October Market Update: Market Reports May Be Too Negative

The western plywood markets continue to grind lower on price, but with decent weekly sales activity over the past month. A decent-to-good shipping pace out of yards in the east and west parts of the US continues to require weekly fill-in purchases from most buyers.

While inventories are light at best, in most areas buyers keep purchases to needs-only requirements — buying as close in as they possibly can. While the same economic conditions and concerns continue to be in place, business in multifamily sectors still remains good in many parts of the country and buyers must keep some wood flowing into their yards, despite what they think of business prospects down the road.

In recent weeks, there is a bit more stability in product pricing simply because they are hitting lows as compared to the previous year or two, as well as sliding below breakeven levels for mills. This is not surprising because September and October consumption remains steady enough to make things interesting, even with economic headwinds.

Few people have illusions about business prospects in the months ahead. We expect some tough times ahead for the industry in general. As such, retail and wholesale distribution commodity inventory levels are vastly pared down for most companies.

For now, the market appears to be more of the same. It is not dead out there. Wood purchasing at many levels is up for grabs each week. Given the relatively decent business of late, one could interpret that current market reports and commentary may even be a bit too negative relative to the actual trading pace.

The commodity lumber and panel reports are a mixed bag of relative weakness and strength. Many commodity lumber items have had a pickup in recent weeks, clawing back some price ground lost earlier.

On the panel side, OSB appears to be generally decent and steady, even with some short-term tightness for quick product in areas. Plywood in the south and west are still looking for solid ground. Some products, however, are at levels now that don’t get buyers overly concerned about downside risk. When mills continue to complain about costs week after week, buyers should start to pay attention.