Lumber down, OSB up w/w. According to Random Lengths (RL), the Framing Lumber Composite decreased $15 w/w to $388 and the OSB Composite increased $10 w/w to $374. For next week, RBC Elements™ forecasts that the RL Framing Lumber Composite will decrease $20 w/w to $368 and that the RL OSB Composite will increase $23 w/w to $397.
RBC Capital Markets will host its Forest Products Conference on Tuesday, December 5, in Toronto. Our annual Forest Products Conference will feature a series of in-depth discussions with senior executives in the industry, and highly interactive one-on-one meetings and small group discussions. Companies attending include CAS, CFP, DBM, IFP, LPX, MERC, WEF, WFG, and WY. Please contact your RBC Capital Markets Institutional Salesperson for more information.
Paper & Forest Products Q323 preview. Please click here to access our preview, or see Exhibit 1 of this note for our reporting schedule. Next week will also see reporting from Packaging Corp. on October 23, providing a read-through to the containerboard names ahead of International Paper reporting on October 26 and the release of FBA and AF&PA data for Q323 on October 27.
Containerboard prices hold, CRB falls $20/ton. According to RISI, October linerboard (42lb, unbleached kraft, E. US) prices held at $845/ton while medium (26lb semi-chemical, E. US) held at $715/ton. Prices for linerboard and medium have remained unchanged since May 2023. SBS and CUK prices were flat m/m, while CRB prices dropped $20/ton m/m to $1,605/ton.
Suzano and Arauco hike pulp prices. Suzano recently informed clients that it is increasing BHK prices by $50/tonne for sales in China and $80/tonne for Europe and North America. Arauco also introduced similar price hikes, but specific to Chinese buyers, which included a $50/tonne increase for BHK, a $50/tonne increase for radiata pine, and a $80/tonne increase for unbleached softwood kraft. The price hikes from both companies will take effect in November.
IP closing containerboard mill in Texas; industry supply-demand outlook improving. International Paper announced on October 18 that it will permanently close its containerboard mill in Orange, TX (please click here for more information). The Orange mill has an annual capacity of 800k tons and management expects the closure to be complete by the end of 2023. With that closure, gross nameplate industry capacity additions of 2.5MM tons in 2023 have been whittled down to less than 1MM tons on a net basis, which is equivalent to about 2.1% of existing North American capacity.
Crofton paper operations to remain suspended until late November. Paper Excellence announced on September 26 that the curtailment of paper production would extend to the end of October; however, operations will now be suspended until late November. The mill has an annual capacity of 535k tonnes, including 382k tonnes of NBSK and 131k tonnes of paper.
UPM’s Plattling graphic paper mill will close in November. Initially announced in July, the mill closure will result in a reduction of 380k tonnes of uncoated publication paper and 215k tonnes of coated publication paper.
LIRA projects a slowdown in R&R activity. According to the Joint Center for Housing Studies of Harvard University’s Leading Indicator of Remodeling Activity (LIRA), annual owner expenditures for home improvements and maintenance are expected to trend lower through the next four quarters (Q423–Q324).
Paul Quinn