Domtar Corporation T.UFS

Forest Products Lumber & Wood Production

Domtar Corp makes and sells a variety of fiber-based products through its pulp and paper mills and its network of converting and forms manufacturing operations throughout the United States and Canada. The company operates under a single business unit: pulp and paper. This segment produces communication papers (copy, electronic imaging, and uncoated freesheet papers), specialty and packaging papers (papers used for coating and laminating applications), and pulp products (softwood, fluff, and hardwood pulp). Domtar exports its products to diverse end users worldwide, including merchants, retail outlets, stationers, printers, publishers, and converters. Communication paper products are the company's most profitable product line, and most of the firm's sales flow from the United States.

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Domtar Corporation

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Post by retiredcfon Mar 15, 2021 8:31am

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Post# 32797069

TD Notes

Trees Weekly

Most P&FP Equities Posted Modest Gains Last Week
Lumber Prices Approach Apparent Peak; OSB Prices Still Climbing

P&FP share-price trends were generally positive last week, with all but two equities in our coverage universe posting gains. The average share-price increase for our coverage universe was 2.1% versus gains of 2.6% for both the S&P/TSX Composite and S&P 500 Composites. Positive performance last week was led by Louisiana-Pacific (+8.3%) as oriented strand board (OSB) commodity prices continued to surge, setting new records. The average share-price decline for our coverage universe from recent peaks is 9.9%, but prices are still up an average of 257.2% from April 2020 trough levels.
Lumber prices crept higher in some regions, but overall momentum has slowed. The Western SPF 2x4 (#2 and better) cash market price was flat at US $1,025/Mfbm (a record) for the third straight week. The Random Lengths Framing Lumber Composite (RLFLC) price increased 1% (to US$1,044/Mfbm), led by utility grades and some high-value grades (e.g., Western Red Cedar). Anecdotal reports cited buyer "fatigue", but order files remain extended.
Relentless OSB price gains. The benchmark North Central OSB price increased another 2% last week to US$915/Msf — a record. Gains in other regions (e.g., the South West) were more pronounced. Reports mentioned ongoing supply scarcity.
March pulp price hikes successfully implemented; more on deck for April. Preliminary North American softwood pulp list prices increased US$120/tonne this month (+8-9%). This builds on evident positive momentum since last December as producers benefit from lower mill inventories, unplanned downtime, and resurgent demand. Resolute Forest Products has proposed another US$145/tonne increase in April, which would take the list northern bleached softwood kraft (NBSK) price to US$1,565/tonne. Although fundamentals have improved, we are skeptical that there is enough support for accelerating gains from current levels.