Freres Lumber May Market Update: Plywood Markets Building after COVID-19 Slumber

May 25, 2020

In the past three weeks we have seen Western Plywood markets building and coming alive, after about a ten week slumber. Markets are not crazy, mind you, but steady. For obvious reasons stemming from our global lockdown, all commodity markets have suffered dearly. Most other businesses, small and large, have suffered, as well. The one thing you can say about COVID-19 is that there are few areas that have not been affected. Some areas are experiencing disastrous consequences, in our country and around the world. The virus is not discriminating in where it spreads and who it affects. It is affecting everyone.

But things are looking up now, as the country gradually reopens. Plywood markets are building and starting to stir as a result of available resources and pent-up energy. People and companies are adapting and making things happen. This is all good news!

Positive Panel Sectors

Currently all commodity panel sectors – OSB, SYP Plywood, Western Plywood, and Canadian Plywood are positive and firm. These sectors are up and looking to build on recent gains. Order files in general, are now booked out to the second to third week in June. It is difficult to not be optimistic, given what the markets have done with barely 50% participation around the country so far. Our biggest consuming area, the Northeast, is lagging behind and just beginning to open up a bit.

Many things are still uncertain regarding the virus and the effects of opening up swaths of the country. But it is reasonable to expect that, at a minimum, construction projects that were shelved during the lockdown period are now restarting and moving forward. This means the ability to accept wood on jobsites, which is a crucial factor in businesses getting life pumped back into their operations. A really good thing.

I believe that markets could continue to perform well through June, since many areas of the country are currently underbought. This should continue to fuel the market over the next several weeks. It is a mixed bag out there, as the level of activity varies around the country. With an uneven restart, some areas are picking up quickly and others are moving slower out of the gates.

Looking Ahead

What will happen to business in the field for the third quarter and beyond is still uncertain. Some say that things will slow down again, after exhausting the current backlog of business. Perhaps this will be the case. For now, nearby fundamentals are ruling the day. If you have people asking for wood and you don’t have it, you had better get some. Simple, not a lot of deep thinking needed. Those fundamentals are what we are focused on. And for now, we will take the better pace of business. It certainly feels good to be conducting business on a daily basis. This is important for all of us.

Be safe.

Bob Maeda