Pulp Market Recovers and Revises 2026 Price Projections Upward

Recovery after US tariff hikes unfolds amid rising production in Brazil and China.

After a stronger-than-anticipated 2025 start, short-fiber pulp prices in China—the primary benchmark—dropped sharply over the year due to new supply volumes and US trade tariffs. Prices hit US$495 per ton in July. From August, recovery began, closing the year near US$540 per ton, per BTG Pactual's December 23 report.

Analysts expect the uptrend to persist into 2026. However, supply-demand uncertainties prompted revised average price forecasts. Early 2025 projections topped US$600 per ton; later adjustments set 2026 at about US$570 per ton annually.

Global pulp output is set to rise without new mills, led by Brazil and China, pressuring 2026 prices. Itaú BBA analyst Daniel Sasson attributes 2025's tough pricing mainly to new market volumes, despite US "tariff hike" disruptions.

Post-April US tariff announcement, pulp prices plunged, initiating gradual rebound. Suzano's 2.55 million-ton Cerrado project advanced, alongside Chinese integrated mill expansions since 2021 amid real estate woes.

Surplus wood from construction shifted to pulp lines, boosting Chinese paper makers' negotiation leverage. Sasson notes 2026's slower integrated capacity growth due to wood costs, but China remains a watchpoint amid limited visibility.

Prices corrected mid-2024 with Cerrado startup. Early 2025 saw offset from Shandong Chenming's crisis shutdown, spurring 200,000 tons monthly extra demand—matching Cerrado's addition—pushing China prices to US$600 per ton.

April tariffs stalled talks, dropping prices to US$495 per ton low. Brazil faced 10% pulp tax briefly, impacting US sales until September reversal.

“The biggest surprise was how long prices remained low,” said Rodolfo Schmauk, Fitch Ratings corporates director. This strained high-cost northern producers, prompting shutdowns or closures. Recovery solidified from August, hitting US$540 per ton by December.

About 15 million tons of short and long fiber still run at losses. “By 2026, we shouldn't see any more closures of some 'players', which should bring some relief to the supply,” said Fernanda Rezende, Fitch Ratings Latin America senior corporates director.

Stronger demand recovery in China, Europe, and the US could hasten price gains. "It would be a positive factor, but we still have little visibility. At the moment, we still see a more gradual scenario," she added.​