Market Recap: RISI Crow's Construction Materials Cost Index

A price index of lumber and panels used in actual construction for Jan. 11, 2013

*Western - regional species perimeter foundation; Southern - regional species slab construction.

Crow's Market Recap -- A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow's Weekly Market Report.

Lumber: Trading activity in the SPF lumber market was stagnant, leading to generally flat pricing. Producers showed order files still out into the weeks of Jan. 21 and 28, extending beyond the expiration of January's futures contract. Southern Pine lumber mills and secondaries both reported good sales activity for most items. Solid demand, decent weather in most part of the Southeast and limited offerings from mills all contributed to higher prices. Buyers reentering the Coastal species lumber market on a consistent basis, having to purchase for the next round of buyers they will sell to, continued to place upward pressure on prices. Rising log prices remained a concern. Inland species lumber producers reported a modest start, but activity improved as the week progressed. Limited offerings and good order files helped producers move prices up. Secondaries sold off previous purchases at or slightly above replacement costs. Activity for Radiata Pine Mldg&Btr was steady, with supplies limited and prices firm. Improved activity for blanks sent those prices higher. Ponderosa Pine Mldg&Btr sales remained steady but uneventful. Buyers only bought what they needed and then only after shopping to find the best price. Others relied on their contracts to keep them in stock. Ponderosa Pine producers reported an increase in activity for boards, especially narrows. Eastern White Pine producers reported a good week of sales, with Industrial leading the way. Standard sales were also good. Limited supplies of ESLP and Idaho White Pine kept sales volumes light but prices firm. Western Red Cedar pricing continued to creep higher, mostly due to tight supplies available for the first quarter. Constricted fiber supplies are creating spotty production cutbacks.

Panels: The market for OSB remains tight, although buyer resistance is increasing as prices escalate. A two-tier market was present in some regions, as wholesalers sold off positions at below replacement costs. The Southern Pine plywood market remained fluid, keeping lead times at mills extended and pushing prices higher. Wholesalers sold at various price levels below replacement costs and were able to match mill prices for the quickest shipping volumes. Western Fir plywood producers experienced lackluster sales activity, while secondaries sold quicker shipping volumes below replacement prices. Buyers were both satisfied with volumes purchased previously and skittish over high price levels. Buyers of Canadian plywood who measured the need for additional purchases against robust pricing and extended mill order files often found themselves on the fence. Particleboard and MDF mills in both the East and West experienced increases in market activity. Various market segments, including moulding manufacturers, stepped up their purchases.

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