Market Recap: RISI Crow's Construction Materials Cost Index

A price index of lumber and panels used in actual construction for June 2, 2017.

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: After looking for something that might trigger SPF lumber buyers to enter the market in greater numbers, significant gains in lumber futures brought traders in to cover shorts. Mills reported receiving more inquiries Wednesday and follow-through Thursday after a sluggish start. In Southern Pine, the heightened level of demand experienced the week prior failed to carry over into the holiday shortened week. Having sold off considerable excesses the previous week, producers showed little urgency to discount prices significantly. If the Coastal species lumber market had any reaction to the surge in lumber futures Thursday it was minimal. Demand across most items was not appreciably better, although spot items did see a notable increase in demand. What began two weeks ago as a market pause became an implosion, as major Inland Hem-Fir volumes hit the market, testing prices beyond the breaking point. Stud volumes sold at an improved clip, especially in SPF, keeping many 8’ prices close to those levels established previously. Weakness in 9’ persisted, with producers discounting more deeply where excesses were more prolific. Radiata Pine Shop has tightened significantly in availability. The supply from Chile is maxed out, and little of any sort is available from New Zealand. Unfortunately, some key suppliers of Ponderosa Pine are still waiting on new logs, but reports indicate that they are on the way. In the meantime, the prices of all industrial lumber held. Spring demand for 4/4 boards has subsided, leaving the market active but not aggressive, and prices have stopped most of their rush to higher levels, leaving only an upward trickle in the #4 Ponderosa Pine Commons. Sales of Western Red Cedar at mills remained less robust than in early May. Their customers’ heightened early participation in the 2017 market was given credit for the calmer pace.

Panels: OSB markets appeared to enter a firming trend this week, brought on by improved weather and a need for dealers to stock up during the busier portion of the building season. While pricing continued to lose ground in most regions, sources said they feel a bottom may have been reached. Activity in the Southern Pine plywood market remained dull, lending to persistent weakness across many items. Rainy weather was offered by several traders as a key reason sales remain measured. The sales pace in Western Fir plywood was lackluster, leaving a number of prices susceptible to discounts. West Coast buyers participated in good numbers while sales to eastern customers lagged significantly. The week opened quietly in Canadian plywood markets but picked up midweek as producers did some discounting to move order files out. Some volume business was done, and by Friday, mills were, for the most part, firmly asking one point over established price levels. Warmer weather has MDF and particleboard mills “pumping out product” at strong rates. MDF demand remained strong, giving producers order files extended through June and in some instances into early July.

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