"Persistent global economic uncertainty continued to negatively impact global pulp and paper fundamentals throughout the third quarter and resulted in a challenging quarter financially for our business." – Stephen Mackie President and CEO of Canfor Pulp Products.
Nov. 5, 2025 - Canfor Pulp Products Inc. ("the Company" or "CPPI") today reported its third quarter of 2025 results:
The Company reported an operating loss of $16.0 million for the third quarter of 2025, compared to an operating loss of $5.3 million for the second quarter of 2025. After adjusting for a $4.9 million inventory write-down in the current period, the Company's adjusted operating loss was $11.1 million for the third quarter of 2025.
These results largely reflect the ongoing impact of global pulp pricing declines in the current quarter driven by elevated market pulp producer inventory levels and weak softwood pulp demand. These factors were moderated to a degree by improved pulp production at both of the Company's pulp mills and the associated benefit of lower per-unit pulp manufacturing costs.
Commenting on the Company's performance, Stephen Mackie, CPPI's President and Chief Executive Officer, said "Persistent global economic uncertainty continued to negatively impact global pulp and paper fundamentals throughout the third quarter and resulted in a challenging quarter financially for our business. Although our initiatives to improve reliability and productivity have partially mitigated these factors in the third quarter, we anticipate these economic challenges to continue."
After experiencing downward pressure in the second quarter of 2025, global softwood pulp markets remained notably weak during the current period. Northern Bleached Softwood Kraft ("NBSK") pulp prices in China continued to decline throughout the third quarter. North American pulp markets also came under pressure as prices in this region adjusted to the lower pricing environment previously experienced in other global regions. As a result, US-dollar NBSK list prices to China, the world's largest pulp consumer, averaged US$690 per tonne for the current quarter, down US$44 per tonne, or 6%, from the prior quarter.
Global softwood pulp producer inventories continued to increase through the third quarter of 2025, ending August at 52 days of supply, an increase of 2 days compared to June 2025, remaining well above the balanced range. Market conditions are generally considered balanced when inventories are in the 39-47 days of supply range.
The Company's average NBSK pulp unit sales realizations experienced a significant decrease compared to the previous quarter, primarily reflecting the continued declines in global US-dollar NBSK pulp list prices.
Pulp production was 107,000 tonnes in the third quarter of 2025, an increase of 5,000 tonnes, or 5%, compared to the second quarter of 2025, primarily reflecting improved productivity in the current period. This uplift was partially offset by reduced production associated with a planned minor maintenance outage at the Company's Intercontinental NBSK pulp mill in the current quarter.
Operating income in the Company's paper segment was $5.0 million, compared to $1.5 million in the previous quarter, largely due to a favourable product sales mix quarter-over-quarter, combined with a reduction in paper unit manufacturing costs in the current quarter.
Looking ahead, global softwood kraft pulp market conditions are anticipated to remain weak during the fourth quarter of 2025 as economic uncertainty, particularly between China and the United States, continues. As a result, pulp producer inventories are forecast to remain well above the balanced range through the remainder of 2025.
In addition, in the fourth quarter of 2025, a maintenance outage is scheduled at the Company's Northwood NBSK pulp mill which is projected to reduce NBSK market pulp production by 10,000 tonnes.
Consequently, Management's forecast indicates that a decline in the Company's results in the fourth quarter, correlated in part with the reduced production associated with the scheduled maintenance outage, combined with ongoing macroeconomic headwinds, could leave the Company with minimal headroom under its financial covenants and create a risk of non-compliance as early as December 31, 2025.
Management is working to mitigate this risk of non-compliance by implementing cost-saving measures and deferring certain capital expenditures to improve the Company's financial position. However, the Company's ability to maintain covenant compliance and execute these plans is subject to a number of uncertainties including market volatility, execution risk and the achievement of forecast cash flows. Management is actively negotiating with its lenders in an effort to obtain a waiver for the potential future breach of its financial covenants.
The subdued demand for bleached kraft paper globally and in North America, as seen throughout the first three quarters of 2025, is anticipated to continue into the fourth quarter of 2025, primarily due to ongoing uncertainties surrounding Canada-US trade relations, in addition to broader global economic challenges.
Canfor Pulp Products Inc. is a leading global supplier of pulp and paper products with operations in the northern interior of British Columbia ("BC"). Canfor Pulp operates two mills in Prince George, BC with a total capacity of 780,000 tonnes of Premium Reinforcing Northern Bleached Softwood Kraft ("NBSK") pulp and 140,000 tonnes of kraft paper.
SOURCE: Canfor Pulp Products Inc.