Biomass supply/demand tight in early 2026
The imported biomass fuel wood pellets and Palm Kernel Shell (PKS) markets were soft at the end of 2025 but supply/demand is expected to tighten. In 2026, the imported biomass markets are unlikely to remain weak.

Buying active but weakens after demand met in 2025
In 2025, large scale power stations mainly fueled by wood pellets started up one after another in Japan. In Tahara city of Aichi prefecture and at Sendai port in Miyagi prefecture, Japan's largest scale biomass-only power stations with capacity of 112megawatt started commercial operations. More than 10 large scale biomass power stations fueled by wood pellets including these stations began operations. Along with the startup, more buy tenders were carried out while suppliers had less room to conduct spot sales as term contracts for these power stations started. The Japan market was supported. However, almost all power stations became operational in September but troubles were also reported. In this situation, uncommitted cargoes gradually emerged, which exerted downward pressure on the market.

While pellet demand rose, there were not large projects of PKS and some suppliers had high stocks in summer. Especially, cargoes were in surplus in Indonesia and trade was conducted at prices below the FOB Malaysia market. After Japanese power companies bought Indonesian cargoes at low prices, Malaysian surplus cargoes were observed and some of them were sold at below $80/mt on an FOB basis.

Until when supply/demand tight in 2026?
In Vietnam, a major wood pellet supplier, a typhoon hit the central region of the country in November 2025 and brought heavy rain. This affected many suppliers. As factories and warehouses were flooded, some production and shipment were suspended. Collection of raw wood was also delayed. This situation is expected to have an impact on supply in January and February 2026. Considering the situation might be prolonged, some trading houses refrained from entering term discussions with power companies for the first half of fiscal year 2026.

As for PKS, demand from outside Japan is growing. Indonesian PKS of 100mil mt was sold to Poland and Singapore is anticipated to have demand for around the same volumes. Meanwhile, due to heavy rain in the northern part of Sumatra in Indonesia, supply concerns were raised. For both fuels, supply/demand is perceived to be tight at the start of 2026.

Nevertheless, fewer biomass power stations are predicted to start up in Japan, which peaked in 2025. On the supply side, several wood pellet factories are scheduled to start up in Vietnam. Fresh suppliers of PKS appeared in Indonesia and Malaysia, and supply of FOB Thailand cargoes also began. Supply/demand might loosen again during the harvest season of Elaeis guineensis for wood pellet, and after Vietnam recovers from damage of the typhoon for PKS. Determining up to when supply/demand would be tight is the key to the market in 2026.