Market Recap: RISI Crow's Construction Materials Cost Index

 A price index of lumber and panels used in actual construction for Sept. 26, 2014

*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: Anxious buyers stepped into the SPF market to purchase after seeing gains in the futures market Tuesday morning. Limited windows of opportunity for buyers to purchase at a bottom over the last few cycles prompted a rush to buy. Wholesalers covered shorts and yards filled in inventories where needed. Ample downward price pressure across a broad swath of the Southern Pine lumber market kept buyers from purchasing. Those needing to buy filled in inventories with minimal volumes often at $15-25 discounts. Demand for Coastal species improved as early as Tuesday, then slowed but remained somewhat steady the remainder of the week. Although several of the dimension lumber prices finished a few dollars down, prices stabilized early and adjusted very little the remainder of the week. Inland lumber price declines ranged from $5-10 and included even some of the wide widths, which had been particularly strong because of their relative scarceness. High grades were even more vulnerable. The US dollar gained sufficient strength to attract additional volumes of Radiata Pine blanks from Chile, thus weakening low grades of Ponderosa Pine, notably 5/4 #3 Shop, P99 and Shop Outs. Ponderosa Pine Mldg&Btr has been almost cleaned up, with only one major supplier showing any excess at this point. The #2 Shop is firm. Ponderosa Pine board prices have softened from $5 to $10, with some especially competitive numbers on 1x12 #3 Common. Eastern White Pine 4/4 boards are much less competitive than are Ponderosa Pine boards. Western Red Cedar producers and their customers continued to focus much of their attention on next year’s business. Customers’ near-term needs often consisted of highly specified and conservative volumes.

Panels: Prices for OSB reached a low enough level that some buyers took longer positions this week, sensing very limited risk. Still, many wholesalers are selling contract wood and not buying any extra. Across most regions, prices moved down a few dollars from last week’s levels, inching mills closer to uncomfortable margins. Following the momentum built the previous week, buyers continued to purchase Southern Pine plywood at a steady pace. By all accounts, a wide array of buyers purchased moderate volumes, trying to keep inventories in check. Mill lead times extended into the week of Oct. 6 and beyond. Western Fir plywood producers experienced slower sales activity than the week prior, which left sheathing prices flat. Buyers continued to purchase conservative volumes, prompting producers to report “solid but unspectacular” sales. Several mills reported order files at least half way through the week of Oct. 6. Canadian plywood buyers slipped off to the sidelines this week in a waiting mode, convinced pricing will soften next week. All sources agreed that for now, levels remain sideways from last Friday. Demand and production in the particleboard market remained steady. Both buyers and producers show little concern over pricing. MDF sales maintained an even pace, which left prices at prior levels.

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