U.S. expected to gain ground in Brazilian pulp exports

Traditionally, Chinese producers faced high costs and limited wood availability, which made them heavily dependent on imported market pulp. However, during the real estate crisis in 2021, surplus wood originally intended for construction was redirected toward integrated pulp production.

According to Rabobank, China’s integrated hardwood pulp capacity surged from 5,000 tonnes in 2016 to 9,500 tonnes in 2024. The bank projects that by 2027, production will reach 14,500 tonnes—a nearly 53% increase.

“Of the projects planned in the past three years, no one had anticipated this development,” says Andres Padilla, analyst at Rabobank. He notes that the market will likely adjust, with the most efficient producers filling the space left by less competitive ones. Even so, part of the displaced demand will need to find new markets—and the U.S. is emerging as a promising destination for Brazilian fiber.

In 2024, Brazil supplied 82% of U.S. short-fiber pulp imports, totaling 2 million tonnes, according to Rabobank’s report. This marks a 74% increase from a decade earlier and an average annual growth rate of 4.7%. The pulp is primarily used for tissue paper production, including toilet paper and facial tissues.

In the long-fiber segment, typically used for paper packaging, the U.S. market has long been dominated by Canada. However, post-pandemic shifts in global supply chains have opened room for Brazilian and European producers. In 2024, Brazil accounted for 10% of U.S. softwood pulp imports—around 300,000 tonnes—while Canada’s share fell to 75%, according to the bank.

“Brazil is well-positioned. In addition to managing exchange rate volatility more effectively, it benefits from low production costs and competitive logistics,” says Mr. Padilla.

This strength, he explains, is the result of several factors—including the short seven-year rotation cycle of eucalyptus, advances in genetic research that boosted productivity, and large-scale investments in integrated pulp mills.

Beyond Suzano’s Cerrado Project, companies such as Chile’s Arauco and CMPC, as well as Indonesia’s Bracell, are expanding operations in Brazil. There are also expectations for a second production line at the Eldorado mill in Três Lagoas, Mato Grosso do Sul. With these new capacities, Rabobank estimates that Brazil’s pulp exports will rise from 20 million tonnes today to 25 million tonnes by 2030.

Another factor supporting this growth, Mr. Padilla notes, is the price gap between hardwood and softwood pulp, known as the “spread.” Currently, hardwood pulp sells for about $250 to $300 less per tonne on the U.S. East Coast market, according to Rabobank.

“There’s a clear economic incentive for hardwood pulp to gain market share in the U.S.,” Mr. Padilla explains. “The spread is wide right now, and the supply and demand dynamics suggest it will be difficult to close that gap in the short to medium term.”

Beyond pricing, Brazil’s advantage lies in its long-standing commercial relationships with U.S. buyers and its reputation for reliability and quality. “Brazilian suppliers already have deep, consistent partnerships with U.S. clients, meeting their needs efficiently,” Mr. Padilla adds.

Against this backdrop, the White House’s decision to impose a 10% tariff on Brazilian pulp last year was, according to him, “a shot in the foot.” It is no coincidence, he says, that Washington quickly reversed course and eliminated the tariff.

*By Helena Benfica — São Paulo

Source: Valor International

https://valorinternational.globo.com/