TSX:WFG - Post Discussion
Post by
retiredcf on Nov 22, 2021 8:08am
TD Notes
Trees Weekly
Lumber Prices Lift on Short-term Supply Constraint Concerns Downtime Sustains Tight Paper Packaging Markets
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Forest product equities in our coverage universe climbed last week, led by wood-product-weighted names. The average week-over-week share-price increase of 4.0% for our coverage universe outpaced a 1.0% decline for the S&P/ TSX Composite and a 0.3% gain for the S&P 500. In our coverage universe, strong gains for lumber and panel producers (average w/w improvement of 5.1%) offset sluggish performance from pulp & paper-weighted equities. Since recent lows in Q3/21, the average recovery for our coverage universe is 17.5%.
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Western SPF lumber prices are surging on expected B.C. supply constraints. The benchmark Western SPF 2x4 cash market price increased 12% last week to US$620/Mfbm and the nearest futures contract price rallied 29% to US$802/Mfbm. Although producers have not articulated downtime plans yet, B.C. transportation disruptions tied to severe flooding are expected to yield temporary production curtailments. We believe that price gains could also reflect a pending increase in duty deposit rates for Canadian shipments to the U.S. Price gains in western Canada were accompanied by positive momentum in eastern Canada, but lumber markets in the U.S. South were quiet.
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OSB markets were quiet last week. The benchmark North Central price of US $500/Msf held steady for five straight weeks. Market reports noted a firmer tone towards the end of last week.
Packaging markets hold gains as downtime keeps markets tight. RISI Fastmarkets published November paper prices indicate that North American containerboard prices held despite reports of modest pressure at the margins. Unplanned downtime at IP's mill in Prattville, Alabama, has added tension to prices. Domestic containerboard prices have climbed US$160-US$180/ton (+23-30%) over the past 14 months.
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