Core Insights - The report from Guotai Junan forecasts a significant increase in the production capacity of both softwood and hardwood pulp, expected to grow by 36 million tons from 2023 to 2035, leading to an expansion in wood demand by 136 million tons, with over 90% of this demand growth coming from China and South America [1] Group 1: Hardwood Demand and Supply - Hardwood demand is anticipated to grow rapidly, with eucalyptus showing a significant cost advantage [1] - From 2004 to 2023, the area of eucalyptus plantations in Brazil increased from 3.2 million hectares to 7.55 million hectares, although growth has slowed significantly since 2015 due to rising land prices [2] - The price of hardwood in Brazil is expected to increase by nearly 200% compared to 2000, while the global average hardwood price has only risen by about 40% during the same period [2] Group 2: Eucalyptus Production in China - Guangxi ranks sixth in forest area and has achieved leading timber production through eucalyptus plantations, with over 3 million hectares planted by 2022 [3] - The average yield of eucalyptus in Guangxi has declined since 2009 due to issues such as degeneration of clonal planting and high operational costs, indicating a need for improved forestry practices [3] - Future improvements in eucalyptus yield may be achieved through better seedling quality, diverse species planting, and scientific management practices [3] Group 3: Import Trends and Supply Sources - China's import of hardwood chips surged from 9.71 million tons in 2015 to 17.58 million tons in 2022, with the average import price peaking at $212 per ton in 2022 before declining [4] - Vietnam has become the primary source of hardwood chip imports for China, accounting for 71% of imports in the first half of 2025, with expectations for continued growth in eucalyptus and acacia planting in Vietnam [4] - Australia, the second-largest supplier, has increased its artificial forest area significantly, from less than 30,000 hectares in 1987 to 182.1 million hectares in 2023, with hardwood plantations making up 40.6% of this area [4]