Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Morning Wood Commentary (05-Sept-17)

|Includes: Canfor Pulp Products, Inc. (CFPUF), CFPZF, CFXTF, IP, KS, LPX, MERC, OSB, RYAM, WFTBF, WRK
Summary

W. SPF prices moved $10 higher during the week to $395/mfbm, stemming what was becoming a bit of a slide for the key lumber grade

Prices in Western Canada continue to pull back following a spike in spot prices during the BC Forest Fires that shut down a Norbord mill

Coming out of left field, APP / Paper Excellence appear to have won the biding process for Eldorado Brasil Celulose (at a cost of $4.7 Billion)

Lumber 

  • W. SPF prices moved $10 higher during the week to $395/mfbm, stemming what was becoming a bit of a slide for the key lumber grade
  • Southern Yellow Pine prices moved the opposite direction, falling $3 during the week to $360/mfbm. This will be one to follow in the coming weeks as the market further digests the impacts of Hurricaine Harvey on re-build needs
  • I would expect the incremental demand from Harvey to support Southern Lumber prices heading into the slower Winter season
  • Another reason for optimism on Southern grades comes from the relative weakness we are seeing in the SYP / W. SPF Ratio, which remains at historically low levels

Oriented Strand Board

  • Prices in Western Canada continue to pull-back following a spike in spot prices during the BC Forest Fires that shut down a Norbord mill
  • North Central pricing (which is the most quoted) held flat at $414/msf
  • Key point to watch will be the pace of capacity adds and how well the two dominant players can manage new additions 

Pulp

  • Coming out of left field, APP / Paper Excellence appears to have won the biding process for Eldorado Brasil Celulose (at a cost of $4.7 Billion)
  • While they were likely forced sellers due to ongoing legal issues at the controlling Batista family, the price still screens quite expensively
  • With such an aggressive buyer in the market, it would be interesting to gauge the appetite for a softwood pulp manufacturer like Mercer International (NASDAQ:MERC)
  • Market pulp pricing continues to strengthen even with major capacity adds coming online, which should support a brighter fundamental outlook for the sector

Containerboard

  • KapStone (NYSE:KS) announced a price hike for several of its specialty paper grades effective October 1st

Comps Table

Comps Table 050917

Disclosure: I am/we are long OSB.