State-owned utility Korea South-East Power (Koen) has issued a tender for 90,000t of high-quality wood pellets to be delivered to its Yeongdong biomass power plants in August, according to a wood pellet seller.
The tender is seeking wood pellets with quality higher than industrial grade 2 (I2), also known among South Korean market participants as "Yeongdong specifications". The utility is open to receiving domestic and imported wood pellet bids, according to a Koen official.
South Korean utilities typically seek I3 pellets, a lower-quality grade with more impurities and volatile matter produced during biomass firing for power generation.
The utility has specified the cargoes to be priced on a delivered duty paid basis, inclusive of value-added tax (VAT) at the plant's No.1 and No.2 units. Participants in the tender were invited to bid for a minimum supply of 4,000t.
The tender opened on 16 June and will close on 18 June, which is the deadline for bid submissions.
Koen also previously concluded a tender on 29 May for 70,000t of wood pellets for the similar specifications, awarding the volumes mostly to domestic suppliers. No Vietnamese supplier won any bids, according to market sources. The "Yeongdong specified" wood pellets were bid for an average of $248.13/t ddp basis VAT included for July delivery.
The emergence of domestic suppliers able to meet the required specifications at competitive prices could marginally reduce short-term demand for Vietnamese supplies, at a time where wood pellet quality from Vietnam remains uncertain. Some cargoes were held in at least one South Korean port because the pellets do not meet the utilities' specifications, market participants said.
Domestic production capacity remains at 800,000 t/yr, which is still insufficient to meet the 4.5mn t/yr wood pellet demand in South Korea in the long term.
