September Market Update: Improvement in Commodity Plywood Markets

The past three to four weeks have seen marked improvement in the commodity plywood markets. Gradual improvement at first, but picking up the pace.

This uptick has followed the long and tortuous ordeal of moving off old, high-priced inventory from yards around the country. Not many people were immune to the wrath of the downside of the historic winter/spring runup of panel prices.

When the market topped, sellers at all levels found themselves competing against one another for spare orders – mills needing new business and distributors and wholesalers needing to sell off high-priced stock. This brought on a brutal selling cycle for more than three months, which likely pushed prices far below where they may have bottomed under different circumstances. To say the commodity markets and its participants are a little beat up is an understatement.

However, the last few weeks have improved in tone and substance, as buyers throughout the distribution chain have finally found the wherewithal to do some fill-in purchasing. This has been welcome news for mills and all sellers – and buyers, as well.

As of this writing, Southern Yellow Pine plywood is the stronger seller out in the field, and is leading the way for western plywood. Today, most SYP plywood items are at premiums to their western counterparts in all crossover markets in the country, with more price appreciation likely. The western plywood markets are better, but by comparison have lagged the robust sales pace of SYP plywood. Nonetheless, SYP plywood is dragging western plywood prices up. I expect these current price relationships to continue.

It is nice to hear that many yards around the country are finally seeing a flow of new fall business. The commodity plywood markets were overcooked to the downside, as I mentioned in past market updates. So, it should be no surprise to see the markets recoup the bottom $100 to 200/m of the price slide in short order.

Some of that has already happened. Most buyers are cautious right now, with little appetite for speculation, and even contractor yards with good fall order files are being conservative in their buying.

This fill-in-only mentality will likely provide fuel for steadier markets ahead. What many people want is some calm and normality, but markets do what they want to do — with little regard to our personal wants and feelings. It looks like we have the makings of at least a solid marketplace in plywood this fall. We must remember that current price levels are only about 25-35% of what they were only three months ago.

I believe the Southeast SYP plywood region is the epicenter for the current market push in plywood. Pine plywood buyers are surprised by the strength in prices and order files in the past couple weeks, and this trend looks like it will continue.

Quick products are hard to find in the south. Pine plywood is trading considerably over printed numbers this week. A couple reasons for the market strength in the southeast include lack of imports and strong fall demand.

Pine plywood and Western plywood always play off of each other because they compete against each other in many major consuming areas. The discerning plywood buyer should keep that in mind. When spreads between the two get larger than normal, buyers need to pay attention to opportunities. And because of that, you’d have to say that Western plywood commodity plywood currently represents the best value in the marketplace.


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