Lumber stocks make up biggest gainers; Alcoa drops on Q1 sales miss

The S&P 500 Materials sector closed this trading week in red, down 3.83%. The Materials Select Sector SPDR (XLB) also registered a 3.66% dip.

Most industrial metals stumbled on Friday amid concerns that Chinese COVID lockdowns and rapid monetary tightening will suppress metals demand and economic growth. According to Reuters, LME three-month copper dipped 0.7% to $10,213/ton by 1015 GMT, leading to its third weekly decline. LME aluminum was down 0.7% to $3,274/ton, tin declined 2.1% to $41,960, while lead was flat at $2,401.50.

Earlier in the week, shares of precious metals miners fell across the board, with gold prices suffering their biggest drop in three weeks as the benchmark U.S. dollar index rose to its highest since March 2020. Gold futures, for June delivery, registered a 2.1% fall for the week, settling at $1,934.30/oz. Silver futures dropped nearly 6% for the week.

Meanwhile, lumber prices reclaimed the crucial $1,000 per thousand board feet level, reversing some of their March losses as seasonal demand began to pick up.

“Prices for the essential building commodity could continue higher into the summer months due to historically low inventory and a seasonally strong period for lumber as the homebuilding season heats up,” stated one industry executive.

Take a look at this week’s top gainers among basic material stocks ($300M market cap or more):

• West Fraser Timber (WFG) +12.28%; The wood products company announced a $1.25B stock buyback plan this week.
• Avient (AVNT) +11.74%; The company reached over 1-month high on better-than-expected Q1 results and a deal with Royal DSM to acquire the DSM Protective Materials business.
• Sylvamo (SLVM) +9.22%; The paper company adopted a limited-duration shareholder rights plan this week in order to protect the interests of all shareholders.
• Resolute Forest Products (RFP) +7.75%; The growth may be linked to the uptick in lumber prices.
• Ufp Industries (UFPI) +6.06%; Stock gained on the back of better-than-expected Q1 results.

The week’s top decliners among basic material stocks ($300M market cap or more) were:

• Ramaco Resources (METC) -26.90% and Century Aluminum (CENX) -25.29%; both stocks were among the top 10 decliners in energy and natural resources. Crude oil futures fell for the third week out of the last four.
• Alcoa (AA) -23.44%; Stock dipped on the back of Q1 sales miss as aluminum production fell 9% Y/Y to 498K metric tons.
• Endeavour Silver (EXK) -22.38%; The drop may be linked to the decline in silver futures this week.
• Hycroft Mining (HYMC) -22.28%

Other materials ETFs to watch: iShares Global Timber & Forestry ETF (WOOD), Materials Select Sector SPDR ETF, Vanguard Materials ETF (VAW), iShares Global Materials ETF (MXI), SPDR S&P Metals and Mining ETF (XME), VanEck Vectors Gold Miners ETF (GDX), iShares MSCI Global Gold Miners ETF (RING), Global X Copper Miners ETF (COPX).