The price of planted forest wood decreased by VND 600,000/ton

Hung Nguyet Anh Co., Ltd. is a unit specializing in the production of wood chips for export located in the industrial cluster of Van Canh town (Van Canh district, Binh Dinh province). From 2022 to the first 2 months of 2023, this company signed 4-5 orders to export wood chips every month, but in March 2023 the company only had 2 orders.

"The number of new orders has decreased. The price of wood chips has also decreased by 12% compared to before. Despite such difficulties, we still produce in moderation, but it's true that we can't sell goods at the moment. We have decided to store the goods so that we would always have the goods available to match our partners' demand. Maintaining production is also to help workers keep their jobs," said Mr. Tran Lam Huy, Director of Hung Nguyet Anh Co., Ltd.

According to the Forest Products Association of Binh Dinh (FPA Binh Dinh), in the first two months of 2023, the group of wood chips and wood pellets experienced strong growth. Export turnover reached USD 42 million, up 65% over the same period last year. However, in March 2023, many wood chip and pellet processing factories stopped production because they could not sign new orders. The export price decreased from USD 180 to USD 150-160 per ton of dry wood.

Having few export orders, the price of planted wood in Binh Dinh immediately suffers a slight downtrend. If the price of planted forest wood in Binh Dinh was at VND 1.8 million/ton by the end of 2022, now the factory price is only VND 1.2 million/ton, returning to the price in 2021. Factories also limit buying in bulk to maintain trade connections.

As a result, forest owners in Binh Dinh are immobile and wait for their time, because If they exploit the forest at this time, they will surely lose money because the money from selling raw wood is not enough to pay for the work of exploitation, shell peeling and shipping.

"In An Tuong Dong commune, an approximate 300 ha of planted forest are planted. Currently, the price of raw wood is purchased by traders at only VND 900,000/ton, but due to the cost of hiring workforces to exploit, peel, and transport is too high, growers only earn VND 550,000/ton. Not only has the price of raw materials dropped dramatically, but now, for some reason, the planted forest has been infected with diseases after 2-3 years. Growers are suffering," said Mr. Tran Hao An, Deputy Director of An Tuong Dong commune (Hoai An district, Binh Dinh province).

According to enterprises processing wood chips for export in Binh Dinh, markets that regularly import wood chips such as China and Japan have a large amount of inventory and no longer need to import goods, so the purchase price decreases sharply. 

While the export of wood chips in Binh Dinh is at a standstill, the export of pellets in this province holds on fairly well. According to Mr. Nguyen Thanh Phong, Branch Head of the Pellet Branch (FPA Binh Dinh) cum Chairman of the Board of Directors of Phu Tai Bioenergy Joint Stock Company (Quy Nhon city, Binh Dinh), pellets produced in Binh Dinh are normally exported to the Japan market. Japanese partners always sign long-term contracts when conducting business with Vietnamese enterprises.

If the price of wood pellets in the world spikes, Vietnamese businesses may not benefit since they cannot change the price. However, when the export situation is as bad as today, pellet processing enterprises that have signed long-term contracts with Japanese partners do not have to worry about losing orders like wood chip processing enterprises.

The import demand from Japanese partners may decrease slightly during this period, but it will recover quickly. The reason for such a prediction is that Japan is developing many thermal power plants using pellets as fuel, so the need for pellets will increase significantly.