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Bullboard - Stock Discussion Forum West Fraser Timber Co Ltd T.WFG

Alternate Symbol(s):  WFG

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... see more

TSX:WFG - Post Discussion

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Post by retiredcf on Oct 19, 2021 11:26am

TD Notes

September U.S. Housing Starts/Permits A Little Below Estimates Event

The U.S. Census Bureau released September 2021 U.S. housing data this morning.

Housing starts of 1.555 million units (seasonally adjusted annual rate, SAAR) were 3.6% below the consensus forecast of 1.613 million units. September SAAR starts declined 1.6% m/m as unchanged single-family units were offset by a 5.1% m/m decline in multi-family units. The multi-family data series is typically more volatile. U.S. new home construction comprises ~25% of North American lumber shipments and ~50% of North American oriented strand board (OSB) shipments.

Lumber-weighted equities: West Fraser (WFG-N,T), Canfor (CFP-T), Interfor (IFP- T), Western Forest Products (WEF-T), Resolute Forest Products (RFP-N,T).

OSB-weighted equities: Louisiana-Pacific (LPX-N), West Fraser (WFG-N,T).

Impact: SLIGHTLY NEGATIVE

September housing starts and permits represented five-month and one-year lows, respectively. One attenuating factor, in our view, is that weaker trends last month were primarily weighted to the less wood-intensive multi-family segment. We attribute the moderation to ongoing supply chain disruptions and labor shortages as home demand remains strong. The October confidence index for single-family homebuilders released yesterday improved m/m for the second consecutive month and remains solidly in positive territory.

Details

  • September single-family SAAR starts of 1.080 million units were unchanged m/m (the August reading was revised 0.4% higher). September single-family starts were 17.9% below the December 2020 cyclical peak of 1.315 million units (15-year high).

  • September building permits (SAAR) of 1.589 million units (one-year low) were 5.4% below the consensus forecast of 1.680 million units. Building permits decreased 7.7% m/m, led by an 18.3% m/m decline for multi-family (single-family permits moderated only 0.9% m/m), and were 15.6% below the January 2021 peak of 1.883 million units.

  • The lumber and OSB price recovery continues. The cash market Western SPF 2x4 price is US$600/Mfbm (highest level since early-July 2021) — up 56% versus the mid-August trough. The benchmark North Central OSB price of US$490/Msf is also at a three-month high after having rallied 26% versus mid-August lows.

     
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