Market Recap: RISI Crow's Construction Materials Cost Index

A price index of lumber and panels used in actual construction for July 14, 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: SPF prices were already grinding higher when wildfires in British Columbia touched off a surge in buying. Three producers reported mill shutdowns early, due to the fires, prompting buyers to cover needs and purchase insurance volumes because of potential shortages. Southern Pine sales activity improved and a slow turn in pricing that began last week propelled some prices higher. Buyers perceived the turn and purchased increased volumes as a result. Price appreciation in Coastal species accelerated as concerns over limited availability out of BC grew. Traders also credited a significant proportion of sales to solid demand in the field. Strong order files extending into late July and early August added to the market’s strength. Most Inland lumber producers were out of their offices late this week, attending the annual conference in Coeur d’Alene, Idaho. Early-week reports, however, indicated “some hot activity” in the markets for Inland lumber, elevating the numbers for both Hem-Fir and Fir-Larch. Stud prices increased incrementally as the week progressed, boosted by summer shutdowns in the SPF market and the threat of even tighter supplies in western Canada. After covering needs early, buyers tried to assess the market and the long-term implications the fires might have on logging and transportation. Little price pressure exists on either Radiata Pine or Ponderosa Pine industrials at this point. The greatest pressure on Ponderosa Pine industrial lumber is on #3 Shop. Ponderosa Pine boards have been strong throughout the spring, but those have flattened out in price. While the #2 Commons are steady this week, some of the #3 shows softening. Western Red Cedar producers reported selling at a better pace, more like the one prior to the Fourth of July holiday week. Buyers continued to backfill inventories with mixed loadings. Excesses at mills were spotty, with many reporting limited availability.

Panels: Blazes in British Columbia lit a fire under OSB markets this week. With the fires, several producers are OTM, some mills and their wood supplies are under direct threat, distribution channels are snared, and prices are on a sharp upward trajectory. Sales activity in Southern Pine plywood improved, with much of the pickup occurring in the latter half of the week. Buyers entered the market in greater numbers both Wednesday and Thursday, extending mill order files into the weeks of July 24 and 31. Wildfires in BC compelled Canadian plywood buyers to look for coverage from US Western Fir producers. The fires, along with continued solid demand from US customers, placed even more upward pressure on Canadian plywood prices. Most producers are OTM, order files are a big question mark (maybe nothing until September), and prices are all over the map. Particleboard and MDF markets were in the midst of summer doldrums. A broad swath of producers agreed with the assessment, which met their expectations for this month. Sales activity was decent overall, but time off taken by downstream manufacturers limited inventory replenishment by those customers.

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