Wood Pulp Market Edges Off Lows as NBSK Stabilizes, BHKP Tests Support

Where are wood pulp prices now?

Wood pulp prices hit a low in late 2025 and have not yet broken out of that range. As of mid-2026, the picture is one of cautious stabilization with regional divergence. Northern Bleached Softwood Kraft (NBSK) pulp, the benchmark grade for tissue and specialty papers, shows early signs of recovery in Europe and North America, while China remains subdued. NOREXECO Shanghai NBSK futures for early 2026 trade at approximately $678 per tonne, according to TopSource Hygiene. BHKP (Bleached Hardwood Kraft Pulp) China Net futures indicate a stabilized benchmark of $550 per tonne. The NBSK-BHKP premium has narrowed to roughly $130/tonne, below the historic $180-220 range, reflecting softwood's weaker pricing power in an oversupplied market. In China, NBSK spot prices declined from approximately 5.55 RMB/kg in January to 5.27 RMB/kg in March 2026, according to Procurement Resource, with the Q1 average slipping 0.5% from Q4 2025. European NBSK remained comparatively stable at roughly 1.14-1.15 EUR/kg DAP, with quarterly averages down just 0.2%. German NBSK prices turned upward in Q1 2026, rising 3% month-on-month in March and 4% above Q4 2025, suggesting the regional bottom may have passed.

Supply: massive additions meet selective closures

The dominant supply story is China's integrated pulp capacity expansion. According to Fastmarkets senior economist Patrick Cavanagh, integrated pulp capacity has doubled in four years to over 32 million tonnes annually, adding 15 million tonnes of new supply. This massive expansion reduces China's need for imported market pulp and acts as a ceiling on global prices. On the softwood side, closures are beginning to rebalance the market. The Domtar Crofton mill in Canada closed in 2025, removing 380,000 tonnes of NBSK capacity. The Metsa Kemi bioproduct mill shutdown in Finland left a 1.5 million tonne supply gap in fluff and kraft pulp grades, tightening NBSK and hardwood markets through 2026. Thunder Bay Pulp & Paper is shifting from northern bleached hardwood kraft (NBHK) to pure NBSK in 2026, with an estimated output of 300,000-310,000 tonnes annually. The mill has declined product requests from North American buyers of NBHK, further squeezing hardwood supply options. Latin American hardwood expansion continues to reshape the cost curve. Suzano's Cerrado mill in Brazil ramped to 2.3-2.55 million tonnes of bleached eucalyptus kraft (BEK) in 2024-2025. CMPC's Guaiba Phase 2 in Chile and APRIL's RAPP expansion in Indonesia have added further low-cost hardwood supply. The Paracel BEK mill in Paraguay (~1.8 million tonnes) is slated for mid-decade completion, continuing the Latin American hardwood wave.

Demand: tissue supports NBSK floor, packaging drives BHKP

The tissue sector remains the structural anchor for NBSK demand. China alone consumed an estimated 6.1 million metric tons of NBSK equivalent in 2024, primarily for tissue manufacturing. NBSK constitutes 25-40% of the fiber mix in typical tissue furnish blends, a functional necessity that cannot be fully replaced by hardwood or recycled fiber without compromising product quality. Plastic-to-fiber packaging substitution is expected to add 4.5-6 million metric tons of incremental bleached kraft pulp demand globally between 2025 and 2030, according to Dataintelo research. This is equivalent to 4-5 new world-scale mills. BHKP demand has been supported by steady packaging and specialty paper consumption in China, where corrugated and folding boxboard production remain robust. The overall bleached kraft pulp market was valued at $54.2 billion in 2025 and is projected to reach $83.6 billion by 2034, a CAGR of 4.9%. BHKP is expected to grow faster at 5.6% CAGR versus 4.4% for BSKP (softwood), reflecting the shift toward packaging applications.

Analyst views: a market waiting for curtailments

Fastmarkets' senior economist Patrick Cavanagh stated at the North American Forest Products Conference that capacity curtailments are needed to improve global pulp pricing. 'Chenming idled 7 million tonnes of paper and board capacity to help drive up prices in early 2025, but the pulp price rally proved unsustainable,' Cavanagh said. His view is that the supply-demand picture could improve in 2026, with less new capacity globally ramping up than in recent years, while significant softwood capacity remains at risk of closure. The bull case for NBSK rests on tightening fiber supply in North America. Canadian lumber tariffs averaging 45% are causing sawmill curtailments, leading to fewer residual chips for pulp mills and higher wood costs. With Canadian lumber production forecast to decline by 1 billion board feet, Fastmarkets highlights chip scarcity as a leading indicator for potential NBSK price spikes. The bear case centers on China's integrated capacity overhang. With 32+ million tonnes of annual capacity and continued expansion through 2027, China is becoming increasingly self-sufficient in pulp, reducing import demand and capping global price recovery. The large low-cost Latin American hardwood supply ensures BHKP remains structurally long.

Forward catalysts

Key events to monitor: the pace of further mill closures in Canada and Scandinavia as softwood producers continue to operate near cash cost; the extent of destocking completion in China, which would signal resumed import buying; and energy cost trends in Europe, which remain a wildcard for NBSK production costs. Any supply disruption from weather events in the U.S. South would immediately tighten the fluff pulp market with spillover effects on NBSK.