【Biomass】

The supply-demand balance for imported wood pellets and palm kernel shells (PKS)--which are used as fuel by large-scale biomass power plants in Japan--is expected to differ as winter approaches.

　For wood pellets, spot demand remained sluggish from spring through summer due to reported equipment malfunctions at large power plants. Meanwhile, in Vietnam--a major producer--a series of new plants are coming online, creating a sense of ease in the supply-demand balance. As the winter demand season approaches, this sense of ease does not appear likely to dissipate.

　For PKS, prices did not fall this summer despite increased oil palm harvests, and spot market conditions remain moderately firm for both Indonesian and Malaysian shipments. Supply and demand have tightened slightly due to suppliers raising their offers in response to rising domestic fuel prices and supply concerns stemming from escalating tensions in the Middle East, as well as a gradual increase in domestic demand for biomass fuel. Uncertainty surrounds PKS supply, as the El Niño phenomenon is expected to affect palm oil yields by the end of this year, and the Indonesian government's plan to transfer the palm oil export business to a state-owned enterprise is set to begin in earnest.

【Coal】

The market conditions for thermal coal in the second half of 2026 are likely to be influenced by multiple factors, including the situation in the Middle East and the resulting trends in fossil fuel prices, as well as the supply-demand balance in China, the world's largest coal consumer. In fact, since the outbreak of war between the US and Iran, prices for crude oil and liquefied natural gas (LNG) have surged, leading to increased demand for relatively inexpensive coal. In Japan as well, import volumes have recently exceeded those of the same month last year. Many industry insiders expect this situation to continue for the time being.

　In China, some observers point out that demand for thermal coal is lackluster due to a decline in electricity demand stemming from the economic slowdown. As of now, there are no signs of recovery in the second half of the year. However, there are reports that domestic supply of thermal coal has decreased following a coal mine accident in Shanxi Province in May, and some analysts speculate that procurement from overseas markets may increase depending on how the situation develops.

　On the supply side, there is a growing movement in Indonesia to place coal exports under state control. Some observers predict that a sense of scarcity will emerge, particularly in Asia.