Global Timber and Wood Products Market Update

April 30, 2019

By: The Working Forest Staff

 Over 22 million tons of wood pellets were shipped globally in 2018, up

21% from 2017. The US, Canada, Vietnam, Latvia, and Russia, accounted

for 69% of global exports in 2018, reports the North American Wood

 

Europe continues to be the major destination for globally traded wood pellets. However,

Asia has increased its importation of pellets over the past three years, with Japan and

South Korea importing a record volume of 4.5 million tons in 2018. A majority of the

volume is sourced from pellet manufacturers in southeastern Asia.

Global trade of wood pellets jumped more than 21% year-over-year in 2018

when a new record of 22.3 million tons was shipped, according to the North American

Wood Fiber Review. The five major pellet exporting countries (the US, Canada, Vietnam,

Latvia, and Russia) have remained the top exporters for over five years. They accounted

for about 69% of the world’s export volume in 2018.

Following the “big five” in 2018 were Estonia, Austria, Malaysia, Denmark, and Germany,

in descending order. Pellet production in the US South continued at a record pace in, driven

by a European move away from fossil fuels and towards renewable energy. From the 1Q/18

to the 4Q/18, exports from the region were up almost 50%, further manifesting US’s role

as the world’s largest producer and exporter of wood pellets, reports the NAWFR. The

United States ships practically all its pellets to three countries: the United Kingdom,

Belgium and Denmark. Only a small share of the pellet production in the US is consumed

domestically.

Demand for imported pellets in Japan and South Korea continued a three-year growth trend

in the 4Q/18 when import volumes reached new record highs of 339,000 tons and 993,000

tons, respectively. In 2018, the total annual import volume for the two countries was just

over 4.5 million tons, more than doubling in just two years. With the increased trade, prices

for pellets landed in both Japan and South Korea have moved upward over the past three

years.

In the 4Q/18, the price for pellets imported to Japan averaged $182/ton, up almost six

percent from the 4Q/17. Pellet import prices to South Korea, which were nominally lower

than those in Japan, rose almost 25% during the same period. The lower average cost

for South Korea can be explained by that country’s reliance on pellets from low-cost

countries in nearby Vietnam and Malaysia. This is unlike Japan, whose major pellet

supplier is British Columbia, a more expensive producer of high-quality FSC and SFI.

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