MAY 2022 BUILDING MATERIAL MARKET REFLECTION
May was a month of corrections in the markets. With rising interest rates continuing in both Canada and the U.S. there is a lot of uncertainty in the North American economy at the moment. That combined with continued transportation issues has made for a very difficult market to read.
Housing Starts remained quite strong in the U.S. with a shift from single family to multifamily keeping numbers up. This did little to inspire the market. I have attached an interesting comparison with housing starts from May 2005, the peak of the U.S. housing market. Notice the difference in completions from 2005 and 2022. A direct impact from labor and supply issues.
As mentioned, we saw a steep correction in lumber, adjusting down on 2×4 and 2×6 #2 &Btr more than $400/M CAD for the month, and it doesn’t feel like we have it bottom yet. Mills continue to search for a trading level with little success. Combined with continued rail car issues it feels like product is starting to pile up.
The OSB decline started a bit later dropping $180/M in the last two weeks of the month. News of a fire out of one of the Tolko mills may slow down the decline as many buyers are waiting for news on how long the mill will be down to assess the impact it will have on the market.
Plywood held its own most of the month on Random Length Print, but the cash market was telling a different story with volume deals being done at -15% off those levels. Expect to see prices correct to those cash prices over the next few weeks.
Truss orders continue to be strong keeping manufacturers on there toes to keep up to the demand. The EWP situation continues to be dire, continued allocations, combine that with late shipments due to production issues at the mills is causing significant delays to builders.
Something positive as finishing products look to have stabilized for the most part. And production looks to have caught up to supply. Look for continued price increases in the months ahead as raw material costs continue to rise.
Looking Through the Crystal Ball
With the May long weekend concluding in both Canada and the U.S. it will be interesting to see how retail sales performed on there “benchmark” weekend. What will the impact of inflation and rising interest rates have? When will the transportation issues work themselves out? Lots of questions has everyone searching for some answers to try and figure out this market going forward.
FRAMING LUMBER
A hard and fast correction saw prices drop in excess of $400/M on some items and it doesn’t feel like we’ve found a bottom quite yet. Mills and secondary’s continue to look for a trading level while buyers are comfortable sitting on the sidelines until we hit a bottom.
| R/L | MAY 26, 2022 | APR 29, 2022 | +/- |
|---|---|---|---|
| 2×4 | $961 | $1,385 | -424 |
| 2×6 | $794 | $1,257 | -463 |
| 2×8 | $954 | $1,193 | -239 |
| 2×10 | $1,076 | $1,276 | -200 |
| 2×12 | $1,377 | $1,526 | -149 |
| STUDS | MAY 26, 2022 | APR 29, 2022 | +/- |
|---|---|---|---|
| 2×4 – 92 5/8“ | $1,057 | $1,302 | -245 |
| 2×4 – 104 5/8“ | $1,025 | $1,283 | -258 |
| 2×6 – 92 5/8“ | $916 | $1,122 | -206 |
| 2×6 4/8“ | $1,261 | $1,411 | -150 |
OSB
The drop in OSB followed lumber as it usually does, falling $180/M over the last two weeks of the month. A fire at one of Tolko’s mills may slow down the correction depending on the severity.
| OSB | MAY 26, 2022 | APR 29, 2022 | +/- |
|---|---|---|---|
| 3/8″ | $800 | $980 | -180 |
| 7/16″ | $800 | $980 | -180 |
| 15/32″ | $820 | $1,000 | -180 |
| 19/32″ | $1,065 | $1,225 | -160 |
| 23/32″ | $1,265 | $1,455 | -190 |
PLYWOOD
Plywood has not changed much on Random Length Print, but the cash market is trading at -15% off those levels. Print will have to catch up to cash over the next few weeks so expect a sharp decline in pricing.
| PLYWOOD (STD) | APR 29, 2022 | APR 29, 2022 | +/- |
|---|---|---|---|
| 9.5 (3/8) | $1,062 | $1,119 | -57 |
| 12.5 (1/2) | $1,416 | $1,492 | -76 |
| 15.5 (5/8) | $1,770 | $1,865 | -95 |
| 18.5 (3/4) | $2,124 | $2,238 | -114 |
| 25.5 | $3,192 | $3,363 | -171 |
Framing Lumber Composite Price
MAY 27, 2022 LUMBER MARKET REPORT HIGHLIGHTS:
- North American traders saw triple-digit discounts across framing lumber species.
- Western S-P-F experienced a severe decrease in price due to cautious buyers, industry events, and U.S. and Canadian holidays.
- The July futures contact alternated between gains and losses, meanwhile, cash prices decreased through the week.
- The Western S-P-F stud price decreased across grades, widths, and trims.
| This Week | Last Week | Year Ago | |
|---|---|---|---|
| FRAMING LUMBER COMPOSITE PRICE | $1,017 | $1,156 | $1,807 |
| 2×4 #2&BTR KD Western S-P-F | $961 | $1,155 | $1,935 |
| 2×6 #2&BTR KD Western S-P-F | $794 | $1,020 | $1,947 |
| 2x4x9′ Studs | $1,069 | $1,270 | $2,165 |
| 2x6x9′ Studs | $1,313 | $1,437 | $2,280 |
| 2×10 #2&BTR KD Western S-P-F | $1,218 | $1,387 | $2,062 |
2020-2022 FRAMING LUMBER COMPOSITE PRICE
Structural Panel Composite Price
MAY 27, 2022 PANEL MARKET REPORT HIGHLIGHTS:
- OSB prices continued to soften and traders needs to asses numerous factors when making purchasing decisions.
- Sheathing prices continue to decrease as producers used different discounts to try to maintain liquidity.
- Buyers have looked to purchasing single truckloads to decrease delivery time.
- Sheathing is selling well below published levels which can be contributed to traders being away from their desk due to the long weekend.
| This Week | Last Week | Year Ago | |
|---|---|---|---|
| ORIENTED STRAND COMPOSITE | $960 | $1,051 | $1,755 |
| 3/8″ 4×8 OSB | $800 | $870 | $1,875 |
| 23/32″ 4×8 OSB T&G | $1,265 | $1,365 | $2,385 |
| 3/8″ 4×8 Spruce Plywood | $1,062 | $1,119 | $1,519 |
2020-2022 ORIENTED STRAND BOARD COMPOSITE PRICE
*All Pricing is in CAD