Pulp & Paper

Brazil is a highly efficient country in pulp production. Its high competitiveness comes from very favorable soil and climate conditions and from a long history of investment in forestry research and development, carried out both by the main companies in the sector and by research bodies. As a result of this competitiveness, national pulp production has shown high growth since the early 1990s.

As pulp is considered almost a commodity, with small differences originated from the type of wood fiber used for its manufacture, competition in industry takes place by price. Therefore, the most competitive producer is the one that operates with the lowest manufacturing cost, with wood being the main cost component.

As the freight for wood is significantly higher than the freight for pulp, globally the production of this commodity tends to be concentrated close to high productivity forests, so that the industrial unit is located at the lowest possible average distance from the planted forest base. Pulp outflow logistics is also an important factor, as is the industrial scale, which is essential for reducing unit consumption of inputs (mainly labor, chemicals and energy).

In the paper segments, however, the logic is different. Production tends to be concentrated close to consumer markets, due to the complexity of the distribution chain with a high number of SKUs, the need (in many types of papers) to provide technical assistance to consumers (such as printers), from direct sales to end consumer of some types of paper, increasing the need and importance of the brand and the low density or added value, making freight over long distances more expensive (especially in the case of tissue paper and corrugated cardboard made from recycled paper).