Russian Wood Pellet Trade Opportunities in Asia

March 25, 2019

Mr Matias Pekkanen from Indufor Oy gave a presentation on the topic “Russian Wood Pellet Trade Opportunities in Asia” in the 4th Bioenergy Congress in St. Petersburg, Russia, on Tuesday, 19th March.

Wood pellet production in Russia has been steadily increasing in the past years. The North-West Region accounts for most of the production but the recent major increases in the production capacity are in Siberia and the Far-East Russia. Domestic markets for wood pellets in Russia are very marginal, and almost all production is exported. Pellet exports have been growing mainly in the EU countries such as Denmark and Sweden. In Siberia, pulp and paper industry offers only limited local demand for residual sawmill chips, which has forced many sawmills to dump their by-products. Several pellet mills are being constructed in connection to the sawmills, as the companies have abundant pellet raw material and growing market opportunities.

At the same time, the industrial wood pellet consumption in Asia has grown, mostly in South Korea and Japan. Numerous energy utility investment projects consuming wood pellets are planned in both countries. Asian industrial wood pellet consumption accounted for about a quarter of the global market in 2017 and is estimated to increase in the next years. So far Vietnam and Malaysia have been the major suppliers of wood pellets to Korea and Japan, but it is unlikely that these countries are able to increase the supply sustainably or provide supply security in the already tight and growing market.

The forecasted demand increase in Asia offers an opportunity for Russian biomass producers, especially for those in Siberia and the Far East. These companies have access to abundant and homogenous wood raw material, and they are close to Korea and Japan. Organising the logistics from pellet producers to the consumers can still be a challenging exercise, which requires finding new solutions and partnerships.

Indufor can support your company by:

  • Mapping of potential customers for pellet producers or mapping wood pellet producers for consumers and creating a viable strategy for entering the markets.
  • Planning and improving the efficiency of the supply chain and logistics.
  • Improving due diligence of supply and improving the legality controls of the supply chain.
  • Creating strategies and forming functional partnerships along the value chains.

If you wish to have more information on our related services, please contact Matias Pekkanen, Senior Consultant, or Jarno Seppälä, the Head of Forest Industry & Bio Solutions Consulting at Indufor.

Indufor is a global leader in Natural Resources Management, Investment Advisory, and Strategic Industrial Development consulting. We support our customers to compete and grow in international markets. Indufor has own offices in Finland, New Zealand, Australia and the US, and representation in China. We have close to 40 years of experience in more than 100 countries. Our services support our clients to make the world more sustainable and greener.

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Jarno Seppälä

Head of Forest Industry & Bio Solutions Consulting

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