March 22, 2021
Commodity panel markets continue to surge due to limited availability, astounding all participants. It is hard to believe, but current western 15/32 CD 4-ply is currently trading approximately 60 percent higher than the previous record high in September of 2020. Fairly remarkable. At the moment, there is nothing on the horizon that is telling us anything will change in the marketplace in the near-term.
Southern pine plywood mills in the southeastern part of the U.S. have offered little product over the past many weeks as buyers with nearby needs continue to soak up all offerings for quicker shipment from mills or secondaries. OSB continues to be in short supply for nearby needs for almost everyone, further pumping up the spot market prices by three-digit premiums. British Columbia plywood mills are sporting July and August shipping times. Order files in the western plywood group go from late April to mid-June or later.
The biggest factor propelling the market forward and upward is the fact that nearby availability of products is limited, and nearby demand for quick shipping products is strong in all structural panel products. These two fundamental factors continue to make for a crazy and volatile market environment, pushing prices to levels we never thought possible only a few months ago.
Also, industry labor issues continue to plague most lumber and panel manufacturers, capping production at a time when product is in dire need. While the needs of a robust housing industry continue to push things further and further, other major consuming areas are also competing with the housing industry for lumber and panel products as well.
Namely, the repair and remodeling sector, the industrial sector, and the treating sector. All these areas use huge amounts of product, adding further pressure to our markets.
My sense is these other areas are possibly underbought, overall, going into spring and early summer. Not good news for anyone looking for some break in prices anytime soon. The forecasting metrics point to demand remaining strong for the duration of the year. The panel markets, as crazy as it may seem, likely have more room to the upside.
Continuing last month’s refrain — the trend is currently your friend.
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