July Market Update: Multiple Factors Prop up Plywood Sales

July 31, 2017

Strong Plywood Market

It has been a remarkable plywood run so far this summer, with strong sales and stronger prices. The plywood market was strong through June and then our own custom dryer facility burned at the end of the month and that tipped the sheathing market up some more. Then, you add the British Columbia wild fires to the mix a couple weeks ago–causing mills to go off the market due to fire danger and the cessation of logging in many areas. Sawmills and panel mills had to evacuate areas in several cases across the region and are still largely off the market due to the uncertainty of the fires and logging in affected areas.

Summer Demand and Unforeseen Events Affect Lumber and Panel Prices

Prices of most commodity lumber and panel items (with the exception of southern pine lumber and plywood) are at many-year highs – or on some items, all-time highs. That’s kind of scary, but is indicative of the summer demand across the country as well as the–at the moment–under bought lumber inventories in many critical areas of the country. The events of the past few weeks are obviously unexpected events, but have combined to be a perfect storm, given the disposition of inventories in the supply pipeline in much of the country. Most buyers were caught off guard by these events and many have underestimated their nearby impact on the commodity markets–which has been quite remarkable. Buyers are in a tough spot right now, having to decide if they cover their commitments for the back half of the summer or wait it out on prices. With lengthy order files in most commodities, that becomes a difficult decision for buyers.

At this juncture in the market, most buyers will likely do what they have to do and pay the going rate, but no more than that given the high price levels. Not an easy, comfortable way to go considering we still have three strong months of a typical building season left. Prices are very high, but they could go higher, given the current imbalances in supply and demand that exist in the field.

Looking Ahead

The plywood markets are a done deal for July. The question is whether August will see the market extend itself. Given that many mills have mid-August order files or later, that is a possibility.

For now, it seems to be more of the same. But the price levels on most items are making many buyers queasy. It will be fun to look back in a month and see where we’re at!