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Sales of bleached eucalyptus kraft (BEK) pulp in Brazil remained weak in February, reflecting the typical seasonal pattern marked by lower market activity during the Carnival holiday.
Nevertheless, sources told Fastmarkets that the month offered trading opportunities, with several buyers anticipating purchases and strengthening inventories amid expectations of higher prices and concerns over margin compression along the supply chain.
Pulp buyers attributed inventory replenishment to several factors, including the preference for pulp over recycled fibers considering current price levels, margin protection strategies through early raw material procurement, higher production capacity at some plants and new contract structures requiring larger purchase volumes.
“I bought a lot of pulp in February to ensure I won’t be affected by any risk of price increases in the market. I will monitor my purchasing needs week by week in March,” one buyer-side source said.
Another buyer said that higher inventory levels could support better customer negotiation conditions in March.
“The market is not strong across the supply chain. Any attempt to pass on price increases at the moment tends to face strong resistance,” they added.
In Brazil, domestic pulp prices follow the PIX Pulp BHKP (bleached hardwood kraft pulp) index for the previous month, converted using the average exchange rate of the period and adjusted by the contractual discount applied in negotiations.
As a result, Brazilian buyers track European price movements and can anticipate upcoming local market trends.
In February, Fastmarkets assessed pulp, bleached hardwood kraft eucalyptus (domestic), cif Brazil at $700-1,130 per tonne. The lower end of the range reflects higher discount levels recorded in early 2026, while the upper end follows the European PIX index of the previous month.
Compared with February 2025, the average price of hardwood pulp in dollar terms rose by 8% this year. However, the depreciation of the US dollar against the Brazilian Real, from around 6.00 Reais per $1 to 5.33 Reais per $1 over the period, helped offset the increase observed in international prices.
In local currency, the expected contract price for pulp in Brazil for March, including discounts and the average February exchange rate, is around 4,030 Reais per tonne. The level represents a 5.1% decline year on year but a 7.9% increase month on month.
Fastmarkets found that spot market trading volumes declined after contract renewals incorporating higher discounts, while demand for offgrade pulp increased. This product is typically traded at prices around 5% lower than standard pulp.
“To access certain types of offgrade pulp, buyers may need to join a waiting list. It is important to secure purchase commitments because supply may take time to appear, but the product is of high quality,” a third buyer-side source said.
According to a seller, offgrade pulp is an alternative for non-integrated tissue producers seeking to maintain competitiveness amid competition from large vertically integrated companies. In Brazil, 40% of tissue production capacity is controlled by three major integrated companies, Suzano, Bracell and CMPC (through its subsidiary Softys), which operate in both pulp and finished tissue markets.
Another sell-side source said offgrade pulp “perfectly meets” Brazilian tissue producers’ needs. According to this market participant, three pulp specifications are particularly important: brightness, dirt count and viscosity.
“Sometimes the product is downgraded because it fails part of the specification requirements, but it remains high-quality pulp,” the source said, adding that offgrade material is priced 1-2% lower than conventional pulp. Buyers, however, said they can find offers priced up to 5% lower.
With prices for recovered paper white #1, the main recycled raw material substitute for pulp, remaining stable at 2,600-2,800 Reais per tonne, buyers argue that purchasing offgrade pulp yields better financial returns.
They also noted a decline in the supply of mechanical pulp, which is used on a smaller scale in the tissue industry. The tighter environment for alternative and recycled fiber is expected to keep conditions favorable for virgin pulp in March, but preferences could change in April depending on commodity price levels, buyers noted.
Outside of Brazil, pulp, bleached hardwood kraft eucalyptus, cif Latin America prices increased by $10 per tonne in February compared with January, assessed at $620-630 per tonne, varying according to logistics in the region.
Sources have said that prices in the region are moving up with some difficulties as demand remains weak and supply in the region is abundant. “We see pulp prices moving up little by little in the region as buyers see Asian net prices also moving up, it is hard for them to resist completely to these attempts,” a source said.
Some Latin American BEK producers announced new rounds of price hikes to take place globally in March, with the upward outlook based on good demand in China, the delay of OKI’s expansion project in Indonesia and the revocation of forestry licenses also in Indonesia that could trigger higher woodchip costs going forward.
During the weekend, however, the escalation of conflicts in the Middle East started to add new instability in the business environment, with market participants trying to understand initial impacts in the pulp market.
A source with knowledge of trading in the region said that surcharging was immediately added for freight in the region, with expectations that spot offers would move up very quickly.
“Energy costs with oil prices moving up can also affect production and logistics in Europe and other parts of the world, while shift of supply can happen with new markets targeted by Chinese and Asian producers if there will be higher costs to reach Europe,” a contact said.
A second source noted that Latin American sales to the Middle East are relatively small compared with other markets.
“In terms of supply and demand balance, the regional purchases should not impact markets, but there was immediate panic buying there during the weekend to secure tonnages. But looking back at similar facts that happened before, we see these tensions forcing commodity prices up,” the source said.
In terms of logistics, several cargo companies announced that they are suspending routes that go through the Arabian Gulf, including MSC, CMA, Maersk and Hapag-Lloyd.
Companies are not yet mentioning impacts on ships that transit via the Suez Canal, an important route connecting Asian markets to Europe.
In 2021, when a vessel blocked the Suez Canal for six days, supply disruptions escalated and shifted market trends during that period, prompting higher prices for pulp at the time, as logistics costs increased from Asia and unexpected higher demand was noticed in Europe in the early stages of the situation.
Stay informed on evolving market risks by exploring our Middle East conflict coverage dedicated hub and speak to our team to understand how Fastmarkets data and pricing intelligence can support your commercial decisions.