Christian Chavassieu, Managing Partner of CelCo, presented on the dissolving wood pulp market — a sector representing approximately 10% of total pulp production, with supply dynamics, competitive structures, and end-use markets that differ significantly from standard market pulp. His presentation covered supply, demand, pricing, and competitive structure across the sector’s main sub-segments, with particular focus on the diverging fortunes of commodity textile grades versus specialty grades, the growing role of alternative fibres, and a live anti-dumping trade case at the US Department of Commerce whose outcome could materially reshape sourcing patterns in the US market within days of the conference.

Christian Chavassieu

On supply, Chavassieu noted that dissolving wood pulp capacity has grown at roughly 4.1% annually over the past decade, though that pace has slowed recently with the closure of two facilities — a GP mill in the US and the Tembec mill in Temiscaming — and only modest new capacity coming online, primarily from Brazil and a new mill in Portugal. Geographically, North America’s share of global supply has been declining steadily, with Latin America — primarily Brazil and Chile — and Asia, primarily Indonesia, taking an increasing share. The three largest exporting countries are now Indonesia, Brazil, and South Africa, all eucalyptus-based. The 2025 operating rate for the sector as a whole was approximately 84%, though Chavassieu noted that figure is skewed by Chinese swing mills that can produce either dissolving pulp or paper pulp depending on market economics. Excluding those facilities, the effective operating rate for committed dissolving pulp producers was closer to 94%.

The demand picture he presented was one of growth at the aggregate level — 3.9% for dissolving wood pulp overall in recent years — but with sharply divergent dynamics depending on the sub-segment. The largest by far is the textile market, accounting for approximately 78% of total cellulose demand. This is where the wood fibre connection to everyday consumer products is most direct: dissolving wood pulp is the raw material for viscose — also widely marketed as rayon — and for Lyocell, sold commercially as Tencel, both of which are wood-derived textile fibres that compete with cotton and polyester in apparel and home textiles. That connection is not always visible to the consumer, but it places the pulp industry squarely in the global textile supply chain. The textile segment grew at 7.6% over the past year, driven primarily by China and Indonesia, and the underlying structural driver is what Chavassieu described as the cellulose gap. Cotton’s expansion is constrained by limited agricultural acreage and water availability, while polyester is a petroleum-derived synthetic facing growing sustainability scrutiny. That creates structural room for wood-derived viscose and Lyocell to grow as the more sustainable alternative in a textile market that is itself expanding. European producers like Lenzing, however, continue to face significant competitive pressure from Chinese pricing despite that favourable demand backdrop.

The specialty segment — which includes acetate used in cigarette filters and increasingly in textile applications, ether and microcrystalline cellulose or MCC used across construction, food, pharma, and personal care, and a range of other applications including nitration grades and specialty casings — told a more mixed story. Acetate grew 2.1% over the past five years, outperforming expectations given declining smoking rates in Western markets, supported by growth in China, new heat-not-burn cigarette formats from producers like Philip Morris that use larger acetate filters, and the development of acetate-based textile and plastic applications. Ether and MCC, by contrast, showed negative growth of 4.6% over five years — driven by persistent destocking, weakness in the construction sector which represents roughly 50% of ether demand, and aggressive Chinese competition in finished cellulose ether products that has displaced some dissolving wood pulp demand in that segment.

A development Chavassieu flagged as a major structural shift is the growing use of paper pulp as a substitute for dissolving wood pulp in Chinese viscose staple fibre production. Chinese mills have become increasingly creative in incorporating paper grade pulp into their furnish — a lower-cost alternative that requires process adjustments but is now technically viable, with some Chinese producers operating at 100% paper pulp. The spread between paper pulp and dissolving pulp prices, currently around $270 per tonne, continues to favour paper pulp in commodity textile applications, and Chavassieu said that trend is likely to continue. It represents a genuine long-term competitive pressure on dissolving wood pulp demand in the textile segment, particularly in China.

The pricing picture overall showed a 3.2% decline year over year, but that aggregate figure hides a story of dramatic divergence. Commodity textile grades fell 4.8%. Specialty grades, by contrast, rose sharply — driven by a severe shortage of softwood dissolving pulp for applications that cannot use eucalyptus or hardwood fibre, including ether grades, nitration, and certain specialty casings. Unlike the broader pulp market where eucalyptus has been steadily displacing softwood, certain dissolving pulp applications require the longer fibre length and specific cellulose structure of softwood, and there is no new softwood dissolving pulp supply coming to market. That shortage has been building since 2025 and is now acute, with the spread between commodity viscose grades and specialty grades widening to nearly $1,000 per tonne. Into that already tight market, Rayonier Materials has announced an 18% price increase for 2026 specialty grades — a significant challenge for buyers whose furnish specifications cannot be quickly reformulated.

The specialty segment’s supply is highly concentrated, with three players — Rayonier, Bracell, and Beauregard — dominating. That concentration, combined with the softwood shortage and Rayonier’s pricing move, sets the backdrop for the anti-dumping trade case now before the US Department of Commerce, initiated by Rayonier against Beauregard of Norway and Bracell of Brazil. Rayonier has alleged dumping and is seeking duties that Chavassieu said could reach 60% on imports from those two suppliers — a level that would fundamentally alter sourcing decisions for US buyers of specialty dissolving pulp. The Department of Commerce ruling is expected May 19th. Estimates of the likely duty range from 5% to 60%, leaving buyers attempting to plan around an outcome that remains genuinely uncertain.

In the Q&A, Mason asked about the practical challenges of paper grade mills converting to specialty dissolving pulp production. Chavassieu said entry-level conversion to a low-end dissolving grade requires reaching a cellulose content of approximately 92%, which demands mill modifications that technology providers like Andritz or Valmet can deliver for several hundred million dollars. Specialty grade production, however, requires adding caustic extraction — a chemical purification step at the front of the pulping process that removes hemicelluloses and raises cellulose purity to the levels specialty applications require — at a capital cost closer to one billion dollars depending on scale and configuration. On the anti-dumping case, Mason drew a parallel with the softwood lumber dispute, noting that Canadian producers know well how punitive Department of Commerce duty determinations can be. Chavassieu agreed and said the full implications for the industry would depend entirely on where the duty lands.

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