CHILE (From news reports) -- Chilean industrial conglomerate Empresas Copec said that the Chinese market for its forestry products could become more challenging if paper makers struggle to boost sales amid uncertainty over U.S. tariff policies.

"Most of our customers that export, especially to the U.S., really don't know what the price of their goods is going to be," said Cristian Infante, who heads Copec's forestry arm Arauco, in a presentation. "So they're trying to buy as little as possible."

Arauco, which sells pulp and wooden panels worldwide, contributes the bulk of Copec's earnings, but saw its core earnings dip over 22% in the first three months of 2025 as pulp prices fell and it shipped smaller volumes.

Copec said although prices increased at the start of 2025, they began to deteriorate in March "mainly due to the trade war," which caused Chinese paper makers to source locally to avoid forward purchasing agreements with long delivery periods amid shifting prices. It reported a similar pattern in Europe.

According to analysts at Scotiabank, Copec's realized average pulp prices stood at $678 per metric ton over the first quarter, down 11% from a year earlier.

Infante warned that prices could continue to go down in May.

"When Chinese customers feel that the prices are close to the bottom, they will start talking. When that will be, that's a very good question," he added, noting that recent news on talks between the U.S. and China had made futures markets jump.

Chinese demand, he said, was "pretty good" and supported a solid market if tariff uncertainties are lifted.

Regarding Copec's U.S. market, Infante said he considered the market stable for the time being, although costs had increased for components of resins used in wood panels amid volatility over new import tax policies.

"I wouldn't say it's booming," he said. "All this volatility that we've seen due to the tariff issue has affected the market."

In Europe, meanwhile, Copec said uncertainty and concerns are growing in the face of the possible implementation of new U.S. tariffs and potential trade conflicts with other countries.

The comments come as Arauco begins construction of a $4.6 billion pulp mill project, named Sucuriu, in Brazil. The plant is expected to produce some 3.5 million tons of pulp per year and launch operations by the end of 2027.