China's wood chip imports from Vietnam during January-June fell by 28pc from a year earlier to 3.7mn t, although this trend is expected to reverse in the second half of the year.
China's total wood chip imports fell to 6.7mn t over the same period, down by 26pc from 9.1mn t a year earlier, customs data show.
Weaker demand from the pulp and paper sector contributed to the reduced intake. Chinese wood chip imports remained high during 2022 but slowed from December.
The weaker Chinese demand has offered some relief to Vietnam's wood pellet production sector, where raw material supplies have been tight since 2022, particularly for pellets shipped to Japan. Vietnamese wood chips make up a large portion of the feedstock in the production of pellets delivered to Japan, unlike pellets delivered to South Korea that rely mostly on sawdust.
The reduced Chinese demand partly caused a sharp drop in spot fob Vietnam to Japan feed-in tariff (FiT) wood pellet prices this year (see graph).
Chinese chip demand has grown broadly in line with increased pulp production, while the country's ban on imports of used paper from January 2021 also supported its wood chip demand. Wood chips are not used for power generation following a ban in 2017. But domestic wood supplies are unable to keep up with the country's pulp demand, increasing its dependence on imports.
Chinese chip imports tend to peak around April-June and rise again towards the end of the year, with December 2022 being an exception.
Vietnamese wood chip prices to China are now beginning to increase, Vietnam-based market participants said, likely supported by a new pulp factory in China to launch in September. Details on the location and capacity of the pulp factory have yet to emerge. Prices are expected to continue rising until the end of the year, participants said, following last year's uptrend but on a smaller scale.
| China wood chip imports by destination | ('000t) | |
| 1H '23 | 1H '22 | |
| Vietnam | 3,684 | 5,087 |
| Australia | 1,354 | 1,664 |
| Thailand | 526 | 796 |
| South Africa | 116 | 171 |
| Brazil | 212 | 309 |
| Chile | 269 | 446 |
| Malaysia | 79 | 140 |
| Indonesia | 213 | 187 |
| Russia | 69 | 46 |
| US | 95 | 151 |
| Source: China customs | ||
