportunity to replace Indonesia’s pellet supply for the Japanese market due to sustainability certification issues.

Mr. Olaf Naehrig, Chief Engineer of KAHL Group in Vietnam, believes that the EU market currently accounts for a small proportion of Vietnam’s pellet import markets but has great growth potential. In anticipation of the EU market’s growth prospects, international transportation service providers are rushing to upgrade systems and train personnel to be ready to seize opportunities.

Currently, Vietnam has 83 businesses directly involved in pellet exports and over 300 production facilities. However, this industry is facing fierce competition for raw materials with the wood chip export industry. Sea transport has become the backbone of the supply chain, effectively connecting raw material areas with processing plants across the country.

For sustainable development, Vietnam’s pellet processing industry needs to change technology and find alternative raw material sources. Mr. Nguyen Son Ha, representative of KAHL Group in Vietnam, suggests utilizing by-products from wood furniture processing to produce pellets. In the process of utilizing wood by-products, container shipping is proving to be the optimal solution, ensuring safety and efficiency for moving raw materials to pellet production facilities.

In conclusion, for sustainable development, Vietnam’s pellet production industry needs to diversify raw material sources, invest in new technologies, and expand markets, especially the EU market. The support of modern logistics systems and professional import-export services will be crucial factors for this industry to overcome challenges and seize development opportunities in the future.