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.
US Housing Stats April 2022
US Housing Stats May 2008
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.