Russian, Chinese regulators agree to accelerate removal of barriers for Russian pellet imports - Segezha

MOSCOW. Aug 1 (Interfax) - The Chinese Commerce Ministry together with relevant Chinese agencies for environmental protection, reform and development, energy, forestry and customs regulation has confirmed the acceleration of work to optimize pellet imports into the country, the press service of forestry holding Segezha Group said.

This week, another meeting of the permanent Russian-Chinese working group on forest resource development and utilization took place. As noted by Segezha, whose representative participated in the meeting, the meeting's minutes recorded an agreement between relevant agencies and companies of the two countries to "facilitate trade in wood pellets."

Currently, regular pellet supplies from Russia to China are not taking place, as this byproduct of wood processing had until recently been classified by Chinese regulators as waste rather than biofuel. Russian forestry companies, which prior to sanctions primarily supplied fuel pellets to the European market, have repeatedly drawn authorities' attention to the need to create new sales markets, pointing to significant accumulations of sawdust in warehouses. The largest potential market for Russian pellet supplies is China. The Russian Industry and Trade Ministry has been negotiating for several years to lift China's restrictions on pellet imports.

The ministry previously reported on the results of the Russian-Chinese working group meeting on forest resource development and utilization, but did not comment on the progress of negotiations regarding pellet supplies to China. The Industry and Trade Ministry's press service only said that the parties "discussed expanding Russian-Chinese cooperation in reducing trade and transportation barriers, as well as joint investment projects, low-carbon and green cooperation in the forestry sector."

The meeting took place ahead of President Vladimir Putin's state visit to China, the Industry and Trade Ministry said. Earlier this spring, the president instructed officials to work on exporting products from Russia's forestry sector, including pellets, to China.

According to data cited in the ministry's statement, Russia-China trade turnover in the forestry sector in 2024 amounted to $6.6 billion.

"The wood pellet market in China is both a huge opportunity and a serious challenge for Russian producers. Demand for biofuels in China is growing 15%-20% annually, but only those who are ready to meet strict environmental standards can enter this market," Segezha quoted company Vice President Nikolai Ivanov, who participated in the bilateral working group meeting, as saying. Segezha can produce around 400,000 tonnes of pellets annually that meet Chinese standards, Ivanov said.