AUGUST 2023 BUILDING MATERIAL MARKET REFLECTION
August began with the same sluggish tone July finished on. It felt like we were poised for a correction in pricing. But as we hit mid-August the standoff between producers and buyers came to a head. With mills looking to move inventory and with lean inventory levels in the market, a bottom was established and a round of buying took place.
New Residential Construction Press Release (census.gov)
Monthly Housing Starts and Other Construction Data Tables | CMHC (cmhc-schl.gc.ca)
The Peak | One million residents short of estimates (readthepeak.com)
Even with the late month rally lumber prices still finished down month over month. 2×4 (-2%) and 2×6 (-10%) and 2×8 (+2%) and 2×10 (-10%). Studs were also moderately down, 2×4 (-3%) and 2×6 (-5%). Mill order files are stretching into the second or third week of September.
OSB topped out in August and began a correction of (-7%). As the month comes to a close it looks like this correction may be done for now. Mills are reporting continued strong sales from the box stores and product outside of monthly contracts remains difficult to source.
Plywood prices mirrored the correction of OSB coming off (-10%), and the market continues to feel soft heading into September.
Truss order files are coming in at a strong pace. We continue to hear of some EWP supply issues hitting some markets with extended lead times of up to 16 weeks. Right now, this seems to be limited to one or two suppliers, but it is something to keep an eye on.
The supply chain continues to be good in most products, outside of the odd logistical issue most products are arriving on or close to the scheduled delivery dates.
Looking Through the Crystal Ball
The fall season can be some of the busiest months in the building materials industry and this year looks to be no different. With mill order files into mid-September on lumber, and OSB even further out into October, which should see pricing remain in a narrow trading range for the short term. Expect buyers to continue to keep their inventories as lean as possible as higher interest rates will keep borrowing costs high.