Global softwood pulp markets were relatively flat through the fourth quarter of 2025, driven mainly by elevated pulp producer inventory levels. Towards the end of the period, however, buyer sentiment began to improve.
March 6, 2026 - Canfor Pulp Products (TSX: CFX) on March 5 reported its fourth quarter of 2025 results:
The Company reported an operating loss of $85.6 million for the fourth quarter of 2025, compared to an operating loss of $16.0 million for the third quarter of 2025.
Commenting on the Company's fourth quarter results, Canfor Pulp's President and CEO, Stephen Mackie, said, "The Company faced another extremely challenging quarter, as ongoing global economic uncertainty weighed heavily on softwood pulp market conditions. As a result, we remain cautious heading into 2026 as we continue to navigate significant external pressures on our business, including the prolonged downturn in softwood pulp markets and the ongoing constraints in securing economically viable fibre."
Global softwood pulp markets were relatively flat through the fourth quarter of 2025, driven mainly by elevated pulp producer inventory levels. Towards the end of the period, however, buyer sentiment began to improve. Lower global pulp prices prompted a modest uptick in purchasing activity, particularly in China, as producers worked to draw down higher-than-average inventory levels. As a result, US-dollar NBSK list prices to China, the world's largest pulp consumer, gained some positive momentum late in the quarter, finishing December at US$690 per tonne. Despite this late uplift, for the fourth quarter overall, US-dollar NBSK pulp list prices to China averaged US$671 per tonne, down US$19 per tonne, or 3%, from the prior quarter.
Outside China, market conditions remained difficult. Demand and pricing in other global regions weakened through the fourth quarter, with the average US-dollar NBSK pulp list price to North America falling by 8% from the previous quarter.
Global softwood pulp producer inventories remained elevated and at the top end of the balanced range throughout the current quarter, ending December 2025 at 47 days of supply, in line with September 2025. Market conditions are typically considered balanced when inventories fall within the 39-47 days of supply.
Canfor Pulp's average NBSK pulp unit sales realizations in the current quarter experienced a modest decline relative to the previous quarter, principally a result of the decrease in global US-dollar NBSK pulp list prices, partially offset by a 1% weaker Canadian dollar.
Pulp production was 103,000 tonnes for the fourth quarter of 2025, down 4,000 tonnes, or 4%, from the third quarter of 2025. Early in the current quarter, the Company successfully completed its scheduled maintenance outage at Northwood as planned. However, the restart of Northwood was delayed by several days due to operational difficulties unrelated to the scheduled maintenance downtime. Combined, these factors impacted NBSK pulp production by approximately 15,000 tonnes in the current quarter.
Operating income in the Company's paper segment was $5.5 million, compared to $5.0 million in the third quarter of 2025, largely due to the weaker Canadian dollar, combined with slightly lower paper unit manufacturing costs.
Looking ahead, global softwood kraft pulp market conditions are anticipated to remain weak into 2026 as ongoing economic uncertainty, particularly between China and the US, continues to weigh on market demand despite some cautious optimism seen late in 2025.
Canfor Pulp continues to closely monitor developments in Canada-US trade relations. Should tariffs be applied to US pulp and paper shipments, the Company has mitigation strategies in place that are projected to partially offset potential impacts.
No major maintenance outages are planned at the Company's pulp mills for the first quarter of 2026. In the second quarter of 2026, a maintenance outage is scheduled at the Company's Intercontinental NBSK pulp mill ("Intercon") with a projected 20,000 tonnes of reduced NBSK market pulp production. For the rest of 2026, no further scheduled downtime at the Company's pulp mills is anticipated.
As announced on February 17, 2026, Management's forecast indicates that due to global pulp market conditions remaining weak, ongoing macroeconomic headwinds and continued challenges accessing economic fibre in British Columbia, the Company may experience continued declines in financial performance during the first quarter of 2026, making it highly probable that CPPI will not comply with its financial covenants at March 31, 2026.
Although Management is undertaking mitigation initiatives and advancing the Proposed Transaction, the ultimate success of these actions cannot be assured at this time. Management's discussions with its lenders regarding future financial covenant relief are currently on hold, pending the outcome of the Proposed Transaction. Should the Proposed Transaction not close, the Company would re-engage with its lenders for further temporary relief while it works to undertake a restructuring process.
Demand for bleached kraft paper, both globally and within North America, is anticipated to remain subdued throughout the first half of 2026. This forecast trend is primarily attributed to ongoing uncertainties in Canada-US trade relations, coupled with broader global economic challenges such as overcapacity and stable demand.
A maintenance outage is currently planned at the Company's paper machine in the second quarter of 2026 with a projected 10,000 tonnes of reduced paper production.
Canfor Pulp is a leading global supplier of pulp and paper products with operations in the northern interior of British Columbia. Canfor Pulp operates two mills in Prince George, British Columbia, with a total capacity of 480,000 tonnes of Premium Reinforcing Northern Bleached Softwood Kraft pulp and 140,000 tonnes of kraft paper.
SOURCE: Canfor Pulp Products Inc.