It was still snowing in Lyons, Oregon as we moved into April. This winter weather has been persistent. The Oregon snowpack is at 172% of average at the start of the month, the highest since 2008. We are thankful for abundant water and what looks like a full season at Detroit Lake.
California, a state which has seemed to be in perpetual drought, has been hammered with snow this year. The Central Sierra range is currently at 237% of average snowpack while the Southern range is a whopping 300% of average snowpack. We hope a gradual Spring warming will bring plentiful water supplies but no flooding.
It seems apparent that the extended winter has reduced the building season considerably. Obviously, the biggest impact on wood products markets has been the Federal Reserve’s rate increases which has had a significant impact on housing affordability, but weather also seems to be a contributing factor.
There are signs however that spring is approaching, not only regarding weather but also our markets. Housing starts jumped 9.8% in February to 1.45 million housing starts, seasonally adjusted annual rate. This was not expected considering we are in a period of rising interest rates.
Plywood volumes sold last week exceeded volumes for each of the prior four weeks. Plywood prices retreated, but producers seemed to bow their backs considerably at significant price declines. Last week started strong with significant volumes sold and prices flattening. Reports from other manufacturers indicate that this wasn’t an isolated incident for us, but rather a more widespread increase in volumes across the northwest panel producers.
Perhaps most encouragingly, LVL customers reported increased volumes moved into the market. LVL has been shockingly dead so far this year following a retreat in the mid-fourth quarter of 2022. The LVL market is still the dominant purchaser of doug fir 54’s in the Northwest, so weakness in that market has a large influence on production levels. A rebound in LVL markets would be very positive for our markets.
Our current order file for our Mass Ply products indicates that there is still strength in the housing market, especially for multi-family. We have solid production schedules ahead of us as we continue to deliver multi-story buildings of all sizes. This month marks the delivery of our tallest and most anticipated project yet, an 18-story structure with our customer oWow. We hope that this project not only sets the standard in the use of sustainable building products, but also proves the efficacy and cost-effectiveness of building with prefabricated Mass Ply Panels. We are also starting an Oregon local multi-story project called Minnesota Places.
Through the month of April our panels will be the primary rocking wall assembly for a 10-story shake table test at University of California, San Diego. This test is intended to prove that a wood structure can be built to withstand a significant earthquake. No test with conventional building materials has survived above four stories, so the potential for a much taller wood structure to survive is groundbreaking.
It is easy this time of the year to focus on the rain and snow, as well as the negative aspects of our markets. The future of wood looks bright and we are optimistic that the markets ahead of us are better than those behind us.
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