March Market Update: Spring Brings With It An Uptick in the Plywood Market

March 21, 2016

Improvements Seen in the Plywood Sector

The change of seasons has brought with it a breath of fresh air for plywood sales at Freres Lumber Company.

For the past couple weeks, the western plywood sector has enjoyed some decent to solid sales and with it, some rebuilt order files into the final week of March and the first week of April. Last week was heavier to rail shipments, and this week we’re seeing heavier to truck shipments. Certainly, a mild winter has helped overall business levels in the field and the results have been good in most areas.

Product shipments continue to be good in most areas, however western plywood has actually been a relative laggard compared to other items like dimension lumber and OSB, but we’ll take what we get right now.

Price Increases Are Helping Mills

Prices have clawed back to $15-20/m from extremely low numbers of a couple weeks ago, so that helps mills, but prices are still cheap and mills have struggled with low sales prices for most of the year. Fir 15/32 4 ply is still at a significant discount to its SYP counterpart in many areas of the country and should still be the best value out there in commodity sheathing. With mills bumping up prices several times in the past week to 10 days, the market remains multi-tiered, though reports show that the lowest priced buys of the past couple weeks have sold in somewhat orderly fashion.

Good Weather Creating Opportunities

Much of the country, particularly northern tier states, have gotten off to a good start this year. Mild winter weather has been a big factor in enabling jobs to open up and absorb wood much earlier than anticipated. Additionally, good building momentum is evident in many areas, with some reports of excellent business both now and anticipated for the spring and summer. Contrast that with the previous couple of years of harsh winters when business never got rolling in some areas till late spring and early summer, and the activity we’re seeing this year is significant over this time last year.

International Factors

By reports, Canadian plywood producers have order files into w/o 4/4 to 4/11, so they are in good shape for now. Pine plywood producers continue to stay ahead, but extreme wet weather in the Gulf States has stalled business significantly. Still, order files are 2 to 3 weeks out and prices have ground higher in the past week. Dimension lumber continues to trade robustly in most species, with seemingly room for still more upside.

Looking Ahead

A good start to the year is a great plus for the industry and bodes well for the year to come. Currently, nearby fundamentals look good in regards to bidding, demand, housing starts, product movement, and low inventories at the yard level. Buyers have been successful over the past year and a half with a “buy only needs” strategy. It has served them well, but that may be changing a bit, particularly in lumber where buyers with better than expected business and lean inventories find themselves scrambling a bit to get those needs covered.
We will see how it all shakes out as the months rolls by.