An increase in supplies from Canada and Russia pushed up South Korea's overall imports of wood pellets in June, with the increase offsetting a slight decline in receipts of wood pellets from Vietnam.
South Korea imported 416,000t of wood pellets in June, up by 15pc on the year and up by 9pc on the month.
Vietnam, South Korea's dominant wood pellet supplier, accounted for 234,000t of the country's imports in June, down by 7pc from a year earlier and 17pc lower than in May. Raw material availability for wood pellets was tight in Vietnam as some furniture factories in the Ho Chi Minh area, from which wood pellet producers procure sawdust, were reported to have shut because of Covid-19. Wood pellet producers in Vietnam have faced fierce competition for raw materials from Chinese wood chip buyers, as demand from the Chinese pulp and paper industry rose sharply on higher demand for packaging, following a rise in Covid-19 cases in parts of China.
Canada supplied 78,000t of wood pellets to South Korea in June, up by 83pc on the year and a big increase from 13,000t in May. Canadian wood pellet producer Drax, formerly known as Pinnacle, has a long-term take-or-pay contract to supply 100,000 t/yr of wood pellets to South Korean conglomerate GS Global from this year. British utility Drax did not burn as many pellets in June because of planned outages at two of its 645MW wood pellet-fired units, so more Canadian pellets were available to be shipped to Asia, market participants said.
Malaysia supplied 39,000t in June, up by 24pc on the year, and higher by 20pc from the previous month. Russia supplied 31,000t, up from 6,700t in June 2021, and a 36pc increase from the previous month. Indonesia supplied 24,000t in June, down by 16pc on the year and by 20pc on the month.
Russian pellets are considered to be of similarly good quality to North American pellets, but the current price of Russian pellets is understood to be discounted since certification scheme Sustainable Biomass Programme and other bodies suspended the certification of volumes traded out of Russia and Belarus from early March, following the start of the conflict in Ukraine. This has resulted in a drop in deliveries to Europe.
Additionally, the price of Russian pellets was reported to be similar to Vietnamese pellets. Only those buyers that had resolved payment issues could bring Russian pellets to South Korea, domestic participants said, although they would not disclose how this was done.
By Sam Hong
