The Price Gap: Softwood vs. Hardwood Pulp

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The Price Gap Between Hardwood and Softwood Pulp: Analyzing Implications for Pulp Substitution

According to the latest Hawkins Wright Pulpwatch,the price gap between Northern Bleached Softwood Kraft Pulp (BSKP) and Bleached Eucalyptus Kraft Pulp (BEKP) remains at levels 3–4 times above the historical average. This price gap has sparked plenty of discussion in the industry, leading to the belief that the gap will continue. However, the key question is, “How much can softwood be replaced by hardwood?”

Understanding this dynamic requires a deeper exploration of the different aspects of softwood and hardwood pulps. For example, tissue grades depend heavily on consumer preferences and paper characteristics, while Printing & Writing users may be more open to gradual changes. This leads many to wonder—what are the implications of increased hardwood substitution, and how could this shift impact the pulp and paper industry?

Understanding the Difference Between Softwood and Hardwood Pulp

The pulp market has shifted significantly over the past 30 years, with hardwood now dominating 70% of the market, reversing its previous position with softwood. Rising costs, environmental concerns, and limited wood availability are reducing softwood production, while hardwood supply in the Southern Hemisphere continues to grow. 

The properties of hardwood and softwood pulps make them uniquely suited for specific applications. Hardwood pulp, typically derived from deciduous trees like eucalyptus, is characterized by shorter fibers. This results in smoother paper but with slightly lower strength properties. On the other hand, softwood pulp, sourced from coniferous trees like pine and spruce, possesses long fibers, offering excellent tensile and tear strength.

Technological advancements have made hardwood more versatile, allowing it to replace softwood in products like tissue, packaging, and boxboard. This evolution reflects a broader market shift from softwood to hardwood and from the Northern to the Southern Hemisphere.

For tissue products, softness and absorbency play a critical role in meeting consumer demands. Therefore, hardwood pulp is often preferred in this sector due to its finer, shorter fibers, which contribute to these qualities. However, softwood’s strength characteristics are necessary to ensure the product remains durable during usage.

When it comes to Printing & Writingpaper, the balance shifts. Users in this segment tend to prioritize smoothness for printing and writing quality but are generally more open to subtle changes in paper properties. This makes the segment more receptive to higher proportions of hardwood pulp. Yet, even here, a complete substitution could be constrained by other technical and regional factors.

Hardwood vs. Softwood in Paper Manufacturing: Regional Trends and Future Possibilities 

As illustrated below, the proportion of hardwood used when producing Printing and Writing paper varies across region. While in Latin America, Printing and Writing paper is made with 90% hardwood, in the Middle East, 3-5 times more softwood is required.

rw 23jan25 1 

This disparity underscores regional differences in manufacturing standards, raw material availability, and technological adaptation. If the global industry were to align with Latin America’s model of using predominantly hardwood components, there could be substantial changes in resource allocation. 

Based on industry estimates, if the entire industry were to adopt Latin America’s furnish standards, over 4 million tons of softwood could be replaced by hardwood in the P&W sector alone. Such a transition would ease softwood demand pressures—potentially narrowing the price gap—but would require substantial shifts in manufacturing processes, supply chain logistics, and end-user acceptance.

Possible Implications of Increased Hardwood Substitution 

Like any shift or development in the market, increased hardwood substitution brings a range of implications that could affect various sectors of the industry. These include:

1. Increased Chemical Consumption 

When substituting hardwood for softwood in pulp production, one possible implication is an increase in chemical consumption, though this impact is nuanced and depends on the stage of production. Softwood, which contains higher lignin content, generally requires more chemicals in the pulping process, such as those used for bleaching and digesting, to break down the lignin and make the fibers suitable for paper production. On the other hand, hardwood typically has lower lignin content, which means that it often requires fewer chemicals during the initial pulping stage, potentially lowering chemical use in that aspect of production.

However, when hardwood is used in place of softwood, particularly in paper and board products that rely on strength as a key characteristic, it may necessitate the addition of chemical additives to compensate for the lower inherent strength of hardwood fibers. These additives—such as wet-end starch, size press starch, and dry strength agents—are used in the paper-making process to enhance the final product's strength and performance. 

As a result, while the pulping process may require fewer chemicals, the paper production stage could see an increase in chemical consumption to achieve the desired product properties. This shift highlights the complex nature of chemical usage in pulp and paper production and suggests that while overall chemical demand might not rise drastically, specific areas like paper additives could experience an uptick in consumption when hardwood is substituted for softwood.

2. Market Dynamics and Supplier Considerations 

A significant shift in pulp preferences from softwood to hardwood would ripple across the supply chain:

  • Producers: Hardwood pulp producers, particularly those in eucalyptus-rich regions like Brazil and Portugal, could benefit from increased demand. However, producers reliant on softwood production could face reduced competitiveness unless they diversify their offerings.
  • Logistics: Transport and supply chain networks would need to adapt to the heightened demand for hardwood in non-Latin American regions.
  • Customers: Buyers, such as tissue and P&W manufacturers, would need time and resources to adapt to the mechanical and aesthetic changes that come with a higher proportion of hardwood in their final products.

3. Environmental Considerations 

Hardwood pulp production often boasts a stronger environmental profile, particularly eucalyptus pulp from Latin America. Eucalyptus trees grow faster, require less land to produce equivalent output, and are often cultivated on plantations designed to minimize ecological disruption. These factors make the case for increasing hardwood usage more appealing from a sustainability perspective.

However, implementing widespread substitution purely for cost-related reasons does raise ethical questions about the long-term environmental impacts. A balanced approach, prioritizing sustainability alongside economic considerations, will be essential for maintaining corporate responsibility.

A Balancing Act for the Industry 

The ongoing price disparity between softwood and hardwood pulps presents a compelling case for increasing hardwood substitution. However, the feasibility of this shift depends on multiple factors, including regional capabilities, consumer expectations, and the overall readiness of supply chain systems to adapt.

Staying informed about market movements and changes is crucial for maintaining a competitive edge in the pulp and paper industry. By closely monitoring industry trends and developments, companies can make proactive adjustments to their sourcing strategies, optimize production processes, and anticipate shifts in customer preferences.