Canfor Reports Weaker Pulp and Paper Performance in Q2 2026 as Global Market Pressure Persists

Canfor Corporation reported a weaker second quarter for its pulp and paper business despite an overall improvement in company-wide earnings, citing continued weakness in global softwood pulp markets, lower production, declining shipments and sustained pricing pressure.

The company's pulp and paper segment recorded an operating loss of CAD 23.1 million in the second quarter of 2026, compared with an operating loss of CAD 16.2 million in the previous quarter. After adjusting for a CAD 3.3 million inventory write-down, the adjusted operating loss was CAD 19.8 million, compared with CAD 16.2 million in the first quarter.

Global pulp market remains under pressure

Canfor said global softwood pulp markets weakened further during the quarter as structural market changes, subdued demand and elevated producer inventories continued to pressure prices.

Average Northern Bleached Softwood Kraft (NBSK) pulp list prices delivered to China declined to US$658 per tonne, down US$27 per tonne (4%) from the previous quarter and 10% lower than the same period last year. Producer inventories remained elevated at 47 days of supply, at the upper end of the industry's balanced range.

In North America, NBSK list prices remained broadly stable sequentially but were significantly below year-earlier levels.

Production and shipments decline

Pulp production fell 17% quarter-on-quarter to 85,000 tonnes, primarily because of a scheduled maintenance outage at Canfor's Intercontinental Northern Bleached Softwood Kraft (Intercon) pulp mill.

Pulp shipments declined to 96,000 tonnes, down 18% from the previous quarter and 6% from the second quarter of 2025. Paper production totalled 29,000 tonnes, while paper shipments remained stable at 30,000 tonnes compared with the previous quarter.

Higher per-unit conversion costs resulting from lower production volumes and maintenance activity also contributed to weaker profitability, although fibre costs declined due to a lower proportion of higher-cost whole log chips.

Paper demand shows resilience

Despite weakness in pulp markets, Canfor reported improving global kraft paper demand during the quarter. The company said paper-based packaging demand strengthened, supported by higher plastic raw material costs, continued substitution away from plastic packaging and stronger food packaging demand. Geopolitical uncertainty also encouraged customer restocking activity.

Looking ahead, Canfor expects global softwood kraft pulp markets to remain under pressure through the third quarter as additional global production capacity enters the market and economic uncertainty continues to weigh on demand.

However, the company forecasts stable demand for bleached kraft paper, supported by continued growth in paper-based packaging, although Canada–US trade uncertainty and global manufacturing overcapacity remain risks. No major maintenance outages are scheduled for the company's pulp mills or paper machine for the remainder of 2026.

Northwood pulp mill closure announced after quarter-end

Following the end of the reporting period, Canfor announced the permanent closure of its Northwood Northern Bleached Softwood Kraft (NBSK) pulp mill in Prince George, British Columbia. The closure is expected to remove approximately 300,000 tonnes of annual NBSK production capacity.

President and Chief Executive Officer Susan Yurkovich said the decision reflected ongoing structural challenges facing global pulp markets.

"Global pulp markets remained challenging during the second quarter as the ongoing structural shift in market fundamentals combined with subdued demand and elevated inventories continued to pressure pricing. Against this backdrop, we made the difficult but necessary decision to permanently close our Northwood pulp mill. As global pulp market conditions are likely to remain under pressure in the near-term, we remain focused on optimizing our footprint, controlling costs, and strengthening the long-term competitiveness of our pulp and paper operations."