Lumber and OSB prices both move upwards – According to Random Lengths (“RL”), the Framing Lumber Composite increased $34 w/w to $1,217 as the composite moved upwards after last week’s decline as buyers began to pad inventories. In OSB markets, the OSB Composite increased $88 w/w to $1,244 as transportation delays continued to be an issue. For next week, RBC Elements™ forecasts that the RL Framing Lumber Composite will increase $59 w/w to $1,276 and that the RL OSB Composite will increase $58 w/w to $1,302.

Domtar announced more pulp price increases – According to RISI, Domtar announced a $100/mt NBSK price increase and a $75/mt SBSK price increase for North America effective March 1st. This is the first March price increase announcement for softwood pulp. The company also slated a fluff pulp price increase of $110/mt in North America and Europe, following prior announcements from International Paper, Rayonier Advanced, and Suzano. In Europe, SCA and Södra both announced additional February price increases. Europe remains under supplied due to the ongoing UPM strike.

Old newspaper prices are surging – According to RISI, declining newspaper supplies and increased demand for molded fibre/paper insulation are contributing to a tighter supply-demand balance. In particular, sorted clean news (“SCN”) reached a new all-time high in October and remains elevated at $183/st.

Party like it’s 2018? – The current lumber market is reminiscent of 2018, when railcar shortages caused mill inventories to build up materially during the winter/spring and pushed prices up to what was at the time record levels. Over the past few weeks, Random Lengths has reported that some BC mills have declared force majeure due to their inability to ship. We expect that lumber futures will be volatile over the coming months as market participants will not want to be caught long when the supply chain normalizes. Rail car shortages are also having a significant impact on pulp markets, with Alberta Pacific Forest Industries curtailing production earlier in the year and now Paper Excellence announcing an indefinite curtailment at its Meadow Lake, Saskatchewan BCTMP mill. According to Paper Excellence, “CN Rail… has failed to transport Meadow Lake’s pulp production to ports for months… [and] the mill has exhausted local storage facilities”.