{"id":23156,"date":"2021-04-18T20:41:24","date_gmt":"2021-04-19T00:41:24","guid":{"rendered":"https:\/\/capital10x.com\/old\/?p=23156"},"modified":"2021-07-25T23:09:38","modified_gmt":"2021-07-26T03:09:38","slug":"markets-metals-navigator-lumber-goes-parabolic","status":"publish","type":"post","link":"https:\/\/capital10x.com\/old\/markets-metals-navigator-lumber-goes-parabolic\/","title":{"rendered":"Markets &#038; Metals Navigator: Lumber Goes Parabolic"},"content":{"rendered":"<h1><strong>Lumber: Demand Overwhelms Tight Supply<\/strong><\/h1>\n<p>Lumber is the best performing commodity over the last year, up a staggering 290%, and year-to-date it is up 48% only behind Cobalt.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23160\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/ytd-commodity-heat-map.png\" alt=\"\" width=\"800\" height=\"1026\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/ytd-commodity-heat-map.png 800w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/ytd-commodity-heat-map-234x300.png 234w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/ytd-commodity-heat-map-798x1024.png 798w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/ytd-commodity-heat-map-768x985.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/ytd-commodity-heat-map-696x893.png 696w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><\/p>\n<p>From a longer term multi-decade perspective the scale of the rise over the last year has been parabolic. Lumber is now $1294.70 per board foot, an astounding 4x higher than the average from the last 40 years ($300 per board foot).<\/p>\n<p>The physical lumber market remains very tight &#8211; the current the price difference between the May 2021 and November 2021 lumber futures contracts is about 22 percent, which isn\u2019t enough of a discount to signal an impending price decline.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23157\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/Lumber-price-parabolic.png\" alt=\"\" width=\"976\" height=\"502\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/Lumber-price-parabolic.png 976w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/Lumber-price-parabolic-300x154.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/Lumber-price-parabolic-768x395.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/Lumber-price-parabolic-696x358.png 696w\" sizes=\"auto, (max-width: 976px) 100vw, 976px\" \/><\/p>\n<p>The lumber frenzy will likely continue into through the summer peak of home building as depleted inventories and labor shortages mean supply can&#8217;t keep up with rocketing demand.<\/p>\n<h3>US Housing Starts<\/h3>\n<p>The lumber shortage is feeding directly into the prices of houses &#8211; soaring wood prices have already added $24K to the price of a new house in the U.S. according to the National Association of Home Builders.<\/p>\n<p>U.S. housing starts rebounded sharply in March to the highest since 2006, exceeding forecasts and indicating residential construction is getting back on track after a winter storm-related setback.<\/p>\n<p>Residential starts jumped 19.4% last month to a 1.74 million annualized rate, according to government data released Friday.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23159\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/US-housing-starts.png\" alt=\"\" width=\"976\" height=\"502\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/US-housing-starts.png 976w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/US-housing-starts-300x154.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/US-housing-starts-768x395.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/US-housing-starts-696x358.png 696w\" sizes=\"auto, (max-width: 976px) 100vw, 976px\" \/><\/p>\n<h3>Lumber Stocks<\/h3>\n<p>The only way investors are able to play the rise in lumber prices is through lumber producers, as there isn&#8217;t a lumber commodity ETF.<\/p>\n<p>The major Canadian lumber companies have risen significantly over the last year: Interfor has lead the pack up +428%, followed by Canfor +317, West Fraser +257% and Western Forest +244%.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23158\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/WFG.TO_CFP.TO_IFP.TO_WEF.TO_chart.png\" alt=\"\" width=\"2000\" height=\"1167\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/WFG.TO_CFP.TO_IFP.TO_WEF.TO_chart.png 1755w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/WFG.TO_CFP.TO_IFP.TO_WEF.TO_chart-300x175.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/WFG.TO_CFP.TO_IFP.TO_WEF.TO_chart-1024x598.png 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/WFG.TO_CFP.TO_IFP.TO_WEF.TO_chart-768x448.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/WFG.TO_CFP.TO_IFP.TO_WEF.TO_chart-1536x896.png 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/WFG.TO_CFP.TO_IFP.TO_WEF.TO_chart-696x406.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/WFG.TO_CFP.TO_IFP.TO_WEF.TO_chart-1392x812.png 1392w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\" \/><\/p>\n<p>Valuations are elevated but not at extreme levels, West Fraser&#8217;s Forward P\/E over the last 5 years has averaged 10.5x vs. its current forward P\/E of 12.4x.<\/p>\n<p>Capital 10X remains cautious on space, we don&#8217;t view lumber as a commodity that has a fundamental supply constraint. However we believe the flow through inflationary impact on construction will be very real and will continue to bid up the rest of the commodity complex.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23163\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/west-fraser-pe-ratio-forward.png\" alt=\"\" width=\"976\" height=\"500\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/west-fraser-pe-ratio-forward.png 976w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/west-fraser-pe-ratio-forward-300x154.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/west-fraser-pe-ratio-forward-768x393.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/west-fraser-pe-ratio-forward-696x357.png 696w\" sizes=\"auto, (max-width: 976px) 100vw, 976px\" \/><\/p>\n<h2>Largo Resources Heading to the Nasdaq<\/h2>\n<p>On April 16th Largo Resources (TSX:LGO, NASDAQ:LGO) announced they had received approval to trade on the Nasdaq, shares will commence trading on April 19th under the symbol LGO.