Suzano Cuts Celulose Production Amid Tariff Uncertainty

Suzano, the world's largest exporter of cellulose, has announced a 3.5% reduction in production for the next 12 months due to uncertainty surrounding US tariffs on Chinese clients. The reduction is expected to result in a decrease of 450,000 tons of cellulose. The decision is attributed to the instability caused by US tariffs, which have impacted negotiations over prices.

The world's largest exporter of cellulose, Suzano, has announced a 3.5% reduction in production for the next 12 months due to uncertainty surrounding US tariffs on Chinese clients. The reduction is expected to result in a decrease of 450,000 tons of cellulose. The decision is attributed to the instability caused by US tariffs, which have impacted negotiations over prices [2].

Suzano's move comes amidst a challenging market environment, with the company indicating that current pulp volumes are not generating adequate returns. The production cut follows a similar move by competitor Bracell, which has shifted its focus to niche dissolving pulp [2].

The reduction in production is part of a broader strategy to manage costs and navigate the volatile trade landscape. Suzano has been proactive in mitigating risks, increasing U.S. inventory levels and diversifying its market reach to include China and Europe [1]. The company's financial metrics, despite a 10.2% year-on-year drop in Brazilian eucalyptus pulp prices, have shown resilience, with 2024 EBITDA reaching 23.8 billion reais ($4.2 billion) [1].

Analysts project 4% growth in 2025 and 16% in 2026 for Suzano, with 17 out of 18 analysts recommending a “buy” rating. A consensus price target suggests potential for a 41% return over the next 12 months [1].

The US tariffs, which have narrowed the trade deficit, have also led to a decrease in consumer goods imports and a sharp drop in the trade gap with China [3]. This shift in trade dynamics has created an opportunity for Suzano to capitalize on potential market reallocations, such as filling gaps left by US producers avoiding Chinese packaging paper due to retaliatory levies.

For investors, Suzano's strategy offers a blueprint for navigating trade uncertainty. Its focus on low-cost production, geographic diversification, and vertical integration creates a moat against external shocks. While short-term volatility is inevitable, the company's financial strength and operational flexibility position it to outperform in a restructured market.

References:
[1] https://www.ainvest.com/news/brazilian-pulp-industry-resilience-tariff-pressures-suzano-strategic-adaptability-long-term-2508/
[2] https://www.investing.com/news/stock-market-news/suzano-to-reduce-pulp-production-by-35-amid-challenging-market-93CH-4175212
[3] https://www.staradvertiser.com/2025/08/05/breaking-news/u-s-trade-deficit-hits-2-year-low-as-tariffs-squeeze-services-sector/