Freres Lumber December Market Report: Plywood markets strong while housing market soars

January 15, 2021

December 2020 a positive trajectory for plywood sales

Plywood markets

December plywood markets were atypical from a historical perspective. Typically, December is a month where producers consider extended holiday shutdowns to make repairs and upgrades and begin the New Year with hope for positive markets. Instead, plywood markets went on a rampage through December with order files and prices continually increasing throughout the month.

Our primary production item, 15/32” 4-ply CDX, increased from $570 at the end of November to $795 by the end of December. Order files are now predominantly through February. Weather typically slows the building in the winter season, but this year weather isn’t a consideration for most purchasers, only the fear of the lack of product availability when projects begin. Market reported prices are set to increase further this week as what little plywood is available is rapidly purchased by eager customers.

Veneer prices
Veneer price increases stalled for a short time when the plywood market temporarily cooled, but demand from the LVL sector made any veneer price declines an impossibility. When plywood resumed upward momentum, veneer prices began increasing again. January has begun with all grades, seasonings (green or dry), and widths of veneer in firm demand. We never try to predict too far into the future, but our current order files and indications of future demand suggest strong markets into the Spring.

Salvaged wood from Beachie Creek Fire
We anticipate bringing in 14 million board feet of burned salvage wood from our forest land impacted by the Beachie Creek Fire in the first quarter of 2021. That volume alone is what we would typically harvest off our private land in a year under our sustained yield harvest plan. We will be processing this burnt timber for a good portion of the year as we try to bring damaged lands back into productivity. We hope that the government will do the same before the trees become unusable as a valuable resource for our rural communities.

Housing market
There are definitely supply constraints in our markets as producers wrestle with regional impacts from forest fires, employment issues from COVID, and the inability to add capacity in the short-term. The big story for 2020, however, was that the housing market was one sector of the economy that surpassed all expectations.

While experiencing a significant drop in demand at the onset of the COVID crisis in March, the housing market soared to 1.38 million starts by the end of the year. Current RISI projections indicate a further increase in 2021 to 1.41 million housing starts, which we have not experienced in over a decade. There is significant migration from city-centers to less dense areas which has increased the demand for single-family housing. Home ownership is now back in vogue and there is too little supply available for current demand.

Employment at Freres
There will be ample opportunity for overtime work in the coming weeks. If you know of anyone looking for a job and is willing to work, please send them our way. We currently have job openings at most of our production facilities. These rare markets are an opportunity to work extra hours and put some extra money in your pockets. Let’s take advantage of the opportunity!