Severe rainfall, thunderstorms and flooding in central and south Vietnam have disrupted wood pellet production in the country and threatens to exacerbate existing tight supply in the market, market sources told Argus today.
Some wood pellet factories in south Vietnam had to stop output because of floods. Heavy rain has also limited the availability of raw material feedstock throughout the country.
A wood pellet plant in south Vietnam has been closed for around 10 days because of floods and the lack of available raw materials, the plant operator told Argus on 30 September. The factory has a capacity of 100,000 t/yr of wood pellets. Some South Korean traders have approached the plant operator for a total of 5,000t of wood pellets. But the producer did not have enough wood pellet stocks, it said.
Wood pellet producers have been competing for limited raw material across the country, including residual sawdust from the wood furniture industry and wood chips. The severe rain has disrupted harvesting of these raw materials.
Demand from South Korea, Europe
Demand from South Korea has been stable but prices have surged because of the lack of industrial grade wood pellets, which are typically made from sawdust residue from furniture manufacturing.
An independent power producer (IPP) in South Korea may have sought November-loading shipments of wood pellets amounting to 60,000t through a tender, and received offers at $125-128/t fob Vietnam, said market sources. But Argus could not immediately confirm the results of the tender.
Argus last assessed the price of wood pellets typically sold to South Korea at $125/t fob Vietnam on 23 September. The price surged by $18.50/t from $106.50/t fob Vietnam on 5 August, because of weather-related disruptions.
Another South Korean IPP sought 80,000-90,000t of wood pellets through a tender which closed on 29 September, but no results were heard as of the time of writing.
Wood pellet producers in Vietnam have also been selling shipments to Europe. "I've received enquiries from many buyers in Europe and they are bidding at higher prices. The EUDR (EU Deforestation Regulation) has not been implemented yet and biomass buyers are trying to buy wood pellets from Vietnam before January 2027 as they are not confident about whether the new regulations will allow them continue to do so," said a wood pellet producer.
Wood, pulp, paper and packaging products under HS code 4401 — including fuel wood, wood chips, pellets and sawdust — remain within the EUDR's scope, despite requests by industry participants to exclude some products from the regulations.
The producer sold a September-loading 50,000t shipment of wood pellets at $155/t fob Vietnam to a buyer in Europe. The product meets sustainability requirements, including the Sustainable Biomass Program and the International Sustainability and Carbon Certification (ISCC)-EU certifications. This grade of wood pellets is typically also sold to the Japanese market.
Delivered industrial wood pellet price rose to a fresh three-year high of $248.50/t cif northwest Europe on 23 September, leaving a large margin of $93.50/t for trading firms to arrange freight and other logistics, based on a price of $155/t fob Vietnam.
Argus last assessed the price of wood pellets that meet Japan's feed-in-tariff (FiT) requirements at $146.25/t fob Vietnam on 23 September.
