Bullboard - Stock Discussion Forum 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... see more

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Domtar Corporation > TD Notes

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Post by retiredcf on May 03, 2021 7:48am

TD Notes

Trees Weekly

Wood Product Cycle Magnitude and Duration are Unprecedented Pulp Markets Approaching Apparent Peak

Most equities in our coverage universe declined last week in tandem with broader market volatility. Profit-taking countered generally positive Q1/21 earnings reports and ongoing commodity market gains. The average share-price decline for our coverage universe was 2.4% versus flat performance for broader North American equity indices. Losses last week were led by Resolute (-14.1% following a spectacular run over the past year). The average share price recovery from March 2020 lows across our coverage universe is 341.9%.
Lumber prices keep climbing with lengthy order files intact. The cash market Western SPF 2x4 price increased another 7% last week to US$1,420/Mfbm. This price is 405% above April 2020 lows and more than double the previous cyclical peak of US$655/Mfbm in Q2/18. The Western SPF price has exceeded US$1,000/ Mfbm for 11 consecutive weeks. Price improvement for other grades/regions was consistent with the benchmark. Management commentary from Q1 conference calls referenced extremely lean supply and order files that extend 5-8 weeks.
OSB price gains continue. The benchmark North Central OSB price of US $1,170/Msf increased another 4% for the week, and has improved 420% from the trough a little over a year ago. Market reports were consistent with recent weeks' commentary referencing "historic supply shortages" and sustained demand strength.

Reports of disjointed pulp market price increase efforts. Following an unprecedented rally over the past 5-9 months, there are signs of a peak emerging for softwood pulp markets. North American NBSK list prices (US$1,565/tonne in April) rallied 38% over the past five months. Some producers have proposed another US$100/tonne increase for May, but Domtar is reportedly holding prices flat. This follows reports that NBSK prices in China (net price range of US$980- US$1,010/tonne) have stalled.