Trees Weekly

P&FP Equity Gains Accelerate; Synchronized Commodity Strength Lumber Price Surge Continues; OSB Prices Mostly Gain Ground

  • P&FP share prices are climbing rapidly. The average share price improvement for our coverage universe last week was 8.8% — again outpacing gains of 0.7% for the S&P/TSX and 1.7% for the S&P 500 Composites. Positive momentum was spread across most key commodity concentrations, but was led by pulp-weighted equities (up 13.8% last week). Average share-price gains for our coverage universe since recent Q3/20-lows are 40.2%.

  • Surging lumber prices across all regions. The benchmark Western SPF 2x4 price climbed 6% week-over-week (+3% in the preceding week) to US$652/ Mfbm and has recovered 21% since the end of October. The U.S. South regional composite price (an important reference for IFP, WFT, CFP, and RFP) improved 5% w/w to US$527/Mfbm. Most mills are sold out through year-end and anecdotal reports referenced current demand that is typical of surging spring volume.

  • OSB prices start to recover. The benchmark North Central OSB price declined 2% to US$590/Msf, but prices in all other regions increased for the first time since mid-September; the OSB composite price increased 2% w/w. Field reports cited unusually strong demand and lean inventories through the channel.

  • Pulp and paper price momentum is positive for most grades. November North American pulp list prices were unchanged month-over-month, but spot prices trended positively and markets continue to improve in China. Several pulp producers have tabled price increases for December and January. This coincides with US$40/tonne newsprint price increase initiatives for Q1/21 and announced hikes for coated freesheet. We believe that Q1/21 North American price increases for containerboard and uncoated freesheet are possible in the coming weeks.