PAUL QUINN
OTTAWA – Lumber and OSB up w/w. According to Random Lengths (“RL”), the Framing Lumber Composite increased $3 w/w to $376 and the OSB Composite increased $5 w/w to $419. For next week, RBC ElementsTM forecasts that the RL Framing Lumber Composite will increase $10 w/w to $386 and that the RL OSB Composite will decrease $9 w/w to $410.
Manulife announces first close on Forest Climate Fund. Manulife Investment Management announced an initial close of its Forest Climate Fund, securing ~$225MM toward its $500MM targeted offering. The fund will focus on creating carbon credits through sustainable forest management practices on timberland assets while also utilizing conservation easements, non-timber income generation strategies, and limited timber harvests to capture financial returns.
Graphic paper demand remained slow in October. According to the PPPC, North American printing and writing paper demand was down 30.9% y/y but up 0.9% m/m to 758k tonnes in October. Demand for uncoated woodfree (UFS) paper was 25.3% lower than last year but increased 14k tonnes (+3.5%) m/m to 413k tonnes in October. On a year-to-date basis, demand for printing and writing paper and UFS through October declined by 27.6% y/y and 21.1% y/y, respectively. RISI published last week that uncoated freesheet (50-lb offset rolls, 92 bright) slid $30/tonne m/m to $1,270/tonne in November.
Skeena Sawmills up for sale. As reported by the Terrace Standard, Skeena Sawmills in Terrace, BC, is under receivership and was soliciting buyer bids as of November 14. Court filings indicate the sale package includes a sawmill with an annual capacity of 80 mmfbm (single shift basis) and a pellet plant capable of producing 90k tonnes per year. The sawmill had taken two temporary closures earlier this year.
Existing-home sales fall to the lowest level in 13 years. The U.S. National Association of Realtors reported October existing home sales of 3.79MM (SAAR) units, which was down 4.1% m/m and 14.6% y/y to the lowest level since August 2010. The total inventory of unsold housing in October was 1.15MM units (+1.8% m/m; -5.7% y/y), or the equivalent of 3.6 months’ supply at the current monthly sales pace.
Read-throughs from Lowe’s (covered by Steven Shemesh): With Lowe’s Q323 results released this week, management reiterated a bullish long-term outlook for the home improvement industry led by favorable housing trends (aging housing stock, with the median age of U.S. houses at 41 years) and favourable demographic trends (250,000 millennial household formations expected yearly through 2025).
Pulp shipments to China slow m/m in October. Pulp shipments in October were up 4.5% y/y (hardwood +8.7%; softwood +0.1%). On a m/m basis, shipments were down 12.7%, driven by a 3.3% decrease in softwood and a 19.5% decrease in hardwood. Shipments to China of ~1.7MM tonnes were up 25.5% y/y and remained the largest driver of stronger y/y global shipments, although shipments were down 17.7% m/m from the record high in September (~2.1MM tonnes). Despite the steep m/m decline, we note that October was still the fourth-strongest month for shipments to China since December 2020.
RBC Dominion Securities, Paul Quinn, Analyst