<\/p>\n<p>We believe this is another strong catalyst for the stock as US investors now have a direct way to play the attractive vanadium market through one of the highest quality companies in the space &#8211; Largo Resources.<\/p>\n<p>Capital 10X highlighted the sizable opportunity to invest in the vanadium the strategic green metal in<a href=\"https:\/\/capital10x.com\/old\/green-metals-in-focus-vanadium\/\"> October of last year<\/a> when we initiated on the sector, shares of Largo Resources have doubled since then.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23169\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/largo-chart.png\" alt=\"\" width=\"2000\" height=\"1167\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/largo-chart.png 1755w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/largo-chart-300x175.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/largo-chart-1024x598.png 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/largo-chart-768x448.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/largo-chart-1536x896.png 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/largo-chart-696x406.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/largo-chart-1392x812.png 1392w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\" \/><\/p>\n<p>We believe there remains strong upside ahead in the vanadium market for 3 key reasons:<\/p>\n<ol>\n<li>Stimulus driven infrastructure spending will increase the use of vanadium as it is an alloy in steel manufacturing.<\/li>\n<li>The growth of green technology applications, specifically vanadium redox flow batteries.<\/li>\n<li>The strong outlook for vanadium pricing.<\/li>\n<\/ol>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23105\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/vanadium-outlook.jpg\" alt=\"\" width=\"1820\" height=\"1024\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/vanadium-outlook.jpg 1820w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/vanadium-outlook-300x169.jpg 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/vanadium-outlook-1024x576.jpg 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/vanadium-outlook-768x432.jpg 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/vanadium-outlook-1536x864.jpg 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/vanadium-outlook-696x392.jpg 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/vanadium-outlook-1392x783.jpg 1392w\" sizes=\"auto, (max-width: 1820px) 100vw, 1820px\" \/><\/p>\n<h2>Goldman Sachs: Copper is the New Oil<\/h2>\n<p>Last week Goldman Sachs released a report to its clients stating that copper will be crucial in achieving decarbonization and replacing oil with renewable energy sources, and right now, the market is facing a supply crunch that could boost the price by more than 60% in four years.<\/p>\n<p>Increased demand and likely low supply are set to drive up the price from the current levels of around $9,000 per ton to $15,000 per ton by 2025, the bank said.<\/p>\n<p>Goldman projects that green demand for copper will rise from 3% in 2020 to 16% by 2030; this will be driven primarily from growth in the electric vehicle and solar markets.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23170\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/green-technology-copper-demand.png\" alt=\"\" width=\"967\" height=\"819\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/green-technology-copper-demand.png 967w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/green-technology-copper-demand-300x254.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/green-technology-copper-demand-768x650.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/04\/green-technology-copper-demand-696x589.png 696w\" sizes=\"auto, (max-width: 967px) 100vw, 967px\" \/><\/p>\n<p>Last month Capital 10X highlighted the attractiveness of the copper mining sector for investors, specifically small and mid sized miners &#8211; as they trade at a 50% discount to their large cap peers.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23077\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-vs-lg-cap.png\" alt=\"\" width=\"1658\" height=\"712\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-vs-lg-cap.png 1658w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-vs-lg-cap-300x129.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-vs-lg-cap-1024x440.png 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-vs-lg-cap-768x330.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-vs-lg-cap-1536x660.png 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-vs-lg-cap-696x299.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-vs-lg-cap-1392x598.png 1392w\" sizes=\"auto, (max-width: 1658px) 100vw, 1658px\" \/><\/p>\n<p>Sierra Metals (NYSE:SMTS, TSX:SMT) and Hudbay Minerals (TSX:HBM) trade at a deep valuation discount to their small &amp; mid cap copper peers (which are already very cheap vs. large caps).<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23083\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-mid-cap-copper-peers-1.png\" alt=\"\" width=\"788\" height=\"659\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-mid-cap-copper-peers-1.png 788w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-mid-cap-copper-peers-1-300x251.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-mid-cap-copper-peers-1-768x642.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2021\/03\/small-mid-cap-copper-peers-1-696x582.png 696w\" sizes=\"auto, (max-width: 788px) 100vw, 788px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this week&#8217;s Capital 10X Navigator: Lumber goes parabolic, Largo Resources lists on the Nasdaq &#038; Goldman Sachs is very bullish on copper.<\/p>\n","protected":false},"author":7,"featured_media":23161,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1755,59],"tags":[76,1803,1712,1714,1688,846,847,1267,893],"class_list":{"0":"post-23156","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-growth_navigator","8":"category-metals","9":"tag-copper","10":"tag-hudbay","11":"tag-largo-resources","12":"tag-lgo","13":"tag-lumber","14":"tag-sierra-metals","15":"tag-smt","16":"tag-smts","17":"tag-vanadium"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Markets &amp; Metals Navigator: Lumber Goes Parabolic | Capital 10X<\/title>\n<meta name=\"description\" content=\"In this week&#039;s Capital 10X Navigator: Lumber goes parabolic, Largo Resources lists on the Nasdaq &amp; 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