West Fraser Timber Co Ltd T.WFG

Alternate Symbol(s): WFG

Forest Products Lumber & Wood Production

West Fraser Timber Co. Ltd. is a diversified wood products company. The Company is engaged in manufacturing, selling, marketing and distributing lumber, engineered wood products, including oriented strand board (OSB), laminated veneer lumber (LVL), medium-density fiberboard (MDF), plywood, particleboard, pulp, newsprint, wood chips and other residuals and renewable energy. Its products are used in home construction, repair and remodeling, industrial applications, paper, tissues, and box materials. Its segments include Lumber, North America engineered wood products (NA EWP), Pulp & Paper and Europe EWP. Its business comprises lumber mills, OSB facilities, renewable energy facilities, pulp and paper mills, plywood facilities, MDF facilities, particleboard facilities, LVL facility, treated wood facility, and veneer facility. The Company operates approximately 58 facilities in Canada, the United States, the United Kingdom and Europe. It also offers wood preservation services.

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West Fraser Timber Co Ltd

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Post by retiredcfon Aug 15, 2022 12:26pm

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Post# 34896767

TD Notes

Trees Weekly

FP Equities Traded Higher Last Week in Tandem with Broad Markets Pulp Price Shows Signs of Weakness

Forest product equity performance was positive last week. The average sector share-price increase last week was 5.0%, compared with gains of 2.9% for the S&P/TSX Composite and 3.3% for the S&P 500. With the exception of LPX (cautious reaction to tempered H2/22 guidance), each name in our coverage universe posted gains, led by MERC (positive reaction to surging power prices in Germany and recent growth initiatives) and CAS (rebound following a negative reaction after lower tissue margin/higher capex guidance the previous week). The average year-to-date decline across our coverage universe is 4.2%, with a wide variance around this figure.

North American lumber prices firmed up for some grades. The benchmark Western SPF 2x4 price improved 2% last week to US$600/Mfbm following a 12% decline the previous two weeks. We attribute some strength for Canada- based prices to WFG's announcement for planned near-term permanent capacity closures in the B.C. Interior. The total is relatively small (<0.5% of North American capacity), but is an important initiative from the market leader, which we expect will be followed by others in the months to come.
OSB prices drift lower across major regions. The benchmark North Central OSB price declined 2% w/w to US$435/Msf. Price declines were more pronounced in eastern Canada and the U.S. Southwest (down 5% and 6%, respectively). Market commentary referenced slowing single-family new home construction trends.
Spot North American pulp prices have started to moderate. In a preliminary survey, RISI Fastmarkets reports that spot northern bleached softwood kraft (NBSK) prices declined US$30-US$40/tonne in August (~4% from the record in July), while list prices held steady. This was the first spot price decline since last November. Reports noted increased supply, given a slowdown in demand from China, and minimal industry downtime.