Bullboard - Stock Discussion Forum 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... see more

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West Fraser Timber Co Ltd > TD Notes

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Post by retiredcf on Nov 17, 2021 11:11am

TD Notes

Oct. U.S. Housing Starts Shy of Consensus; Other Data Positive Event

The U.S. Census Bureau released October 2021 U.S. housing data this morning.

Housing starts of 1.520 million units (seasonally adjusted annual rate, SAAR) were 3.7% below the consensus forecast of 1.579 million units. October SAAR starts declined 0.7% m/m as a 3.9% m/m decline in single-family units was mitigated by a 6.8% m/m increase in multi-family units. U.S. new home construction comprises ~25% of North American lumber shipments and ~50% of North American oriented strand board (OSB) shipments.

Lumber-weighted equities: West Fraser (WFG-N,T), Canfor (CFP-T), Interfor (IFP- T), Western Forest Products (WEF-T), Resolute Forest Products (RFP-N,T).

OSB-weighted equities: Louisiana-Pacific (LPX-N), West Fraser (WFG-N,T).

Impact: NEUTRAL

October housing starts represented a six-month low, but strong quarterly results for big box retailers indicate a robust demand rebound for repair and remodeling activity. Starts trends remain bumpy as ongoing material, labour, and lot shortages constrain activity, but demand for new home construction is strong as evidenced by the confidence index for single-family homebuilders; the November reading represented the third consecutive m/m increase and remains solidly in positive territory.

Details

October single-family SAAR starts of 1.039 million units declined 3.9% m/m to the lowest level since August 2020. October single-family starts were 21.0% below the December 2020 cyclical peak of 1.315 million units (15-year high).
October building permits (SAAR) of 1.650 million units were 1.2% above the consensus forecast of 1.630 million units. Building permits grew 4.0% m/ m (September permits represented a 13-month low) but were 12.4% below the January 2021 peak of 1.883 million units. Single-family permits increased 2.7% m/m and multi-family permits increased 6.6% m/m.
Big box results and guidance point to robust repair and remodeling demand. Home Depot and Lowe's each reported better-than-expected Q3/21 sales, earnings, and growth forecasts over the past two days.
Mixed trends for lumber and OSB prices. The cash market Western SPF 2x4 price is US$570/Mfbm — up 3% versus last Friday but down 8% versus the mid- October peak. SYP prices have been more resilient. The benchmark North Central OSB price has been unchanged since mid-October at US$500/Msf, representing a 28% rally versus mid-August lows.