Market Recap: RISI Crow's Construction Materials Cost Index

A price index of lumber and panels used in actual construction for August 11, 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: A lack of sales forced prices lower in the SPF market. Producers in both East and West Canada discounted to varying degrees, although some producers approached the market less urgently, still holding onto order files extending into the latter days of the month. Production exceeded sales activity in Southern Pine, generating discounts across a broader range of items. The amount of excesses at mills did not warrant an abundance of deep discounting, instead, most price cuts were around $5 with a smattering of $10 declines. Buyers of Coastal species sensed a “plateauing of prices,” and approached the market with a little more apprehension. Still, concerns over log supplies, especially at Southern Oregon mills, remained in play, providing some additional resilience for prices. Inland lumber producers reported generally quieter activity, but prices that remained strong or stronger. This was particularly the case in Fir-Larch, which reflected gains in both #2&Btr lumber and uppers. Stud pricing was mostly flat to lower, with much of the more moderate weakness taking place in SPF. Spotty yet deeper discounting appeared in the US West. Sensing a degree of weakness, buyers held off purchases whenever possible. Radiata Pine reflects some difficulty in moving Mldg&Btr, according to sources. Most pine users have flipped to Ponderosa Pine because of the price gap that has continued for some time between the two species. Ponderosa Pine Selects and Commons show no changes in Selects, which remain reasonably balanced. Idaho White Pine was stable in both Sterling and Standard grades, but Utility reflected the same low-grade strength as other species. Western Red Cedar sales out of mills were sluggish, which likely led to the many opinions offered regarding future pricing. Buyers purchased hand-to-mouth when necessary, resolute about trying to force prices lower, especially in a few weeks when the duty-free gap begins.

Panels: After repeated price surges, OSB markets this week had a mixed look. Some regions showed cracks, others were flat, while some picked up strength. Buyers are leery of price levels and bought only needs. Sales activity at Southern Pine plywood mills was stuck between “decent” and “lackluster.” Most producers managed to garner sales into the week of August 21, but discounts were used in a number of instances to extend lead times. Availability also remained in August 14. Buyers continued to fear downside risk in Western Fir plywood prices and purchased accordingly, prompting assessments suggesting the market is underbought. This presented a market where order files moved more solidly into the week of August 21 as the week progressed, but discounts on carload volumes were sometimes used to establish those lead times. Canadian plywood markets are in a groove, currently, with mill-level activity a bit slower and prices stable. Yards are busy, but anyone buying is being cautious not to take a position. Wildfires in BC are of grave concern, and the province’s entire forest products industry faces questions about raw wood supply. As has been the case for much of the summer, particleboard and MDF markets lacked any considerable changes. Demand for particleboard and MDF continued at a “steady pace.”

For more on RISI, click here.