FEBRUARY 2022 BUILDING MATERIAL MARKET REFLECTION
Transportation issues continue to be the theme across North America. Reduced rail car and truck availability has put extreme pressure on manufacturers across all product lines to get their products to market. Freight rates continue to rise with reports of some carriers asking more than double the previous rates. This combined with continued strong housing starts is creating tremendous challenges in the industry.
Although lumber futures have been up and down in February, the lumber market continues to press higher with upward prices reported across all dimensions. Strong takeaway continues in both the U.S. and Canada as we head into spring. To add to the shipping issues that have plagued the industry this year, mills in Western Canada are starting to pull production off the market either due to;
- The inability to ship products to market, Trucking and rail service.
- The reduced allowable cut is limiting their ability to access logs
- West Fraser informing customers they will be going to 3 days per week production at all their BC mills until the end of March. This is due to a buildup of inventory at the mills as they struggle with transportation.
OSB availability outside of contract loads remains scarce. Mills have been off the market on open market offerings since December. This is creating a large premium between contract prices vs open market prices. Some buyers have looked to plywood as an alternate product, but lack of supply is limiting that option at this time.
Plywood challenges are stemming from late shipments caused by the transportation issues. Some are waiting on product that was scheduled to arrive at the beginning of January. Most mills remain off the market, expect plywood to remain in tight supply until we see some relief in transportation.
Truss orders continue to ramp up based off strong sales, as builders continue their torrid pace. Supply issues and allocations remain on EWP if this pace continues you can expect to see supply issues in the upcoming months.
Finishing products are also feeling the effect of transportation issues as producers continue to wait for raw materials or components to arrive via offshore shipments. Again, we can expect this problem to continue as long as we are dealing with these transportation issues. Price increases continue to impact most product lines as manufacturers try to keep up with escalating raw material costs.