Kevin Mason

A topic that was widely discussed at our Global Wood Summit (GWS) last week was the dwindling supply of “cheap” or economical softwood fibre around the globe. While there remain a couple of major forestry hubs where softwood is abundantly available and still relatively cheap (the U.S. South being the most obvious example), in many key regions—most notably Western Canada, Central Europe and Scandinavia—the softwood fibre supply is more constrained and has become increasingly costly.

The implications of this decline in economical softwood fibre vary depending on the commodity. For lumber, we have already seen the impacts shape global supply dynamics. Lumber output has collapsed in British Columbia given a dwindling softwood fibre resource in the province (among myriad other challenges). In Europe, a spike in European lumber shipments to North American between 2020 and 2022 as well as a surge in softwood log exports to China around the same time was fueled by an abundance of cheap beetle salvage logs coming to market. However, with beetle salvage supply dwindling in central Europe, softwood log costs have risen dramatically over the past year or so, making sawmilling economics more difficult for lumber producers in the region. The U.S. South, blessed with a wealth of low-cost softwood fibre, is now effectively the sole growth engine in terms of North American (and maybe global?) softwood lumber production.

In pulp, we are also seeing a dramatic shift as global softwood pulp capacity shrinks (fibre supply being just one dynamic along with small, aging softwood mills, bans on Russian fibre and a number of other factors) and hardwood capacity increases rapidly. The difference in fortunes for the two grades is driven predominantly by fibre supply— an abundance of quick growing eucalyptus has given producers confidence to invest billions of dollars into new HW pulp capacity, while the opposite is true of softwood pulp mills in Canada (and Scandinavia to an extent). The loss of Russian fibre into Europe has fueled a huge increase of fibre costs for a variety of Scandinavian mills and no relief appears on the horizon.

In packaging, the pivot has been towards growing usage of recycled fibres, but inexpensive hardwood is now making inroads into various packaging grades, a key example being 100% eucalyptus-made linerboard. Even tissue is being produced with 100% eucalyptus fibre in some regions. The scarcity (and higher pricing) of softwood fibre is driving end users (and others) to embrace other options.”