Emanuele Bona, Vice President Europe at the Pulp and Paper Products Council, delivered the conference’s closing presentation — a comprehensive review of global market pulp demand in the first quarter of 2026, near-term forecasts, and a five-year supply and demand outlook for both softwood and hardwood grades. He opened with an observation that had not been addressed directly by other speakers: the volume of pulp itself transiting the Strait of Hormuz. Of the eight countries with access to the strait, over 200,000 tonnes of softwood pulp — roughly 1% of global softwood demand, approximately half of it fluff — transited the region in 2025. Hardwood volumes were larger at over 800,000 tonnes, representing approximately 2% of global demand. Not extraordinary in the global context, Bona said, but significant enough to cause meaningful disruption to those supply chains.

Emanuele Bona

On softwood, first quarter 2026 demand contracted 6.3% year on year — a number that Bona said is heavily influenced by the comparison period. Q1 2025 was exceptionally strong at 6.3 million tonnes, creating a difficult base. On a sequential, seasonally adjusted basis, the picture is more encouraging: demand has been improving quarter over quarter for the past three to four quarters, with Chinese softwood demand showing a similar improvement over the same period. Bona attributed the recent Chinese softwood recovery partly to inventory building and partly to a shift back toward softwood from hardwood, driven by the narrowing price gap between the two grades. The spread between softwood and hardwood import prices in China — which stood at over $200 per tonne at the start of 2025 — had narrowed to well below $100 per tonne by the end of April 2026, significantly reducing the economic incentive to substitute hardwood for softwood and potentially shifting some demand back in softwood’s favour. Chinese softwood import prices on a cost, insurance, and freight basis — meaning the delivered price at a Chinese port — are currently around $660 per tonne, near the lowest level seen over the past 35 years on an inflation-adjusted basis. North American softwood demand was also negative in Q1 at minus 7.2%, again against a difficult year-on-year comparison, but has shown signs of bottoming out over the past three to four months. Mill softwood inventories began the year at 50 days — the highest level in five years — but have since normalized to 46 days, remaining within the statistical normal range.

For the full year 2026, Bona forecast softwood demand to decline approximately 250,000 tonnes or 1% globally. China is expected to see a decline of over 4% following last year’s near 9% increase, driven by a negative inventory swing, continued weak end-use consumption, and softwood-to-hardwood substitution — though the narrowing price gap could partially offset that last factor. The rest of the world is expected to show a modest rebound of 0.7%, reflecting a positive inventory swing against last year’s significant destocking.

On hardwood, Q1 2026 demand was down 2.4% year on year but has stabilized on a sequential basis following a strong 2025. The contraction has been concentrated in other Asia — Southeast Asia and the Middle East — where a 13% decline in Q1 reflected the unwinding of what Bona said PPPC had flagged throughout 2025 as unsustainable demand growth of 15%, much of which went into inventories rather than consumption. The Hormuz disruption has compounded the correction in Middle Eastern markets. Hardwood mill inventories ended December at a seasonal low of 37 days and have not rebounded in the typical January-to-March pattern, remaining at 38 days by end of March — explained in part by production also being down approximately 4% in Q1. For the full year 2026, Bona forecast a hardwood demand decline of approximately 1 million tonnes or 2.3%, with China down 1.5% after last year’s 7% increase, and the rest of the world down 2.8% — largely driven by the other Asia inventory correction.

For North America specifically, Bona presented a relatively encouraging hardwood outlook: average growth of approximately 1.4% per year over the next five years, adding around 300,000 tonnes, driven almost entirely by tissue. All confirmed new tissue projects in North America are based on virgin pulp rather than recycled fibre — a positive signal for hardwood market pulp demand in the region, and a meaningful contrast to the recycled-fibre-based capacity that characterized some recent closures.

The longer-term global picture showed chemical market pulp demand growing at an average of just under 1% per year over the next five years, with 2026 and 2027 as outliers — 2026 depressed by the war and inventory comparisons, 2027 showing a rebound on the year-over-year effect. For softwood, demand is expected to remain essentially flat after the 2027 rebound, as the key end uses — wood-free papers, tissue, and absorbent hygiene products — all flatten or decline on a global basis. For hardwood, the five-year outlook is more positive at approximately 3 million tonnes of additional demand, or 600,000 tonnes per year, though at a slower pace than the 3.5% average growth seen over the previous decade, reflecting slower end-use growth, rising integration in tissue and boxboard, and the increasing competitive reach of integrated Chinese exports.

On the supply side, softwood capacity is expected to remain largely unchanged over the five-year period, with pluses and minuses largely offsetting. Among the notable movements for 2026: the return of Metsä Fibre production following a temporary market-related shutdown at one of its mills in 2025 is a positive, as is Thunder Bay’s grade mix shift from hardwood into softwood. On the negative side, the Domtar Crofton closure and the Maruzumi closure in Japan have carried over into 2026, and the Domtar Trout Run mill was indefinitely idled earlier in May. Looking further out, Georgia Pacific’s Alabama River modernization in 2027 is a positive, partially offset by the integration of Svetlogorsk capacity into the Oji mill. The Irving St. John recovery boiler upgrade contributes a modest capacity increase in the final years of the period.

The hardwood capacity picture is more dynamic, with confirmed additions representing a net increase of 4.9 million tonnes over five years. The APP Hok Kham mill is ready to operate but has delayed its startup for market reasons — Bona included capacity from Q3 2026 but noted the timing may slip. The Arauco Inocencia project in Chile will start up in 2027 but reach full effect in 2028, when hardwood demand is expected to be increasing by approximately 2.7 million tonnes.

Western Europe, Bona said, faces a more difficult picture than any other producing region. Demand is falling in both softwood and hardwood — softwood declining at approximately 1.2% annually and hardwood fractionally negative — driven by weak demographics, with Western European population growth expected to turn negative by 2030, and structural decline in wood-free paper shipments of 6% to 6.5% annually. The result is a widening gap between Western European softwood capacity and domestic demand that reached 5.5 million tonnes by end of 2025 and is expected to widen further to approximately 6 million tonnes — not because capacity is growing but because demand continues to edge down. That surplus is being exported: Western European softwood exports have grown from 2.2 to 5.3 million tonnes over the past decade, with Western Europe now supplying approximately 50% of the Asian softwood market and close to one quarter of the North American market — a competitive dynamic with direct implications for Nordic and North American producers alike.

Putting supply and demand together, Bona presented a world balance showing softwood operating rates holding at approximately 88% in 2026, with both demand and capacity falling roughly 1% each, and hardwood easing from 92% to approximately 90% as demand contracts more sharply than capacity. Over the longer term, both grades are expected to converge around 89% on average — a broadly balanced market, but one defined by slower growth, rising competitive pressure from Latin American hardwood and Western European softwood exports, and an end-use landscape that offers less upside than the previous decade. That, in Bona’s telling, is the market pulp industry’s medium-term reality.

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