Scotia Capital Though he now sees the prices for wood products, including lumber, finishing above his projections in the second quarter, Scotia Capital analyst Benoit Laprade expects a decline through the remainder of the year and into 2023.
“Q2/22 lumber prices above expectations,” he said. “However, by the end of the quarter growing economic headwinds have taken a significant toll on lumber prices (and lumber equities alike). As expected, lumber prices have dropped significantly from unusually high levels and Q2/22 prices are now expected to average $805 and $680 respectively for W.SPF and SYP (up from the previously expected $625 and $650, respectively). However, high(er) mortgage rates combined with inflation running at decades-high levels have created growing uncertainty, leading to extremely cautious lumber buying patterns. With SPF prices now estimated to be at, or very close to, breakeven for the average B.C. producer and with stumpage rates expected to increase on July 1, we expect prices to stabilize soon as buyers likely have to resume purchases to meet ongoing customers’ needs.”
Mr. Laprade adjusted his second-quarter estimates to account for “meaningfully higher than expected prices for virtually all grades of wood products, of communication papers and of market pulp and a slightly weaker than expected CAD. Containerboard prices were in line with expectations.”
However, he reduced his target prices of group of forest and wood product companies in his coverage universe on Friday after introducing his projections for fiscal 2024 based on his expectation for price declines.
His changes include:
- Canfor Corp. (, “sector outperform”) to $42 from $45. The average on the Street is $41.67.
- Cascades Inc. ( “sector outperform”) to $17 from $17.50. Average: $13.71.
- Interfor Corp. (“sector outperform”) to $43 from $50. Average: $48.
- West Fraser Timber Co. Ltd. ( “sector outperform”) to $143 from $157. Average: $121.93.
- Western Forest Products Inc. (“sector perform”) to $2.50 from $2.75. Average: $2.65.
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