Bullboard - Stock Discussion Forum Domtar Corporation T.UFS

Forest Products Lumber & Wood Production

Domtar Corp makes and sells a variety of fiber-based products through its pulp and paper mills and its network of converting and forms manufacturing operations throughout the United States and Canada. The company operates under a single business unit: pulp and paper. This segment produces communication papers (copy, electronic imaging, and uncoated freesheet papers), specialty and packaging... see more

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Domtar Corporation > TD Notes

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Post by retiredcf on Apr 05, 2021 10:05am

TD Notes

Trees Weekly

Lumber Equities Rally as Extended Commodity Peak Continues Resilient Western SPF Markets; OSB Prices Keep Rising

Most forest product equities improved last week, led by lumber-weighted names. The average share-price gain for our coverage universe was 2.7% versus gains of 1.3% for the S&P/TSX Composite and 1.1% for the S&P 500. Last week's gains were heavily weighted to lumber producers, with Interfor (+11.8%) and West Fraser (+11.6%) leading the way. The average share-price decline for our coverage universe from recent peak levels has narrowed to 7.6%. This follows unprecedented appreciation from March 2020 through February 2021.
Lumber markets are demonstrating resilience in some regions. The Western SPF 2x4 (#2 and better) benchmark price improved US$20/Mfbm (+2%) w/w to US $1,045/Mfbm. This sets a record after prices flatlined over the preceding month. Prices in the U.S. South continued to moderate; the regional composite of US $895/Mfbm is down 5% from the early-March peak. Reports referenced order files extending into early-May for western Canadian sawmills (longer than normal) and "crosscurrents", but noted improved tone towards the end of the week.

OSB price gains accelerating in the West. The benchmark North Central OSB price increased another 2% last week to US$975/Msf — a record. Gains in western Canada were exceptional (+13% w/w to US$1,200/Msf). Anecdotal reports referenced frustrated buyers in the West and continued short-supply.

K-C leads the way with North American consumer tissue price efforts. Industry leader, Kimberly-Clark has proposed price hikes in the mid-to-high single digits for buyers in Canada and the U.S., effective late-June. We consider this a margin-preservation initiative intended to offset surging pulp prices. North American U.S. dollar-denominated northern bleached softwood kraft (NBSK) list prices have increased 26% over the past six months (spot prices are up 43% over this duration).