November Market Update: Unsettled Plywood Market

Volatile Plywood Market To Carry Us Through to January

The US plywood market have traveled some distance in pricing this past summer and early fall, ,. Like most commodity lumber and panel products, plywood supply and demand dynamics contributed to one of the most volatile markets in Freres Lumber Company history. The summer and early fall were rife with events that conspired to push prices to very high levels–forest fires, log shortages, mill fires, and damaging storms. Now, as those events have subsided, the past 45 days have been largely a period of retreating prices across all panel sectors. Last week in western plywood, some welcome fill-in buying came to the mills, giving them some breathing room order file-wise. While prices enjoyed some traction, the short Thanksgiving week hasn’t added much to last week’s sales push. Customers who can are holding out on purchasing until they absolutely have to pull the trigger. Order files in the west are still modest and the industry still needs to navigate through, probably, another couple weeks of grinding-it-out business, or until they are quoting shipments into January.

One thing is quite apparent; most customers are packing lean to no inventory in their yards going into the end of the year. Not surprising, really. Moderate weather areas, however, continue to ship wood to jobsites, which creates constant short term demand for inventory replacement.

Predictions for 2018

Much talk nowadays revolves around high fiber costs in the west and how that will affect markets going into 2018. That was a favorite topic of attendees at the recent NAWLA Traders Market. As always, it is a mixed bag of responses. Some say the extraordinary events of this past year were major contributors to the craziness of the commodity markets. Others say the markets would have been the same regardless of the “events” taking place. Many customers definitely said they would be packing an additional layer of inventory in 2018 and did not want to relive this past summer and early fall, when they were flummoxed by the whipsawing events of the year and were always chasing the market and never catching it, even now.

Plywood layup plants face extremely high veneer costs, so break evens are much higher than even a year ago. Mills will likely bow their backs a lot quicker than in past years, given these high costs across the board.

As always, it will be interesting to watch this winter.