In 2022, the worldwide trade of wood pellets remained practically unchanged year-over-year at approximately 29 million tons. This marks the first time since 2017, when wood pellets became a globally traded commodity, that shipments failed to rise year-over-year. Although the global volume remained relatively stable, there were some significant shifts in trade flows on a country-level basis.
Asia, represented by Japan and South Korea, has continued to grow import volumes, while European buyers have seen a decline. In the fourth quarter of 2022, Asia accounted for one-third of the world’s import volume, up from only a quarter in the previous year. This shift in trade flows is attributed to Asia’s increased demand for renewable energy sources, which has led to a surge in wood pellet consumption.
In contrast, European buyers have seen a decline in their import volumes due to several factors. Firstly, the region’s overall demand for wood pellets has decreased due to lower demand for heating during the mild winter season. Secondly, the increased availability of alternative energy sources, such as wind and solar, has reduced the demand for wood pellets. Finally, the ongoing COVID-19 pandemic has disrupted supply chains and led to logistical challenges, causing delays and price increases for European buyers.
Despite the challenges faced by European buyers, the demand for wood pellets is expected to rebound in the coming years. The European Union has set ambitious targets for increasing the use of renewable energy sources, including wood pellets, in an effort to reduce greenhouse gas emissions. This is expected to drive demand for wood pellets in the region, particularly as the EU moves towards a more circular economy and promotes the use of sustainable biomass.
Another notable trend in the wood pellet market is the increasing use of wood pellets in the industrial sector. Wood pellets are being used as a substitute for coal in power plants, as well as in the production of steel, cement, and other industrial processes. This trend is driven by the need to reduce greenhouse gas emissions and meet sustainability targets, particularly in industries that are difficult to decarbonize.
Overall, the wood pellet market remains a dynamic and evolving industry, with shifting trade flows and changing demand patterns. While the COVID-19 pandemic has presented challenges for the industry, the long-term outlook remains positive, particularly as countries around the world seek to reduce their reliance on fossil fuels and transition to a more sustainable energy mix.