Japan's demand for palm kernel shells (PKS) and wood pellets grew sharply in 2020, supported by the start up last year of a series of dedicated biomass power plants and co-firing power plants.

The new capacity included Japanese biomass power producer and supplier Erex's 75MW Buzen and 75MW Ohfunato biomass units, Japanese utility Chubu Electric Power's 49MW Yokkaichi biomass unit, Japanese refiner Eneos' 75MW Muroran biomass unit, Japanese biomass power developer Green Thermal's 6MW Kinan biomass plant and Japanese power producer and wholesaler J-Power's 600MW co-firing unit at Takehara. Others that also started commercial operations last year were Japanese power producer Kushiro Thermal Power's 112MW co-firing power plant in Kushiro city and Japanese trading house Itochu and domestic gas retailer Osaka Gas' 49.9MW biomass power plant in Ichihara city.

PKS imports rise

Japan imported around 2.24mn t of PKS in 2020, a 37% increase from 2019, according to finance ministry data. But total PKS imports may be even higher as they are occasionally filed under an alternative customs code in Japan.

Indonesia remained the primary PKS supplier to Japan in 2020, accounting for 75% of the country's total imports, three percentage points lower than the 78% share in 2019. Imports from Indonesia increased by 32% on the year to 1.68mn t.

Malaysia supplied 558,000t of PKS to Japan in 2020, up by 55% on the year. Malaysia also accounted for 25% of Japan's PKS imports, which was three percentage points higher than its 22% share in 2019.

Thailand supplied 700t of PKS to Japan in 2020, down by 13% from a year earlier.

Diversified wood pellet supply

Japan imported around 2.03mn t of wood pellets in 2020, a 26% increase from 2019, from more diversified suppliers.

Vietnam was the biggest supplier to Japan in 2020 with 1.17mn t, accounting for 58% of the country's total imports. Receipts from Vietnam increased by 32% on the year.

Canada was the second-largest supplier to Japan in 2020 with 593,000t, a 1% increase from a year earlier, and its cargoes accounted for 29% of Japan's receipts.

Malaysia was the third-largest supplier to Japan, accounting for 8% of the country's imports, five percentage points higher than its 3% share in 2019. Malaysia supplied 160,000t of wood pellets to Japan in 2020, more than treble its performance in 2019 despite its movement control order in March last year, which temporarily halted operations at its pellet factories.

Australia supplied 51,000t of wood pellets to Japan in 2020, an increase of 31% from 2019. Japan is expecting regular supplies from Australia in the future, as French utility Engie has a 280,000 t/yr wood pellet supply contract over 15 years starting in 2021 with Japanese trading firm Mitsui. Engie plans to supply 75pc of these wood pellets from Australian sources and the rest from North America and southeast Asia.

Russia, Indonesia and New Zealand supplied 17,000t, 14,000t and 11,000t of wood pellets, respectively, to Japan in 2020. 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.

Palm EFB Pellets

Some of Japanese companies set up new palm EFB pellet lines in Malaysia in the past two years, and are going to set up more than 10 lines more in next 5 years. As biggest palm oil exporter, Indonesia is also expected to export palm EFB pellets to Japan.

Source from argusmedia.com, Author:Sam Hong