November Market Report: Conservative Buying Hinders Wood Products Production

November 23, 2015

Current Wood Products Market Market Outlook

The western plywood market continues to be difficult for all participants. Customers continue to buy conservatively—only filling their needs—and mills continue to fight the slow grind down of prices that have characterized the marketplace over the past couple months. Lately, price deterioration has lessened to a certain extent, but trading does remain difficult and some mills are beginning to bow their backs against deep discounting, and with the current price trajectory, something has to give soon.

2016 Forecast

What is in store for Freres Lumber Company during the remainder of the year and into the start of 2016? As always, there’s a great deal of conjecture in the marketplace, but short of a disruption in production I see more of the same in the coming months—tough sledding for producers and traders. The strength of our dollar will continue to create great advantages for plywood importers, whether from Canada, Chile, Brazil, or China. However, some U.S. traders expect relief from the onslaught of South American imports in the first quarter of 2016 as European buyers place orders during their duty-free period and siphon off material that might otherwise be headed to our shores. If that does happen it’ll help us domestic producers.

I believe, as many producers do, the downside is currently in overdone territory and in any other year we would be in a very volatile price environment. The equalizer this past year has been the volume of imported wood that has upset the supply/demand balance in the plywood marketplace. Until that changes or we have changes in domestic output we will likely face the same results. We are hoping for that to occur, of course, but not exactly counting on it. However, if and when supply changes do occur one has to be prepared for some price volatility. That’s just the way it works in commodity markets where customers maintain lean/light inventories and are afraid to own wood. The distribution pipeline remains under bought, but it’s been that way all year.

What’s Up Next For Freres Lumber Company

As the end of the year looms ever closer, Freres Lumber Company will be taking an extended amount of downtime to tend to some needed repairs and maintenance within the plywood plant. Along with the short Thanksgiving week, we plan to be down from December 12^th through January 3^rd, with tentative plans to resume production on January 4^th.

Bob Maeda, Plywood Sales