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Market Recap: RISI Crow's Construction Materials Cost Index

8/8/2016

A price index of lumber and panels used in actual construction for August 5, 2016


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: The pace of SPF lumber sales slowed. Although some mills retained order files stretching into the weeks of August 15 and 22, others came up with additional volumes for quicker shipment. Most aspects of the Southern Pine market remained steady. As prices move higher, buyers are increasingly cautious, thus managing their inventories closely. However, strong end-use is forcing buyers back into the market to purchase at a steady rate. Although most descriptions of the Coastal species market were some version of “flat,” there was very little softness and mild gains continued to appear. “A lot of attention focused on the volumes of Doug Fir entering the US market from Canada. Inland lumber producers continue to cite the flatness of market prices as being a definite strength, one source saying the market is “flat and happy.” Stud prices were “mixed,” differentiated to some degree by relative strength in 8’ versus flat or weaker pricing in 9’. Buyers awaited the return of production in eastern Canada, which will add a renewed supply pressure to SPF pricing. Radiata Pine has become the major subject of discussion for much of the industry, based on the possible sale of a key New Zealand supplier of Mldg&Btr lumber to the US. Ponderosa Pine industrials have firmed up on the lower end in recent months, but buyers have little difficulty sourcing their needs, often at discounted levels. The focus of activity in 4/4 Ponderosa boards has been the narrow widths. Demand for Commons has resulted in solid pricing for #2 Common and some significant gains in #3 Common. Western Red Cedar producers continued to boast order files extending at least four weeks. However, the market has taken on a slower pace over the past few weeks. Inland cedar boards are strong.


Panels: OSB markets turned a corner this week, with quiet activity and an overall softening in prices. Buyers are being very cautious right now, even though there is a need for wood through the system. Sources said they are watching next week to see what direction is established. Southern Pine rated sheathing pricing continued to slide, the result of an overly supplied market. Demand in the distribution web was solid, but the number of sources for distributors and retailers to purchase from remains high. The overall sales pace in the Western Fir plywood market slowed, which shortened lead times a bit. By Friday, mill order files were in the week of August 15, with some sales into the following week. Buyers “leaned” on producers, searching for weakness. Canadian plywood started the week slow post-holiday, but picked up gradually, becoming busiest late-week. The fundamentals remain unchanged, with thin inventories through the system and steady demand for panels. Extended lead times, solid pricing and persistent demand remained key attributes of the MDF market. In particleboard, prompt availability existed, although there were also some extended lead times at mills, most commonly in the South and East.


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