Trees Weekly
Measured Wood Product Price Recovery Continues Recycled Fibre Costs Keep Climbing
Forest product equity performance was negative last week, led by lumber- weighted names. The average week-over-week share-price decline of 4.2% for our coverage universe was more significant than declines of 0.7% for the S&P/ TSX Composite and 0.6% for the S&P 500. We attribute last week's negative trend to investors digesting recent gains and downward revisions to consensus H2/21 estimates. The average sector gain from recent lows is still 11.3%.
Lumber prices are creeping higher. The Random Lengths framing lumber composite price of US$445/Mfbm improved 6% w/w, with gains registered across most regions, grades, and dimensions. Periodicals referenced more cautious buying than the previous two weeks, but cited market participants' view that most excess inventory and the repair & remodelling level have churned through the system.
OSB prices still improving, albeit at a slower pace. The North Central price of US$450/Msf increased 2% last week — the fifth consecutive week of gains. This price is still down 67% from the early-July peak, but has improved 15% since mid-August. Anecdotal reports indicated slowing order files than recent weeks, but noted still relatively tight supply, partly tied to MDI resin availability constraints.
Preliminary September pulp price survey shows further erosion. Fastmarkets RISI reports that September prices of northern bleached softwood kraft (NBSK) pulp slipped across most regions. List prices in North America declined 2% to US$1,510/tonne and effective transaction prices in China dropped another 4% to US$815/tonne. The spot U.S. NBSK price was flat at US$810/ tonne. Most observers expect that softwood pulp prices will level off by early- Q4/21 as maintenance downtime season kicks into gear.