DECEMBER 2022 BUILDING MATERIAL MARKET REFLECTION
The lackluster feel continued through December, which is to be expected given the lead-up to the holiday season. Even mill curtailment announcements could not inject some life into the market. Mills were open to significant counters on some items but held firm on others, creating a bit of confusion that had buyers wondering if we were getting closer to a balance in supply and demand. Buyers continued to keep inventories on the lean side looking for a sign we have reached a bottom.
Lumber continued to be soft except for a few items I.E., 2×4-16 #2 & Btr. At current levels, there seems to be little downside risk on 2×4. 2×6 on the other hand continues to trade at a significant premium to 2×4 which has most buyers proceeding a bit more cautiously on this item.
OSB looks to have found a bottom as the year comes to a close. Mills have order files through January so we can expect pricing to remain flat to start the year.
Plywood continues to trade at strong levels compared to OSB. As we commented last month this suggests something will have to give. Either plywood will move down or OSB will move up or a combination of both, to close the gap.
As both builders and manufacturers work through the backlog created in 2022 truss production continues to be maxed out at most facilities heading into 2023. Both the LVL and joist supply chains have made full corrections and availability is not an issue moving forward. Again, we are hearing price decreases could be coming in the New Year.
Most other building materials and finish products supply remains in good stead. The exception is exterior drywall, this product continues to be an issue in the market as supply remains on allocations with few alternative options available.
Looking Through the Crystal Ball
The dramatic volatility we have experienced on almost all items looks to have run its course. With most of the supply chain, raw material shortages, and freight issues we experienced over the past 2 years having corrected themselves, supply and demand and pricing on most materials are searching to find a balance. Combined with lower housing starts reported in Canada and the US, we can expect continued curtailments on most items’ manufacturing side. With many regions of North America still underbuilt, once inflation and interest rates come back in line can we expect to see the building take off again? Time will tell.
Happy New Year from our Star Building Materials team and all the best in 2023.