MARCH 2022 BUILDING MATERIAL MARKET REFLECTION
March was a month that saw many factors impact market direction in both positive and negative ways. Logistics continued to be the focus point with everyone holding their breath on a potential CP Rail strike. Fortunately, this only lasted a day and a half before both sides agreed to binding arbitration so there would be no disruption. https://www.cbc.ca/news/canada/calgary/cp-rail-teamsters-canada-strike-1.6387936
The main factors that have been impacting the market eased as the month progressed
- Transportation, especially rail saw marked improvement.
- Labour, more specifically labour issues due to COVID
The easing on transportation very quickly brought available product to the market causing buyers to pause and take a wait and see approach, and cracks started form. As the month came to a close those cracks had widened considerably as both mills and secondaries searched for a trading level, further pushing buyers to the sidelines.
New home sales and starts continue to be very strong but it is being offset by lower than anticipated retail and DIY numbers. Are we starting to see the impact of record inflation levels in North America? That along with the impact of projected interest rate hikes are something to keep an eye one going forward.
OSB started to show some cracks in pricing for the first time in months. Mosty caused by transportation issues, secondaries searched to keep product moving in Canada because shipping to the U.S. had become very difficult. This brought product to the market at aggressive numbers well under contract pricing.
Plywood improved as most late shipments finally arrived. This stabilized pricing bringing everything back in line. Availably going forward is still relatively tight as mills are quoting May / June delivery on most new orders.
Truss orders were strong again for the month pushing lead times out for many producers. The impact of the EWP supply issues and allocations are being felt in full force. Some allocation levels were even lowered by some manufacturers. To say the next 2 months will be very challenging with EWP is an understatement.
Finishing products are seeing some relief as raw materials and products continue to get better with regards to offshore deliveries. This can be hit and miss at times, but the majority of manufacturers feel that they are through the worst of the supply issues.
Looking forward. With demand still strong in both Canada and the U.S. and many underbought heading into peak season there could be a very quick snap back once the buying starts. As one buyer put it, “everyone will try to squeeze through the same door at the same time”.