Japan sees the emerging and booming biomass pellet market

1. Raw Material
Japanese wood pellet mills utilize a variety of raw materials, with almost half of the total raw material consisting of shavings, but also a significant amount of bark and forest residues. Interestingly, the use of saw dust is marginal compared to many other countries. 



2. Production and Consumption
In 2010, there were 111 wood pellet plants in Japan. There is a large variation in size, but in comparison to other countries, capacities are very small. The nine smallest pellet plants only have a production capacity of 50 tons per year, whereas the three largest pellet production lines are only above 3000 tons per year. The total capacity of all wood pellet mills was about 209 kilotons per year (based on 2400 full-load hours), compared to a production of 34 kilotons in 2009, which means that the average load factor was a mere 16%. There are two main markets for the domestic wood pellet production: residential wood stoves and small-scale boilers. The use for residential stoves has almost quadrupled in 4 years’ time, but with less than 12 kilotons per year, and pellet stove is still marginal compared to the utilization of wood pellets for co-firing. In stark contrast to the use domestic production and use of wood pellets (which started in the 1980, declined in the 1990, and saw a revival from 2000 onwards), recent years has seen the increase of co-firing of biomass in large-scale power plants. About 40,000 tons of imported wool pellets were co-fired in 2008 (Mizuta, 2009), and about 60,000 tons in 2010 respectively.

READ: BIOMASS PELLET MARKET IN WESTERN EUROPE
 
3. Imports and prices
Imports of wood pellets have strongly increased in recent years from 10-20 kilotons per year to 60 kilotons in 2009. The vast majority of wood pellets were imported from British Columbia, Canada, with minor amounts from China, Vietnam and New Zealand, and a number of countries with imports lower than 100 tons, presumably for testing purposes. Price levels of industrial wood pellets are comparable to CIF ARA prices: about 130 €/ton. Again, this is in stark contrast to prices of domestically produced pellets, which vary (depending on the type and quality) between 180 and 385 €/ton.



4. Discussion and outlook
The Japanese domestic wood pellet market is characterized by a strong relationship between local pellet production and forestry. The average size of wood pellet manufacturing plants are however extremely small, the feedstocks used are rather diverse and load factors are very low (16% based on 2400 full-load hours). Barriers for the further development of the domestic production are a lack of raw material, a lack of sufficient policy support, and a lack of technical quality standards. The domestic market is in stark contrast to the recent imports large-scale imports of wood pellets, which in 2009 amounted to almost double the domestic production. Strong further growth is anticipated according to Kojima. Mitsui announced plans to import up to 400 kilotons of pellets per year. 

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