Our NBSK (Northern Bleached Softwood Kraft) pulp product UPM Conifer has formed the backbone of our business from the outset. The raw material – spruce and pine – mainly comes from Finnish forests, but historically Russia has also been an important wood raw material supplier to the Nordic industry. After Russia invaded Ukraine in February 2022 and Russian wood imports were banned, the availability of softwood fibre has become more challenging. Imports from Russia to Finland were around 9 million cubic metres a year which has been missing since the spring of 2022.
A tonne of NBSK consumes close to 5 cubic metres of wood which means that 9 million cubic metres equals around 1.8 million tonnes of pulp for which the raw material supply is difficult – although the shortage affects all fibre consuming industries and not only pulp production.
The good news is that our NBSK pulp assets are on relatively good and well invested levels, but with the looming shortage of raw materials in the Nordics, the situation drives cost increases. Wood fibre costs in the region increased rapidly by about 25% from 2021 to 2023, and as domestic prices have continued to rise the trade areas for softwood pulp have grown within Europe.
Securing cost-competitive access to softwood fibre is hard as it is, but the situation is likely to become more difficult with increased competition for fibre. Key drivers eroding the already limited softwood supply include tightening harvesting regulation and the energy sector’s growing need for biomass used in electricity and heat generation, which combined will further challenge the supply-demand balance.
For UPM’s customers and paper producers globally, the situation requires careful examination of the quality of fibres used in their products. When considering, for example, how much of the softwood used in a furnish can be replaced by hardwood, UPM is ready to help make the most of our comprehensive range of pulp products. As a supplier of both softwood and hardwood pulps, we are able to support our customers in optimising the furnish so that the fibre mix fits specific product needs perfectly.
We have already responded to the market situation by shifting our production towards more affordable and readily available fibre, and have strengthened our Technical Marketing and Services team to enhance its proactive role in promoting the best possible solution for each requirement. With our major investments in modern pulp production assets especially in Uruguay, where we now operate two world class pulp mills, we are here for our customers in the long run.
Tomas Wiklund
Senior Vice President, Pulp Sales
UPM Fibres
