Japan more than doubled its Malaysian palm kernel shell (PKS) imports on the year to 166,000t in the third quarter, as Japanese buyers sought more Malaysian supply as a result of high Indonesian PKS prices and export levy uncertainty.
Overall Japan imported a quarterly record of 649,000t of PKS in July-September, up by 21pc on the quarter and by 53pc on the year, according to finance ministry data.
And the country's September PKS imports increased by 18pc on the month and by 50pc on the year to 231,000t, but total imports may turn out to be higher as Japanese PKS importers occasionally use an alternative customs code.
Indonesia remained Japan's primary PKS supplier in the third quarter, accounting for 74pc of the total volume with 483,000t. Imports from Indonesia rose by 13pc on the quarter and by 37pc on the year during the period. Japan's September PKS receipts from Indonesian fell by 6pc on the month and rose by just 1pc on the year to 146,000t.
Indonesia-based suppliers anticipated a change in the country's PKS export levy from September. The levy is paid into Indonesia's crude palm oil fund and supports replanting and sustainable practices by smallholders. Uncertainty surrounding a potential increase encouraged Japanese buyers to look to Malaysia for supply, and spot Indonesian PKS demand thinned from the end of August. The Indonesian government eventually decided to only raise its PKS export tax from 1 October, with a $3/t increase to $10/t , bringing the total export tax package to $25/t, the highest since Argus began assessing Indonesian PKS spot prices in May 2017.
Some Indonesian-based PKS suppliers expect the levy to decrease in the near future. The Argus spot east coast Sumatra PKS spot price averaged $109.60/t in the third quarter, up by 32pc on the year, largely as a result of stronger demand. But Malaysian PKS spot prices became more competitive following the export tax increase.
Malaysia supplied 166,000t to Japan in the third quarter, up by 130pc on the year and by 52pc on the quarter. The country supplied 85,000t in September alone, over eight times higher than a year earlier and more than doubling on the month.
Wood pellet receipts
Japan imported 530,000t of wood pellets in the third quarter, up by 29pc on the year and 16pc on the quarter. But imports in September slipped to 136,000t, down by 3pc on the year and by 35pc from August.
Vietnam was the biggest supplier in the third quarter with 354,000t, almost double shipments a year earlier and a 35pc increase on the quarter. And Japan received 103,000t from Vietnam in September, up by 52pc on the year but down by 19pc on the month.
Canada was the second-largest pellet supplier to Japan in the third quarter with 134,000t, down by 30pc on the year and by 4pc on the quarter. Its September supplies dived by 65pc on the year and by 72pc on the month to 20,000t.
Malaysia supplied 23,000t in the third quarter, up from 8,000t in the same period last year. And Indonesian supplies rose to 11,000t from 800t. Wood pellets from peninsular Malaysia and Indonesia are certified under the Malaysian Timber Industry Board (MTIB) and Indonesian Sistem Verifikasi Legalitas Kayu (SVLK) schemes, which meet the sustainability standards required by Japan.
Russia supplied 6,000t of wood pellets to Japan in the third quarter, up from zero a year earlier. Japanese traders expect more Russian pellet supplies in future because Russian producers can compete with southeast Asian producers on quality and price and have a shorter shipping distance compared with other major pellet producing countries.
