Post: Strategic Shifts in Global Forestry

October 8, 2025

Strategic Shifts in Global Forestry

As we move through the second half of 2025, global market dynamics continue to shift in ways that demand our attention and strategic foresight. The recent escalation of U.S. tariffs under President Trump has introduced new complexities into the global pulp and paper industry—an industry that, of course, exerts strong influence over our hardwood log sales and chip exports to Asia and Europe.

The U.S. administration’s tariff policies have targeted imports from key trade partners, including China, Japan, Canada, and the EU. These measures have increased production costs for U.S. paper manufacturers, disrupted supply chains, and triggered retaliatory tariffs from affected countries. China, in particular, has responded with duties on U.S. goods, including pulp and paper products, reshaping trade flows and pricing strategies across Asia.

For our customers, these developments carry varying degrees of exposure. Japanese buyers are relatively insulated from direct U.S. tariffs but are affected indirectly through global price volatility and supply chain adjustments. Japan’s pulp and paper sector remains stable, though cautious. Our current Japanese customers are exposed only through the broader economic impact and are not directly trading with the U.S. Chinese pulp producers, however, are more directly impacted. With tariffs increasing the cost of U.S. pulp imports, this could drive changes to their sourcing strategies. That said, our major Chinese customer currently has no direct exposure to the U.S. market.

The price of fully bleached hardwood pulp remains a key barometer for our industry. Tariff-induced trade friction has led to margin compression and order delays for major pulp producers in both South America and China. Our competitors in Chile, Australia, Vietnam, and Thailand are also navigating these shifts. Southeast Asian suppliers, in particular, continue to benefit from proximity to Asian markets and lower freight costs.

As these forces play out, we continue to ensure that we remain relevant and competitive on the international stage. To that end, over the past few months, we have shifted significant focus to how the European Union Deforestation Regulation (EUDR) is influencing the sourcing strategies of major pulp and paper companies. We have long recognised that it is in our interests to work towards EUDR compliance. Over time, it has become clear that this is not just a strategic advantage, it is now a key imperative, and one we are actively integrating into our broader strategy, alongside the equally important drive to increase the volume of FSC-certified timber under the NCT banner.

For background, the EUDR comes into effect for large companies on 30 December 2025. EU member states view this as a landmark policy aimed at eliminating deforestation-linked products from EU supply chains and markets. It covers wood and wood-derived products, requiring exporters and suppliers to prove that their goods are deforestation-free (no forest cleared after 31 December 2020), legally harvested, and fully traceable down to the geolocation of origin. This will require suppliers to provide geolocation data, legal compliance documentation, and risk assessments.

Beginning in 2025, the EU Commission will benchmark countries—or parts of them— based on their deforestation risk, classifying them as low, standard, or high risk. Products from low-risk countries will be subject to a simplified due diligence procedure. Countries with high deforestation risk will face stricter scrutiny. Surprisingly, Brazil is currently classified as “standard risk”, while Russia and Myanmar are “high risk”. This classification affects inspection rates: 9% of shipments from high-risk countries must be checked annually, versus 3% from standard-risk countries. South Africa’s classification is not yet finalised, but our relatively strong forestry governance may place us in a favourable category, though this is not guaranteed.

For NCT, this presents both a challenge and an opportunity. Our industry is already known for its structured plantation model and strong environmental governance. As we continue aligning with EUDR requirements—particularly around traceability and due diligence, where we’ve already made significant progress—we are positioning ourselves as a trusted, sustainable supplier to environmentally conscious global markets. Even our Japanese and Chinese customers are beginning to enquire about our level of compliance, which is a clear indication of the far-reaching impact EUDR is having on our industry.

In addition to EUDR, we are also seeing a renewed surge in demand for higher levels of FSC certification, both in domestic and international markets, and across both Eucalyptus and Wattle supply chains. We are also actively working on compliance with the Sustainable Biomass Programme (SBP), which is particularly relevant to our growing involvement in energy-related markets.

Many of our members will already be aware of these developments. We have been working closely with service providers such as CMO and AES to raise our available levels of FSC-certified timber. We have moved quickly to put the necessary resources and technology in place to support these initiatives.

Compliance with EUDR, FSC, and SBP are now key cornerstones of NCT’s market-driven strategy in the short and medium term. It is in the interests of all members to take these developments into account as they plan their own paths forward in a rapidly evolving market. As always, we are here to guide and support our members through these transitions.

Written By: Danny Knoesen

Source: NCT Forestry Agricultural Co-operative Limited