Since the third quarter of 2026, the global pulp market has exhibited a dual-track pattern of "supply-side contraction and demand-side weakness." After a sustained downturn in the first half of the year, signals of price bottoming are gradually accumulating, though the strength of demand recovery remains the key variable determining the market's next move.
Supply Side: Overseas Production Cuts Continue, Short-Term Disruptions Intensify
The global softwood pulp supply contraction trend is still ongoing. Metsä Group's Q2 report indicated that the softwood pulp market continues to face oversupply, but capacity closures-particularly in North America-are helping to curb supply. Financial difficulties and mill closures facing producers in Central Europe and Canada have strengthened Metsä Group's relative competitive position.
Meanwhile, short-term supply disruptions are intensifying. Arauco's September pulp price quotes showed hardwood pulp (Star) rising by USD 20/tonne to USD 590/tonne, and unbleached pulp (Golden Star) up by USD 10/tonne, providing stronger cost support. Metsä Fibre has initiated change negotiations at its Joutseno mill, involving potential temporary layoffs of approximately 160 employees, stating that the pulp market situation "remains challenging" and that the company needs to prepare for "a longer adjustment period than previously expected."
Demand Side: Weak China Imports, Downstream Price Hikes Constrained
Demand-side performance is clearly diverging. According to the July report from PPPC, chemical pulp shipments from the world's 20 major pulp-producing countries fell 6.1% year-on-year, with hardwood pulp shipments down sharply by 7.7%, reflecting overall weakness in global demand.
As the world's largest pulp importer, China's performance is particularly critical. In August 2026, China's total pulp imports reached 2.73 million tonnes, essentially flat month-on-month and up only 2.9% year-on-year. More notably, downstream paper price increases remain weak, mill operating rates are recovering slowly, and raw material restocking sentiment is cautious-demand has yet to provide effective momentum.
Inventory and Price Signals: Destocking Emerging, Bottom Support Strengthening
Inventory data reveals positive signals. Europulp data showed that European port pulp inventories fell 10.0% month-on-month and 21.3% year-on-year in July 2026. Domestically, major regional and port inventories declined 0.9% month-on-month as of end-August.
On the price front, institutional research notes indicate that the current pulp supply-demand landscape features a dual-track pattern of "rising overseas production cut expectations and slow domestic inventory destocking." Arauco's higher hardwood pulp quotes have reinforced cost support. Some analysts believe that proactive production controls by mills, combined with stabilizing pulp prices, are helping narrow losses for certain paper grades. If peak-season orders materialize in September–October, prices and margins could reach an inflection point.
Industry Outlook
The global pulp market currently stands at a crossroads between "supply contraction" and "weak demand." Production cuts by overseas pulp mills have provided bottom support for prices, and significant destocking in Europe has released positive signals. However, as the core demand market, China's persistently weak import data and constrained downstream price increases continue to limit upward price potential.
Two variables warrant close attention going forward: first, the execution of production cuts by pulp mills in North America and Europe; second, whether China's traditional "Golden September and Silver October" peak season can drive a substantive demand recovery. In the process of supply-demand rebalancing, leading companies with cost advantages and raw material self-sufficiency are expected to benefit first.
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