Lumber and OSB up w/w. According to Random Lengths (“RL”), the Framing Lumber Composite increased $3 w/w to $379 and the OSB Composite increased $6 w/w to $425. For next week, RBC ElementsTM forecasts that the RL Framing Lumber Composite will increase $2 w/w to $381 and that the RL OSB Composite will decrease $4 w/w to $421.

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 (please click here to access our conference preview). Companies attending include CAS, CFP, DBM, IFP, LPX, MERC, WEF, and WFG. To register to attend the event in-person and request one-on-one meetings, or to request a link to listen to the sessions virtually, please contact your RBC Institutional Salesperson.

Five containerboard producers announced meaningful price increases. Effective January 1, 2024, International Paper, WestRock, and Cascades will increase North American linerboard prices by $70/ton and medium prices by $110/ton. Packaging Corp. will hike linerboard and medium prices by $70/ton and $100/ton, while Pratt Industries’ increase is $75/ton on linerboard and $110/ton on medium. IP, Cascades, and WestRock will also raise white top prices by $50/ton, $50/ton, and $30/ton, respectively, and WestRock’s increases apply to sales in both North America and Mexico. We note that containerboard market conditions have been stabilizing in recent quarters, with sequentially higher box shipments in each of Q2/Q3 and significant capacity reductions. In our view, while industry operating rates (~85.4% in Q3) would not typically support taking price, we think the announcements reflect containerboard producers attempting to restore margins after a period of strong cost inflation.

Weyerhaeuser announced timberland transactions in the U.S. South. Weyerhaeuser announced on November 30 that it has agreed with Forest Investment Associates to divest ~69.6k acres in Upstate South Carolina for $170MM (~47x WY’s forecast five-year average Adjusted EBITDA or ~$2,443/acre) and to purchase ~60.7k acres of timberlands in Coastal North Carolina, South Carolina and Mississippi for $163MM (~21x WY’s forecast five-year average Adjusted EBITDA or ~$2,685/acre). Company management expects the newly acquired timberlands to generate an annual harvest of 6.9 tons/acre (or 420k tons total) and annual Adjusted EBITDA from timber operations of ~$130/acre (or ~$7.7MM total) over the first five years.

Crofton extended the suspension of paper operations until February 2024. Paper Excellence cited “challenging market conditions which have not recovered as anticipated.” Paper machines at the Crofton plant have been idled since June this year, while pulp operations resumed mid-October after also having been idle since June. The mill has an annual capacity of 535k tonnes, including 382k tonnes of NBSK and 131k tonnes of paper.

Boise Cascade indefinitely curtailed its Chapman, AL mill. The company cited challenges around future investments and overall profitability. The mill has an annual production capacity of 70 mmfbm. Plywood production at the site will be unaffected.

The U.S. ruled in favour of domestic softwood lumber producers. The U.S. International Trade Commission (ITC) ruled in favour of the domestic U.S. industry, finding that alleged dumped and subsidized Canadian lumber imports remain a threat to U.S. lumber producers.