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Suzano–Kimberly-Clark joint venture will not impact pulp volumes on the market, executive says
Cost pressures in Europe and North America have indicated a trend toward de-verticalization in pulp mills—an opportune movement for Suzano’s pulp business
Suzano, the world’s largest pulp producer and a global benchmark in bioproducts developed from eucalyptus, and Kimberly-Clark, a global leader in hygiene and personal care products, formed this year a global joint venture in the tissue market, with operations in more than 70 countries and a US$ 1.734 billion investment.
As an important pulp supplier for the value chain, Suzano has been monitoring a timely de-verticalization movement in mills in Europe and North America, driven by high operating costs. “We have spoken with three to four manufacturers about shifting from a verticalized model to an integrated model with Suzano, but nothing is definitive. If it happens, we will remove volume from lower-margin markets to supply these clients,” said Leonardo Grimaldi, Executive Vice President of Pulp Commercial and Logistics, during a press briefing.
Given this scenario, Grimaldi emphasized that the joint venture will not affect the pulp volumes the company sells on the market. “The contract with KC precedes the JV. They will remain a relevant client, with no impact on market pulp volumes,” he said.
At the same time, this context may open new business opportunities for the company, as units that previously produced their own raw material could begin purchasing pulp from Suzano.
According to the company, 15% of global short-fiber pulp production currently operates with negative margins, a percentage even higher for long fiber. In this context, Grimaldi described the current price level as “unsustainable” and expects an increase in permanent closures or unplanned maintenance shutdowns in the second half of the year.
Even in a challenging scenario, Suzano remains firm in its investment plan, focusing on increasing competitiveness, optimizing costs and strengthening cash generation. According to Marcos Assumpção, Executive Vice President of Finance and IR, the company is working to “emerge from this market cycle in an even stronger position.”
