AUGUST 2021 BUILDING MATERIAL MARKET REFLECTION

The market correction in lumber, OSB, and Plywood continued through August. As the month comes to a close it looks like a bottom may have been found. Buyers seem to have a comfort level at current prices and are starting to look to cover fall business. With most of the downside risk out of the market, the question now is what is the upside moving forward?

Although there is a welcome relief from lower lumber prices Engineered Wood products continue to be capped with allocations on joists, beams, and rimboard, which is limiting new sales growth moving forward. Producers continue to try to manage these supply constraints with their current customer base.

The finishing side continues to struggle as MDF raw material supply remains a concern for almost all producers. There is some hope of light at the end of the tunnel as suppliers are optimistic that material expected to arrive in the next month or so should alleviate some pressure.

FRAMING LUMBER

After hitting a bit of a shelf at the end of July lumber continued to slide through August as it tries to find a trading level. As the month comes to a close, we may have found a bottom as activity has started to increase with buyers looking at their fall requirements. When you combine that with increased offshore business and some mill production curtailments it looks like supply and demand are starting to balance out.

OSB

OSB is another item that seems to have found a trading level as we head into September. After hitting record highs earlier this year it looks to have found a bottom in August. As with lumber, many are wondering how big of a bounce can we expect heading into the fall?

PLYWOOD

Plywood is continuing to search for its trading level, and it feels like we are getting close. It was a product that caused a lot of pain for buyers that went long on this item before prices collapsed. Because of that I would expect many to be cautious going forward.

ENGINEERED WOOD PRODUCTS

Truss order files continue to range from 4 to 12 weeks depending on the manufacturer. These extended lead times are causing some concerns with builders looking for product sooner. Pricing continues to stabilize as lumber looks to have found a bottom heading into September. Allocations continue EWP with no end in sight as we head into the fall and winter.

FINISHING PRODUCTS

MDF raw material continues to be a challenge, especially in the ½” thickness. Manufacturers are cautiously optimistic that expected product scheduled to arrive in September will alleviate the pressure. Hopefully this happens as we are anticipating September, October, November to be the peak takeaway months in finishing.

AUGUST 27, 2021 LUMBER MARKET REPORT HIGHLIGHTS:

• Many framing lumber prices continued to fall, but traders’ sense that a bottom was at hand strengthened.
• Buyers continued to work through higher-priced inventories, and noted that contract volumes and supplies out of distribution yards and reloads were ample.
• Even so, prices moving down to pre-pandemic levels drew in more inquiries, if not sales.
• Amid a stronger tone to the overall market, drops in prices through the week pushed the Random Lengths Framing Lumber Composite Price down for a 14th consecutive week.

AUGUST 27, 2021 PANEL MARKET REPORT HIGHLIGHTS:

• Structural panel prices gained traction as sales picked up. A steady flow of replenishment purchases supported modest price gains in OSB throughout North America.
• In Southern Pine plywood, lingering discounts in rated sheathing dissipated with steady replenishment from a mix of buying segments.
• Light yet improved western Fir plywood sales continued, but downward pressure on prices persisted.
• Canadian plywood prices were not as prone to the steep price cuts seen in prior weeks, as traders generally noted a better tone and anticipation of improved sales in September.

*All Pricing is in CAD