Interfor Corp T.IFP

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Trees Weekly

Lumber Futures Rally on Downtime; Equities Spinning Their Wheels Pulp Prices Under Pressure Across Grades and Regions

• Most forest product equities' share prices declined last week, mirroring broader market volatility. On average, names in our coverage universe declined another 2.4% last week, led by WEF (down 12.1%) and MERC (down 8.7%). Commodity lumber producers were relatively resilient (up 1.0%, on average), supported by a shift in commodity market momentum. Last week's sector trends compared with a 2.0% decline for the S&P/TSX Composite and a 1.4% gain for the S&P 500.

• Benchmark lumber prices climbed last week. The Western SPF 2x4 (#2 & better) cash price ended last Thursday at US$360/Mfbm — up 1% w/w, but still close to the two-month low and 22% below early February highs. The nearest Western SPF futures contract improved 9% during the week to US$452/Mfbm as unconfirmed reports of incremental western Canadian downtime led to improved sentiment.

• OSB prices are stable. The benchmark North Central OSB price ended last week at US$250/Msf, flat for the past five weeks. Prices in other regions were little- changed. Weather remains the dominant factor.

• The preliminary list price of Northern Bleached Softwood Kraft (NBSK) pulp in North America declined 1% m/m in March to US$1,650/tonne. This represents a 9% decline versus the mid-2022 peak. The average net transaction price for NBSK pulp imported into China is US$888/tonne, down 2% m/m and 12% below the July 2022 peak.

• Containerboard prices remain stable. RISI Fastmarkets reported that the March price for 42-lb. unbleached kraft linerboard was unchanged m/m at US$860/ton. Between October 2022 and February 2023, prices declined US$70/ton, or 8%.