Suzano starts up Cerrado project in Brazil

New Cerrado project is set to add 1.1 million tonnes of global BHK capacity in second half of 2024

The post Suzano starts up Cerrado project in Brazil appeared first on Fastmarkets.

Brazil’s Suzano started its new massive pulp project in Brazil the Cerrado mill. On Sunday, July 21 the mill will increase capacity by 2.55 million tonnes per year of bleached eucalyptus kraft (BEK) market pulp.

The project comes with the aggressive goal of reaching a structural cash cost – not including outbound logistics – of around $100 per tonne when the ramp up is completed, with the value estimated to be 30% lower compared with the cash cost presented by the company in the fourth quarter of 2023.

Taking into account announcements for this year, including the Cerrado project, 1.1 million tonnes of new hardwood market pulp in global capacity will reach the market in the second half of the year, according to Fastmarkets’ World Pulp monthly estimates.

That figure includes China’s Liansheng Pulp & Paper (Zhangpu) project that started operations in June and the stabilization of the Kemi mill in Finland.

Suzano’s Cerrado is the last of the large projects announced for Latin America to start up, after UPM concluded its Paso de Los Toros mill in Uruguay in 2023, and Arauco kicked off its MAPA project earlier in that same year.

In 2024 alone, capacity increased by 3.85 million tonnes in annualized production, in a market that totaled 40.8 million tonnes of hardwood market pulp in 2023.

“That is still a significant influx of new supply. The impacts to the market are being felt more directly because the supply is geographically diverse and able to reach buyers without shipping delays,” Fastmarkets’ senior economist for pulp Patrick Cavanagh said.

According to Cavanagh, BEK markets are particularly well supplied “since the Cerrado mill is coming quickly on the heels of the Paso de los Toros, MAPA, and Guaíba expansion projects, which just last year injected 4 million tonnes of new BEK supply.”

In the coming two years, however, there are no additional large pulp projects starting up in Latin America, with future projects announced for the region still in the approval or financial structure stage.

In 2025, Fastmarkets’ data show that at least 1.4 million tonnes of hardwood pulp capacity will come online with APP’s OKI expansion in Indonesia.

Looking ahead

Suzano’s former chief executive officer and current member of the board Walter Schalk told Fastmarkets that the start of the Cerrado Project represents a historic milestone in the company’s trajectory of growth and innovation.

“This new mill expands our production capacity and demonstrates our commitment to sustainability and operational efficiency,” he said.

Schalka noted that Suzano is planting more trees than needed to ensure a robust future supply of wood, allowing it to explore new opportunities and meet growing global demand, especially in Southeast Asia.

“With increasing urbanization and income growth, demand for products derived from pulp continues to grow, and Suzano is prepared to lead this advance,” the executive said.

According to Suzano, estimates for the plant’s production are around 900,000 tonnes this year, with 2 million tonnes expected to be produced by the end of the first 12 months of operation. 

The company estimates a learning curve period of approximately nine months.

The Cerrado project was part of a 22 billion Reais ($3.9 billion) investment, of which 15.9 billion Reais were allocated to the construction of the plant and 6.3 billion Reais to initiatives such as the establishment of the planting base and logistics structure.

The new mill represents a 20% increase in the company’s production capacity, reportedly of 10.8 million tonnes of market pulp and 1.06 million tonnes of integrated capacity. In 2023, Suzano reported sales of 11.5 million tonnes of pulp.

Want to learn more about price movements in the global pulp market? We provide a range of market intelligence, including short-term forecasts, price data and market coverage to keep you one step ahead of the market. Speak to our team and find out more today!

The post Suzano starts up Cerrado project in Brazil appeared first on Fastmarkets.