Post by
lifeisgood1010 on Jul 20, 2022 11:35am
Corton Capital latest comments(Russia...)
• Russian Wood Export Statistics start to reflect international trade sanctions – In May, Russia’s exports of lumber to China fell 18.7% year-over-year according to Lesprom Analytics. The principal reason we believe is due to large retail chains like Ikea pulling orders from countries producing products made with Russian wood. On June 17, Sveza – the leading Russian plywood producer – announced that its Russian plywood plants were operating at 20-40% of capacity due to trade sanctions.
As illustrated in the above chart, lumber prices “bottomed out” on June 10 at US$555 and have since rebounded to US$630. One interesting observation is that a pattern seems to be forming – the price rebounds are happening over a six-month period while the price retreats are lasting only 3 months. We believe this is due to a “tug-of-war” between producers and buyers. At higher prices the buyers, in particular the large box stores, are working down inventories. When prices fall dramatically, the producers are reducing their production rates. Currently there are 15 sawmills located in the B.C. Interior that are taking substantial downtime. Canfor is leading the way with a rotating two-week shutdown at most of its Western Canadian sawmills during July and August. We are forecasting that, similar to Q3’21, the shutdowns will result in a significant price recovery and prices will rebound sharply over the next several months. WHAT’S ON OUR RADAR SCREEN? Q2’22 Earnings – Starting with Weyerhaeuser and Canfor on July 29, companies held in the Global Timber Fund will begin reporting earnings for the quarter ended June 30. Lower U.S. Lumber Duty Deposit Rates - On or about August 3, the combined anti-dumping and countervailing duty rate on Canadian softwood lumber imports will drop by 35% from the current rate of 17.9% to 11.6%. The new rates are the result of the U.S. Department of Commerce’s third Administrative Review. Canfor’s new rate will actually drop to 6.75% from 19.54%