Like all commodity lumber and panel markets, plywood has been on a roll the past five to six weeks, dating back to the week before Thanksgiving. The past several weeks have seen the plywood markets undergo sharp week to week price increases, and while it was calmer through the week of Christmas, it seems poised to continue on this trajectory after the holidays. Demand is strong and most companies are expecting a busy first half of the year. This latest market version is behaving eerily like the bull commodity market that started a year ago and lasted into May of 2021. Most people would rather not see a replay of that volatile and brutal market. I say, the market is the market – it’s going to go where it’s going to go, regardless of what we want. No one is bigger than the market. Currently, lumber and panel prices have risen to a little over halfway to where they were in the early spring of 2021. Not quite so much for OSB, yet.
While strong overall demand for the first quarter of next year cannot be denied, winter markets aren’t easy to navigate. Weather always plays a big part in how a market plays out. Moderate winter weather would likely support additional sales after the first of the year. Harsh winter weather that inhibits the flow of commodity products into the field could stop that momentum. With some order files reaching mid-to-late January, buyers are making some difficult buying decisions. It’s a mixed bag out there. Some plan to pay the going rate when they have to buy, others are covering their needs and commitments for as far out as possible.
Of course, supply chain issues continue to plague the entire homebuilding industry. Well-documented logistical bottlenecks around the country, and internationally, compound the supply problems. Seasonal factors (post holiday) will help ease the supply chain pressures, but these issues will linger well into next year. Waterborne shipment costs have skyrocketed in the past year and will help shape the level of imports and exports. The market isn’t a done deal for the winter yet, but if conditions after the first of the new year warrant additional buying – and push order files out further – buyers could be pushed further back on their heels. We know demand is solid for the first half of the year. Now, it’s weather, weather, weather.
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