Aki Temmes, Executive Vice President of UPM Fibres and a member of the UPM Group Executive Team, opened with a pointed observation about the moment the industry finds itself in: pulp buyers are operating under a tightening triangle of cost pressure, rising quality requirements, and supply security risk — three forces converging simultaneously in ways that make fibre selection more consequential than at any previous point in his 23 years with the company. His presentation drew on UPM’s experience as a multi-fibre pulp producer — offering eucalyptus, Nordic softwood, and Nordic birch from mills on two continents — and on mill trial results demonstrating measurable value from deliberate, data-driven furnish optimization.

Aki Temmes

Temmes noted that hardwood demand will continue to grow despite ongoing uncertainty and increasing Chinese domestic integration, and that softwood, while losing share across most grades, will maintain a relevant position because of its functional properties — particularly its impact on machine runability and end product quality. Production costs are rising across most regions, with wood costs in Scandinavia having increased significantly since the Ukraine war, and energy and oil price developments adding further pressure. Against that backdrop, the instinct to simplify sourcing and buy on price alone is understandable, he said, but potentially costly.

“Not all fibres are equal,” Temmes said, “and the difference matters to business outcome.” He drew an analogy to how investors think about EBITDA: just as not all dollars of earnings are valued equally — different businesses command different multiples depending on quality and sustainability — the same logic applies to fibre. The differences between grades translate directly into what end products can do and what it costs to produce them. In the premium segments growing fastest — premium tissue, specialty papers, and sustainable packaging — brand owners and retailers are simultaneously tightening quality and sustainability requirements, leaving producers less room to optimize on price alone. Energy costs and machine runability compound the picture: sheet breaks and production disturbances can quickly erase savings achieved through lower-cost furnish decisions. Market pulp, he noted, is the single largest cost component in paper and tissue production, making furnish decisions among the most consequential a producer can make.

UPM’s pulp portfolio spans three distinct fibre types, each with a distinct role in a furnish. UPM Eucalyptus — sourced from the company’s two mills in Uruguay, where extremely high self-sufficiency in wood supply underpins consistent raw material quality — offers stable, high-quality hardwood pulp with refinability developed to reduce energy consumption in the refining process. Nordic softwood — the conifer grades from UPM’s three Finnish mills — delivers the strength properties, tensile performance, and cleanliness that support predictable performance across a range of end uses, remaining particularly important for runability and product quality in tissue. UPM Betula, the company’s Nordic birch grade, occupies a distinct position. Birch is a hardwood with longer fibres than eucalyptus, giving it stronger bonding properties. It is well suited to specialty paper end uses, and can also be used in furnish blends to partially replace softwood without significantly affecting runability or end product quality — a versatility Temmes said is not yet fully recognized in global markets.

Understanding what each fibre actually does — in production performance and in end product quality — is, in Temmes’s view, the foundation for smarter sourcing decisions. He described a trend now visible among leading producers: moving away from default furnish compositions toward deliberate, data-driven fibre choices. The producers building the most resilient operations, he argued, are those treating furnish selection as a strategic priority rather than a procurement default — recognizing that total cost optimization, encompassing fibre price, energy, runability, and end product performance together, is a source of competitive advantage for downstream businesses.

Two mill trials conducted with Andritz — a global supplier of pulp and paper industry machinery and process technology — gave concrete illustration of what furnish optimization can deliver in practice. The first targeted a TAD towel application — through-air-dried tissue, the technology behind premium kitchen towels and bath tissue. The trial goal was to reduce softwood content by increasing eucalyptus from 40% to 65% of the furnish, a level achieved without meaningful impact on production performance or end product quality, delivering a fibre cost reduction of approximately 8.5% on long-term prices — a figure Temmes noted is sensitive to the current price differential between softwood and eucalyptus at any given time. The second trial substituted birch for softwood, reducing conifer content from 50% to 35% of the furnish, again achieving cost savings alongside improvements in machine runability. Both trials, he said, demonstrate that with the right data, expertise, and product portfolio, meaningful furnish optimization is achievable.

Temmes positioned UPM’s full portfolio across all three grades as offering buyers something a specialist supplier cannot. Most pulp producers, he noted, focus on either eucalyptus or Nordic grades — a structural reality of the market that means buyers working exclusively with single-grade suppliers must assemble the full furnish picture themselves. A supplier with a complete portfolio across all relevant grades can help customers optimize across those interactions simultaneously.

Supply security, he said, is the other side of the furnish decision and one that can no longer be treated as a footnote. Furnish optimization only delivers value if supply is reliable — any disruption erases the benefits. UPM’s production across Finland and Uruguay represents two continents in politically stable, predictable, and democratic operating environments, naturally reducing supply risk. Certified and traceable fibre from sustainably managed forests satisfies downstream customer and regulatory requirements, and flexibility across five mills provides additional resilience. North America, he noted, has become an increasingly important strategic market for UPM, with the business growing steadily and rapidly in the region in recent years.

In the Q&A, Kelly McNamara asked whether producers are becoming more sophisticated in evaluating total system performance — runability, converting efficiency, end product quality — rather than focusing primarily on fibre price. Temmes said the picture is uneven: some customers invest heavily in that analysis and look well beyond unit price, while others remain more price-focused, with meaningful regional differences across tissue markets globally. On whether shifting furnish composition requires capital investment, Temmes said he would not expect significant capital requirements — furnish optimization is primarily about raw material and process adjustment rather than equipment change.

Drafted with the assistance of digital tools to streamline the process.