<Biomass>
In Japan, supply of imported biomass, wood pellets and palm kernel shell (PKS) is expected to tighten toward this winter. These are used as fuels at biomass power stations.

For wood pellets, new power stations started up in fiscal year (FY) 2025 and many suppliers began supplying term cargoes. Some suppliers see their supply/demand balanced only by term supply and have no room for spot sales. Furthermore, competitions to obtain materials of wood pellets such as raw wood are becoming fierce. In this situation, offers are staying high in the spot market. On top of that, several biomass power stations using wood pellets as fuels are scheduled to start up towards the end of 2025 in Japan. Demand for pellets is predicted to increase further for trial runs and commercial operations of these power stations. Many market players forecast that supply/demand would continue to be tight.

For PKS, supply is anticipated to decrease around October, when the dry season ends in Indonesia and Malaysia and harvests of oil palm would decrease along with the start of the rainy season. However, Japanese trading houses have surplus cargoes as their term contracts were discontinued. They are moving to resell in the spot market and there is much availability at the moment. Market players are paying attention to whether these surplus cargoes would remain available even this winter.

<Ethanol>
Brazilian anhydrous ethanol prices are staying at around $545/ kiloliter(kl) for prompt loading. With supply/demand forecast to tighten, market sentiment is expected to be bullish. According to the Department of Agriculture, Livestock and Food Supply (MAPA) of Brazil, ethanol inventories stood at 2.79mil kl in the country as of end-June, which was nearly 40% lower than the corresponding period last year. Although it is in the middle of the harvest season for feedstock sugarcane, lower portion is allocated to ethanol and higher portion is used to produce sugar compared with the previous year. In addition, yields to extract sugar from sugarcane are low and stockbuild of ethanol is slow. Meanwhile, E30, gasoline containing 30% anhydrous ethanol, was introduced in Brazil in August. While demand for anhydrous ethanol for blending with gasoline would rise, demand for hydrous ethanol, E100, is expected to decline. The impact of the introduction of E30 would be overall neutral.

Prices for US ethanol are currently staying at around $490/kl. There would be no problem about supply of corn that would be harvested in the US this autumn. Nevertheless, movements about Renewable Identification Numbers (RINs), which are environmental credits given to ethanol, are expected to affect the prices. The US Environmental Protection Agency (EPA) would greatly raise RIN volume requirement from 2026. Under such circumstances, supply/demand of RIN tightened. Since US ethanol is traded together with the RIN, ethanol prices might rise along with the RIN.