The demand for long-fibre softwood pulp is expected to increase as the global economic outlook improves. However, production will be subject to various kinds of pressure in the next few years in the most important production markets in Europe and North America.
Petri Jokinen from Jay Partners Management Consulting´says that the biggest future challenges are related to the availability of raw material.
“The raw material supply for softwood pulp is pretty much at full capacity everywhere in the world. There are not many places that can increase the production of softwood pulp in a financially sound manner,” says Jokinen.
Marko Summanen, VP at consultancy agency Resource Wise, is also expecting to see some scarcity in the supply of softwood pulp as the demand for market pulp picks up and customers start refilling their empty stores.
“For suppliers of softwood pulp, the outlook is quite good. The most competitive industry operators with functioning wood supply will reap the biggest benefits,” estimates Summanen.
Challenging times in North America
Pulp producers in North America have been under particularly heavy pressure in recent years. In Canada, the availability of raw material has been poor because of reduced felling quotas and new logging restrictions. Metsä Fibre’s Business Intelligence Manager Teppo Vainio thinks that this will have long-term consequences.
“The reduction in felling quotas makes it difficult to access timber at a reasonable price. It increases the distance the raw material is transported too.”
In North America, production chains are also challenged by extreme weather conditions brought on by climate change. In British Columbia, global warming has increased the number of forest fires and the amount of insect damage, which together have reduced the availability of wood raw materials. Additionally, the closure of sawmills has decreased the availability of sawdust.
In North America the supply of pulp across the region is impacted by the fact that much of the production is spread out among relatively small and old mills. Their efficiency cannot compete with Nordic mills, which have invested in new technology.
For example, unlike in Finland, the sawmill industry has led the way in the North American forest industry, and the necessary pulp industry has been connected to it.
Jokinen says that for decades there have been no significant investments to improve or increase the efficiency of softwood pulp production. “In the long term, it means that many mills will inevitably be permanently closed. This may make the supply even scarcer than before.”
Regulation restricts the use of forests in the EU
Summanen points out that, in Europe, the supply of softwood pulp will be impacted mainly by regulations restricting the use of forests. The EU is trying to achieve this through various policy programmes and legislation.
“The EU is facing a lot of political pressure to restrict the use of forests,” he says.
The negative impacts of climate change are also threatening to weaken the supply of wood in Europe. The forest damage caused by destructive pests may increase. If mild winters become more common, it may make logging more difficult in the Nordic forests.
Summanen predicts that wood supply will experience large fluctuations in Central Europe. In the past few years we have seen a need to accelerate logging due to insect and storm damage. This has temporarily increased the amount of pulpwood on the market and lowered prices.
In Central Europe, forest industry production is also impacted by the increasing irregularity of rain. Heavy floods alternate with periods of drought that threaten to weaken the production plants’ access to water.
Russia is not capable of increasing production
The Russian invasion of Ukraine halted the import of wood from Russia into Western Europe. This has impacted the supply of pulpwood, particularly in the Baltic Sea region.
“The shortfall has been covered by acquiring more wood from nearby areas and domestically, which has increased the prices of pulpwood and logs,” Vainio says.
The European Union imposed an import ban on pulp and wood products from Russia, but the export of pulp and other wood products from Russia to countries such as China is likely to continue. Jokinen does not think that a significant increase in pulpwood production is realistic for Russia in the near future, even though it has more raw material than any other country in the world.
Jokinen says that Russia lacks a comprehensive forest road network and other infrastructure needed to increase logging. An increase in pulp production would also require large investments in the sawmill industry, but that would necessitate financing and technology.
“Russia has neither, and foreign operators were cautious of investing in the country’s forest industry even before the war,” says Jokinen.
Modern mills help to reduce emissions
Vainio points out that, globally, there have been relatively few significant investments in softwood pulp production capacity.
Modern mills create even fewer emissions, and according to Vainio this will improve their competitiveness as environmental regulations are likely to tighten in the future.
To reduce emissions in a cost-efficient manner means, for example, that a company will pay lower emissions trading fees than competitors.
“The winners of the future are the companies with modern, environmental and resource-efficient production plants,” says Vainio.
This article was originally published in Fibre Magazine issue 2025.