Thailand to Start Wood Pellet Export to Japan in 2020

The Kasikorn Bank Research Center has lately assessed increasing needs of biofuel tablets, known as wood pellet, in Japan, after a Japanese biofuel-based electricity generating plant was launched. It is expected that, between 2019 and 2022, more biofuel-based electricity generating plants would start functioning, requiring more 2,000 kilowatts. Needs for fuel from wood may probably soar rapidly, hence inevitable import of wood pellet. Such will be a good opportunity for Thailand, a wood pellet producer and exporter for Japan. At present, the two countries are allies, hoping to enhance sustainability on raw materials specifically for new electricity generating plants in the near future.

Wood pellet is a type of biofuel normally used in several industries and electricity generating plants. It is highly needed overseas due to serious concern on alternative energy. Generally, biofuel is made of agricultural materials like rice husk, corn stalks, cassava rhizomes, palm shells, bark, wood chips or sawdust from wood or furniture processing factories. They can be decomposed and dehumidified before felted. The end result is a kind of convenient-for-transport and durable biofuel with low humidity but high heating value.

South Korea and Japan are Asian countries where a lot of biofuel is used, hence almost impossibility to serve the need of people. Each year, the two countries import over million tons of biofuel. Interesting things about Japanese markets, though, include the fact that, in the near future, use of biofuel tends to increase more than in South Korea. It is expected that Japan will require biofuel from 1.2 million tons in 2019 to 5 million tons in 2022.

Thailand is a country with high capacity on raw materials, especially cutting rubber trees in around 4-Rai land per year. Besides processed wood for furniture, wood waste and sawdust can become major ingredients for wood pellet. Around 8 million tons of wood waste and sawdust per year can worth over 30,000 million Thai Baht in terms of economic value.

Another estimation speculated that, between 2019 and 2022, the growth rate of biofuel needs would reach 54.5%. Therefore, increasing needs for biofuel from other countries are good opportunities for manufacturers and importers in North America like Canada and Asia like Vietnam. Both countries are dominating Japanese wood pellet as around 630,000 tons and 380,000 tons of wood pellet are respectively exported to Japan – a total market share of 95% (only in 2018). Thailand itself exported around 12,000 tons of biofuel to Japan – a total market share of around 1.2%. This is because the existing biofuel electricity generating plant in Japan has a long-term purchasing contract of wood pellet with Canada and Japan for up to 20 years.

Finally, a major factor that can indicate Thailand’s capacity for exporting wood pellet to Japan includes creating confidence among importers, concerning product amount and continuation of existing raw materials throughout the purchasing contract as Japan prefers to sign a long-term contract with its partner. At the same time, Thai entrepreneurs may use this opportunity to improve products from white pellet and transform it into the black one which provides higher heating value, and expand markets in other countries for more opportunities.

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