Paul Quinn

Lumber prices increased… by $5 w/w to $422, while the OSB Composite increased by $10 w/w to $307. For next week, RBC Elements™ forecasts that the RL Framing Lumber Composite will increase $7 w/w to $429, and the RL OSB Composite will increase $9 w/w to $316.

Highlights from the 2023 COFI Convention. The two-day convention included the who’s who of the BC Forest Products industry with wide-ranging discussions on forest policy, First Nation (FN) reconciliation, a move to a higher value, lower volume industry, optimizing carbon returns and technology utilization:

• Harvest volumes continue to decline; More capacity closures expected in H223 — We spoke to a number of private companies who were analyzing future production levels against lower sawlog availability. We expect to see 2-3 mills permanently close over the next 6-12 months.
• One Sky’s Prince Albert, Saskatchewan OSB mill delayed — Pending financing, One Sky’s 600 mmsf/yr OSB mill is expected to be pushed out to 2025 or later (we had forecast the mill to come online in 2024). We believe the delay of this capacity addition will be incrementally positive for the OSB market.
• First Nation participation increasing — The provincial government is committed to increasing the FN share of stumpage and companies continue to work on partnerships, joint ventures and capacity building with the 204 FNs in BC.
• BC NDP government remains committed to their Vision Paper — Released in June 2021, the report outlines specific outcomes for their plan to revitalize the industry. We believe these changes will lead to a smaller, less competitive, but more diversified industry.

Lumber and OSB prices increased. According to Random Lengths (“RL”), the Framing Lumber Composite increased by $5 w/w to $422, while the OSB Composite increased by $10 w/w to $307. For next week, RBC Elements™ forecasts that the RL Framing Lumber Composite will increase $7 w/w to $429, and the RL OSB Composite will increase $9 w/w to $316.

March housing starts preview. The U.S. Census Bureau will release U.S. housing starts data for March before the market opens on April 18. Consensus estimates are calling for housing starts of 1,400k SAAR (-3.4% m/m, -18.4% y/y) and permits of 1,450k SAAR (-4.9% m/m, -22.8% y/y). In Canada, the consensus is for total starts of 252k SAAR, which would be an increase of 3.3% m/m and 3.2% y/y. In February, U.S. housing starts were significantly above expectations at 1,450k SAAR (vs. consensus at 1,310k SAAR), while housing permits were also well above expectations at 1,524k SAAR (vs. consensus at 1,345k).

Conifex files claims against Province of BC and BC Hydro. On April 12, the company announced that it had filed a petition in the Supreme Court of BC seeking judicial review of the Lieutenant Governor In Council of BC’s recent Order In Council (“OIC”), which directed the BC Utilities Commission to issue orders relieving BC Hydro of its obligation to supply service respecting cryptocurrency mining projects for a period of 18 months. The company has concurrently filed a notice of a civil claim against BC Hydro in the Supreme Court of BC seeking an order requiring BC Hydro to supply service to Conifex’s high performance computing projects which have effectively been paused as a result of the OIC.

Louisiana-Pacific announces first production of LP SmartSide at its Sagola facility. The company announced the first production of LP SmartSide products at its Sagola, Michigan facility occurred on March 15, 2023, following the completion of the mill’s conversion project.

Interfor updates diversity target for its board of directors. On April 6, the company announced that it has committed to a diversity target that at least 30% of its board members will be women by its annual general meeting of shareholders in 2024.

Pulp prices slide. Preliminary April list prices for US NBSK were down 2.4% m/m to $1,610/tonne, while SBSK was down 2.8% m/m to $1,565/tonne.