In looking across the entire forest products space this year, it is abundantly clear that demand is weak across all segments. There is no expectation of an improvement in 2025 as consumption remains poor and restocking efforts are expected to be limited. As such, any hopes of better supply/demand dynamics are going to come down to supply discipline (slowbacks/downtime/closures). We have some thoughts about how this might play out in the various sectors:

• Timber and Timberland—Timber harvest guidance will naturally follow wood products demand. Finding a home for pulpwood has been problematic for several years and will only become more difficult amid ongoing downstream capacity shuts. New demand is possible over time, but nothing is expected in the near-term.
• Solid Wood—A raft of capacity closures in both Canada and the US had brought the lumber market into better balance to begin 2025. However, with demand weakening further through the first half of 20025 (and given a bleak medium-term outlook), further capacity rationalization will be required to restore balance and lift prices (Canada will be the focus, but the US could also see shuts). In OSB, prices are already at cash- cost levels, demand could slip further in the coming months, and new greenfield capacity is slated for late ’25 and early ’26. Accordingly, closures/downtime are sorely needed. For both lumber and OSB, producers may be awaiting the outcome of the Section 232 investigation before making major changes to operations.
• Pulp—After several years of pulp shuts (Panama City, Prince George, Tacoma, Pensacola, Foley, Terrace Bay, Northwood and Georgetown), there is still more to come. Current prices are unsustainable for some producers in British Columbia and Northern Europe. Other production in Canada could be at risk as well.
• Paper—Uncoated woodfrees saw substantial closures last year and another sizable shut this year (Chillicothe). However, the flow of imports has yet to diminish across graphic paper grades. Coated woodfree papers are much tighter following the conversion of Sappi’s machine to folding boxboard (FBB) and solid bleached sulfate (SBS) grades, but imports also continue to dominate this grade. If import volumes aren’t forced lower due to tariffs, more capacity reductions could be needed. For newsprint and supercalendered grades, demand is weak and product is readily available. Capacity will need to be removed to prevent price erosion.
• Packaging—Containerboard producers have been among the boldest in the entire forest products space, slating ~5% of US capacity for closure. This should stop prices from falling, but additional closures are still possible. For boxboard, imports of folding boxboard (FBB) and solid bleached sulfate (SBS) are still coming in aggressively despite tariffs. With recently started capacity from Sappi and a new coated recycled board (CRB) mill from Graphic Packaging International (GPK) set to start up in Q4, recent capacity reductions will be insufficient to rebalance the market on their own.
• Tissue—After a few small tissue capacity shutdowns early in 2024, capacity changes are now more focused on expansion. That being said, imports have been on an upswing — particularly in the Away-from-Home (AfH) sector — and unless they slow amid tariffs, they will put pressure on smaller-scale Away-from-Home production.