Kevin Mason
Housing market indicators vacillate between depressing and mildly encouraging. Starts will still fall this year—how badly is the key question. Log prices have slipped in multiple markets, with past strength in Pacific Northwest set to fade. China’s reopening should help New Zealand and Pacific Northwest exports in time. Lumber markets have been shocked by a raft of closures (almost all in BC), prompting a rally in prices (and equities). As lumber prices rise, supply will once again outrun demand, reversing this rally in Q2, 2023. Panel markets have not seen a supply response as lumber has. Prices have barely moved up. New supply this year will suppress any upside.
Pulp prices are migrating lower across virtually every grade and region. Supply reductions in BC have helped moderate softwood’s decline. China’s reopening will limit pricing downside, with trough prices higher. Newsprint prices have peaked, and the only question is how soon the inevitable price decline will begin. However, exports provide options. Paper prices have peaked for all grades; an inevitable decline is next. However, unlike newsprint, woodfree paper grades have seen an explosion in imports that poses substantial risk. Containerboard markets are a mess and massive downtime was taken in Q4, yet prices fell (at least inventories declined). With more supply coming, we expect prices have further to fall. Boxboard markets are far more stable than containerboard, but URB prices have slipped and CRB will follow (in time). Coated unbleached kraft (CUK) and Solid Bleached Sulfate (SBS) will hold stable until late Q2/Q3, but pressures will push prices lower by summer. Recovered-paper prices are stabilizing at low levels for brown grades.