West Fraser Timber Co Ltd WFG

Primary Symbol: T.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 Jul 04, 2022 9:51am

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TD Notes

Trees Weekly

Forest Product Equities Settle After Sharp Downturn Lumber Prices Recovered Last Week; OSB Prices Stabilized

Most forest product equities bounced last week following a sharp correction from Q1/22 highs. The average share-price improvement of 2.9% for our coverage universe last week contrasted against declines of 1.1% for the S&P/ TSX Composite and 2.2% for the S&P 500. Gains for our coverage universe were weighted to wood-product-focused equities, in tandem with a more positive tone for lumber commodity markets. On average, share prices of our coverage universe are 27.3% below year-to-date peaks.
North American lumber markets gained positive momentum last week. The benchmark Western SPF 2x4 price improved 5% last week to US$630/Mfbm and are up 14% over the past three weeks. Prices are still 55% below recent peaks 15 weeks ago, but sentiment has improved — at least temporarily — as downtime in western Canada has accumulated and orders have turned the corner.
OSB prices are stabilizing. The benchmark North Central OSB price was flat w/ w at US$375/Msf — still the lowest point in more than two years and down 71% since late-March. Market commentary noted buyers wading back into the market late in the week to meet immediate needs.
The forest products industry exposure to slowing macroeconomic activity varies across the commodity spectrum. This note provides an overview of long-run North American forest product demand trends. We compare commodity- specific 10-year demand CAGR rates against peak-to-trough demand trends during the 2008-2009 recession. During that recession, North American tissue and global pulp volumes were relatively resistant to broader economic headwinds, reflecting those commodities' relatively inelastic demand. Although TD Economics does not forecast a recession (respective 2022 and 2023 GDP growth forecasts: 3.7% and 1.7% in Canada; 2.2% and 1.4% in the U.S.), it is informative to consider potential demand downside.