Currently, Vietnamese wood and wood products including wood pellets have been exported to many international markets. Wood pellet is a commodity chosen by many developing countries to replace fuels affecting the environment. The potential of the wood pellet industry is large, requiring domestic manufacturers to improve the quality and reduce the cost of the product to gain competitive advantages.

Wood pellets are made from wood chips and branches, by-products from different stages in wood production and processing. According to experts from the Vietnam Association of Wood and Forest Products (VIFOREST), foreign importers import wood pellets as biofuel, humectant, and fertilizer for plants because this material is 100% organic.

Great potential

With the significance of environmental protection and the reuse of surplus materials to create useful fuels, the wood pellet market is expanding, especially in the developed countries of the EU, South Korea, and Japan. Currently, wood pellet products are following international standards such as Certification of Sustainable Forest Management (FSC-FM), Certification of Product Journey Chain (FSC-CoC), Certification of Controlled Wood (FSC-CW) to help enterprises control their raw materials through risk assessment activities under international standards. These are also the standards that importers are asking Vietnamese wood enterprises to apply.

In fact, according to the assessment of the managers, wood by-products for the production of wood pellets qualified for export to domestic enterprises are very abundant. One of the strengths directly contributing to the formation and development of the Vietnamese wood pellet industry is the abundant input material, which is created from wood by-products of the wood processing industry. The input source for making this item includes sawdust, chips, shredded branches, and branches of small-diameter forest wood.

On the other hand, wood pellet processing facilities do not require complex management technology, creating opportunities for many enterprises to participate in the production stage. Vietnam has geographical advantages with raw materials for wood pellet production located near export seaports, which is convenient for transportation. These are the fundamental advantages for the wood pellet industry to develop strongly in the coming time.

In the world market, wood pellets are widely used in both daily life and industrial production. Besides, the use of organic renewable materials has contributed to protecting the environment and not endangering the health of users. As a result, the export of wood pellets is considered to have great potential.

The wood pellet industry has the potential to develop strongly in the coming time. (Source: Internet)

Improving export value

Up to now, the wood pellet has become one of Vietnam’s most important exports. Recently, the annual export output has reached about three million tonnes, equivalent to 350 million USD in turnover. South Korea and Japan are two important import markets, accounting for more than 90% of the annual export of wood pellets. The Korean market is larger than the Japanese market. However, the export price to Japan is higher than to Korea from 20 USD to 30 USD/tonne.

According to some exporters, currently, the export price to the Korean market is low because this market applies the auction mechanism when buying products. Meanwhile, the buying mechanism in the Japanese market depends directly on the agreement between the buyer and the seller.

The statistic from the General Department of Forestry shows that Vietnam has about 80 factories producing wood pellets. However, according to experts from Forest Trends, the number of enterprises directly involved in the production and export of wood pellets may be much larger. The Southeast region of Vietnam – the center of wood processing facilities, has the largest wood pellet manufacturing facilities nationwide. The abundant source of wood by-products from wood processing facilities is the input for wood pellet manufacturing.

The wood pellet industry has potential for sustainable development. That is, the demand for wood pellets in importing countries will continue to increase in the future. According to some exporting enterprises, the number of wood pellets in this market will likely triple in the coming years. If Vietnam’s production capacity is kept at its current level, the supply and demand of this item will balance over the next 2-3 years.

In addition, the wood pellet industry has the opportunity to improve the proportion of FSC-certified products. This can be achieved through cooperation between export processing enterprises and forest households.

Mr. To Xuan Phuc, a specialist from Forest Trends, said that despite the great potential, the wood pellet industry has some limits. That is, material inputs are not strictly controlled on both quality and legal basis. Some processing establishments use mixed raw materials, affecting the quality of products. The supply of wood with sustainable forest management (FSC) certificates is low while the demand in the export market for certified commodities is increasing.

Therefore, the strict control of the quality of input materials, the connection through representative organizations, and modern technology application to create high-quality products with low prices are the urgent requirements for enterprises producing export wood pellets.