The new role of Russia in the wood pellet market

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635 300 Miguel Ángel Martínez

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 new role oThe 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.

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