Another pulp mill is leaving the market

Another pulp mill withdraws from the market: Canfor closes Northwood

    Canadian lumber giant Canfor Corporation has announced the permanent closure of the Northwood Pulp Mill in Prince George, British Columbia. The decision, which will take effect in the fourth quarter of 2026, will result in 300 job cuts and a reduction in the global supply of Northern bleached softwood pulp (NBSK) by 300 thousand tons annually. The company attributes this move to a global oversupply, a collapse in prices, and ongoing problems with access to wood fiber, which have made the company's operations unprofitable.

A factory that has fallen victim to global overproduction

    The decision to close Northwood was made against the backdrop of a structural shift in the global pulp market. Canfor explicitly points out two key reasons:

1. Oversupply and falling prices
    In recent years, a significant number of new pulp production facilities have been introduced worldwide. This created a steady oversupply in the market, bringing down prices and squeezing manufacturers' margins to a critical level. According to analysts, about a quarter of the global pulp market is operating with negative cash, making forced closures inevitable. Analysts note that even despite some expected improvement in the balance of supply and demand in 2026-2027, the current state of the market requires capacity reduction.

2. The crisis of access to raw materials
    The second problem, exacerbating the financial situation, was the shortage and rising cost of wood fiber. This problem is common to the entire British Columbia timber industry. Previous forest fires, epidemics of bark beetles, and changes in land-use policies have reduced available wood supplies. Fewer operating sawmills also means that fewer process chips enter the market, which is a critical raw material for pulp mills.

Impact on the market: a wave of closures and large-scale losses

    The closure of Northwood is not an isolated incident, but part of an alarming trend. This is not the first and probably not the last announcement about the closure of factories in the region. Previously, other Canfor enterprises had already been shut down.

What's next? Prospects for the industry

    Canfor is betting on a long-term restructuring, aiming to create a more efficient and focused lumber and pulp production platform. The company promised to provide support to dismissed employees, including severance payments and the possibility of transfer to other enterprises.

    This event has a double meaning for the global market. 

    - On the one hand, this is a painful reduction in the supply of NBSK, which in the medium term may have a moderately bullish effect on prices as the market absorbs the excess supply. 

    - On the other hand, the very reason for the closure — global oversupply and structural weakness in demand — indicates that the market has not yet reached the bottom.

The key conclusion for the global market 

    The closure of Northwood is not just news about a single plant. This is a clear signal that high-cost producers in North America can no longer compete in the face of global overproduction. This event is an important step towards balancing the market, but it also highlights the scale of the crisis that continues to shake the pulp industry, especially in regions with expensive raw materials and difficult business conditions.

Tags: #Canada #British Columbia #cellulose_industry #Canfor #Northwood_Pulp_Mill #NBSK #close_production #global market