Freres Lumber October Market Report: South American plywood claim filed; wood products market remains stable

October 14, 2019

The South American plywood claim for false labeling continues, with the legal process moving slowly. Meanwhile, the domestic veneer and plywood markets remain stable during the busy fall building season.

South American plywood claim

Shortly after last month’s newsletter was published, we announced that Freres Lumber had joined nine other structural panel producers to file a Lanham Act claim of false labeling against three U.S certification agencies. This South American plywood claim against three certification agencies who are fraudulently stamping Brazilian panels as conforming to U.S. Product Standard PS1-09.

Essentially, this is a mis-labeling claim asserting that the panels do not meet the minimum structural standards required under U.S. code. The stakes are incredibly high and the implications for the health and welfare of the consumer are staggering. Brazilian imports alone now account for more than 10% of the U.S. domestic market. A significant portion of the potentially structurally deficient panels were used in residential construction, especially in hurricane zones in the Southeast.

What if the panels contribute to a premature structural failure? The legal process moves forward slowly so we don’t expect more information to be available for a few months. Rest assured, we have done our due diligence and we believe we are on firm footing.

Veneer, Plywood Markets

There has not been any significant improvement in the veneer or plywood markets over the last months. Veneer prices have found a bottom and it doesn’t seem like there is an appetite for heavy discounts. The LVL market seems to be improving a little bit heading into the fall. This week we received more G ordersfrom Plant 4 than we have seen any week in the last 3 months. We hope that this is a sign that the plywood market will follow suit but have not seen any real indication of that yet.

Plant 6, our Mass Plywood Plant, is perhaps the most optimistic area for us right now. We have confirmation and payment on about 5 projects we have been working on for quite a while. We are waiting for final panel designs but should be proceeding on these jobs over the next couple of weeks. Both the number and size of projects that we are quoting for 2020 are staggering. Every indication is that the significant risk the company took to put in a one-of-a-kind manufacturing facility and developing a product from scratch will pay off in the future. We are hopeful that developing entirely new product lines will make us more immune to market downturns in the future.