News

Brazil Launches Mega Pulp Plant and Intensifies Regional Competition

Sponsors

• The Cerrado Project in the state of Mato Grosso do Sul will be the world's largest single-line pulp factory, directly impacting global supply.

Brazilian company Suzano, the world's largest pulp producer, has begun operations at its Cerrado Project in the state of Mato Grosso do Sul. This mega-plant, once completed, will be the world's largest single-line pulp factory, with the capacity to produce 2.55 million metric tons per year.

The new plant's boost will further expand its supply of bleached eucalyptus pulp, with total production expected to reach 900,000 tons by the end of this year and 2.0 million tons within 12 months. This directly translates to increased competition for Uruguayan biopolymer exports and downward pressure on prices due to the rising supply in the region.

In 2023, Uruguay's pulp exports reached record levels, becoming the country's second most important product after a 7% increase compared to 2022, generating revenue of $2.019 billion. In June, biopolymer shipments surged 50% year-on-year, reaching approximately $219 million.

In addition to the new Brazilian plant, there is the MAPA project (Modernization and Expansion of the Arauco Plant) in Chile by Chilean giant Arauco, which will enable production of around 1.56 million tons per year.

In Uruguay, Finnish company UPM's plant in Fray Bentos can produce about 1.3 million tons of pulp annually, while the Paso de los Toros plant produces around 2.1 million tons per year. Additionally, Montes del Plata's plant (owned by Arauco and Swedish-Finnish Stora Enso) in Colonia contributes another 1.4 million tons per year.

The Global Pulp Market Context
Since the beginning of the year, factors such as declining inventories, increased consumption in Europe, and supply disruptions caused by massive floods in Rio Grande do Sul (Brazil) have driven pulp prices from nearly $700 to over $1,300 per ton.

The benchmark price for short-fiber pulp at $1,320, which even peaked at $1,690 earlier this month—the highest in nominal terms—presents a favorable scenario for Uruguay. However, this could quickly change due to the rising regional supply.

Source:ambito.com