Wood pellets market in Japan

Earlier Report Observations

The Japanese wood pellet market expanded rapidly from 1.2 million tons in 2018 to nearly 6 million tons by 2023. This growth was initially driven by the increasing use of pellets as fuel for biomass power generation, supported by efforts to standardize quality and highlight the environmental benefits of using thinning wood and sawmill residues as a carbon-neutral fuel. The publication of production trends by the Forestry Agency and the promotion of standards based on European norms helped elevate market focus and stability.

A construction rush for new biomass power plants significantly accelerated market expansion from 2020 onward, leading to a surge in pellet imports. Imports rose from 2 million tons in 2020 to over 3.1 million tons in 2021, driven by this new demand. The Ministry of Economy, Trade and Industry's revision of Feed-in Tariff certification criteria, which tightened the evaluation of greenhouse gas reduction effects for imported fuel, introduced a new regulatory dynamic affecting the supply chain. Concerns also grew over the quality of imported pellets and the carbon emissions from long-distance transportation, highlighting a reliance on foreign supply.

Further market development involved regulatory clarifications and quality standardization. In 2022, fire safety regulations for pellet storage were specified under the Fire Service Act, and the Japanese Agricultural Standard established graded specifications for wood pellet fuel, improving quality management. Price revisions for high-quality domestic pellets, like the 'Pure No.1' from the Kamiina Forest Association, reflected rising raw material costs. While imports from Southeast Asia increased, so did the emphasis on promoting domestic pellet use to revitalize local forestry, even as total market volume continued its upward trajectory through 2023.

Production wood pellets in Japan

In kind, 2018-2021, K t

Top producers of wood pellets, 2018-2021

World map of production of wood pellets, 2018-2021

Japan's wood pellet production has grown for the third year in a row. In 2021, the country produced 156.0 K t of wood pellets, marking a gradual 4.7% increase from 2020. Looking at the period from 2018 to 2021, production rose by 19.1%, which translates to an average annual growth rate of 6.0%.

Annual dynamics of production in Japan in kind, 2018-2021, K t

Exports wood pellets from Japan

Exports in kind, K t

The export market for wood pellets from Japan showed significant volatility over this period. Volumes hit their lowest point in 2019 at 0.2 K t, then surged to a peak of 1 K t in 2021, representing a 6.3-fold increase. In 2021, exports grew by 41.1% compared to the previous year. The largest decline occurred in 2019, with a drop of 34.8%, while the most substantial increase was in 2020, when exports jumped by 343.3%.

Annual dynamics of product's exports from Japan in kind, 2018-2021, K t

From 2018 to 2021, South Korea was the nearly exclusive buyer of wood pellets from Japan, accounting for 96.5% of total exports by volume.

Structure of product's exports in kind by countries, 2018-2021

World map of product's exports from Japan in kind, 2018-2021

Exports in value, M $ US

Export values for wood pellets from Japan were highly unstable during this timeframe. The lowest point was in 2019 at 0.1 M $ US, rising to a peak of 0.1 M $ US in 2021, with a 2.6-fold difference between these years. In 2021, export value increased by 25.4% from the year before. The largest decline was recorded in 2019 at 4.1%, while the biggest increase happened in 2020, with a jump of 111.2%.

Annual dynamics of product's exports from Japan in value, 2018-2021, M $ US

Between 2018 and 2021, South Korea clearly dominated as the primary buyer of wood pellets from Japan in value terms, representing 92.2% of total exports.

Structure of product's exports in value by countries, 2018-2021

World map of product's exports from Japan in value, 2018-2021

Imports wood pellets to Japan

Imports in kind, K t

Japan's wood pellet imports have risen for the third consecutive year. In 2021, imports totaled 3 117 K t, showing a steep 53.7% increase from the previous year. From 2018 to 2021, imports grew by 194.2%, which averages out to an annualized rate of 43.3%.

Annual dynamics of product's imports to Japan in kind, 2018-2021, K t

From 2018 to 2021, Vietnam and Canada were the dominant suppliers of wood pellets to Japan by volume, together making up 88.9% of total imports. Other countries each contributed relatively small shares.

Structure of product's imports in kind by countries, 2018-2021

World map of product's imports to Japan in kind, 2018-2021

Imports in value, M $ US

Japan's wood pellet imports in value terms have increased for the third year in a row. In 2021, imports amounted to 562.4 M $ US, reflecting a sharp 63.7% rise compared to the year before. Over the period from 2018 to 2021, import value climbed by 188.7%, equating to an average annual growth rate of 42.4%.

Annual dynamics of product's imports to Japan in value, 2018-2021, M $ US

During 2018–2021, Vietnam and Canada remained the key sources for Japan's wood pellet imports in value terms, jointly accounting for 89.2% of the total. Other partners made up the remainder.

Structure of product's imports in value by countries, 2018-2021

World map of product's imports to Japan in value, 2018-2021