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Malaysia’s wood pellet sector remains in a state of uncertainty despite an easing of Covid-19 restrictions in the country.

It is not clear if this means a return to normal output levels, market participants said, adding that each state has a final say on whether biomass operations can resume.

Malaysia’s economic reopening conditions and standard operating procedures are also unclear on this and so biomass output is unlikely to return to pre-lockdown levels for now, participants said. But they expect the easing of Covid-19 restrictions in the country to increase wood pellet and PKS supplies.

Malaysia’s movement control order (MCO) had halted operations at pellet factories on 18 March and slowed collections and transportation of palm kernel shells (PKS), forcing suppliers to declare force majeure on cargoes and creating a supply gap. Malaysia is the second-largest wood pellet and PKS supplier in Asia-Pacific, exporting 615,000t of wood pellets and 707,000t of PKS last year.

Vietnamese wood pellet spot prices were mostly stable on weak demand from South Korea, Asia-Pacific’s largest wood pellet buyer. But Indonesian PKS spot prices rose significantly as Japanese buyers rushed to purchase the material amid a shortage of spot supplies.

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