According to a research report by Guotai Haitong Securities (GTHT), global softwood and hardwood pulp capacity is projected to increase by 36 million tons from 2023 to 2035, driving timber demand expansion by 136 million tons, with over 90% of incremental demand originating from China and South America.

**Broadleaf Timber Demand Set for Rapid Growth, Eucalyptus Holds Cost Advantage** The combined capacity expansion of softwood and hardwood pulp is expected to spur significant demand for timber, primarily sourced from China and South America. Brazil's eucalyptus and Chile's shining gum exhibit superior growth efficiency compared to other broadleaf species like Acacia mangium. Major eucalyptus-producing countries include Brazil, China, India, Australia, Uruguay, and Chile.

**Brazil Leads Global Eucalyptus Production with Room for Yield Improvement** From 2004 to 2023, Brazil’s eucalyptus plantation area expanded from 3.2 million hectares to 7.55 million hectares. While growth averaged 8.1% annually from 2004 to 2014, it slowed to just 0.9% from 2014 to 2023 due to rising land prices, discouraging new forest investments. Consequently, Brazil’s hardwood timber prices surged nearly 200% from 2000 to 2024, far outpacing the global average increase of 40%. To counter this, Suzano has adopted modern cloning techniques and genetic improvements, potentially boosting yields by 15%.

**China’s Eucalyptus Focus: Guangxi’s Forestry Model Needs Upgrades** Guangxi ranks sixth in forest area but leads in timber output due to commercial eucalyptus plantations. Foreign and state-owned enterprises have driven industry growth, with plantations exceeding 3 million hectares by 2022. However, yields have declined post-2009 due to clone degradation, soil depletion, and high operational costs. Sustainable practices—such as improved seedlings, diversified species, and scientific management—could enhance long-term productivity.

**Eucalyptus Imports Decline as Domestic Supply Rises** China’s hardwood chip imports surged from 9.71 million tons in 2015 to 17.58 million tons in 2022, peaking at $212/ton before retreating amid weaker downstream demand and increased domestic supply. Vietnam remains the top supplier, accounting for 71% of imports in early 2025, with its plantation area expected to grow further. Australia, contributing 17%, has expanded plantations from under 30,000 hectares in 1987 to 1.82 million hectares in 2023, with hardwood species making up 40.6%.

**Risks:** Overseas supply chain disruptions, weak downstream demand, and currency fluctuations.