NOVEMBER 2022 BUILDING MATERIAL MARKET REFLECTION

The November market in a word was lackluster. We saw some buying done before the U.S. Thanksgiving weekend but there was little follow-through afterward. The takeaway is still strong as builders continue to push to get as much out to the field as they can. Most suppliers continue to run inventories lean as the market remains soft on most products.

https://www.barchart.com/story/news/12030797/lumber-zzzzzz

New Residential Construction Press Release (census.gov)

Canada Housing Starts – November 2022 Data – 1977-2021 Historical – December Forecast (tradingeconomics.com)

We saw downward pressure on most lumber items with 2×6 being the exception, but by the end of the month, cracks were starting to show there as well. Even with the market softness, prompt material was difficult to source as winter weather and transportation issues caused delays leaving buyers scrambling at times.

OSB finally showed some cracks after being relatively flat for 6 weeks. Mills have sold their production through 2022 so we would not expect much more downside through December.

Plywood was up over the month creating a large spread between it and OSB. This suggests something will have to give there. Either plywood will move down or OSB will move up or a combination of both, to close the gap. Reports of U.S. plywood coming into Canada at cheaper levels only creates more pricing pressure.

As builders continue to try to get as much out to sites as they can, truss production continues to be under pressure. Although we are starting to see jobs now getting rescheduled into the beginning of 2023 due to weather and a glut of materials flooding sites. LVL and Joist supply remains good, with reported price decreases being considered for the New Year.

Most supply challenges on other building materials are starting to come back in line. Exterior drywall is still under allocations with no light at the end of the tunnel heading into 2023.

Finishing products supply like mouldings and interior doors remain in good shape, although we are still seeing some delays on products produced offshore. Garage door lead times continue to be extended as well.

Looking Through the Crystal Ball

As we head into the home stretch of 2022, we continue to see demand waning and prices deteriorating. This formula would suggest more mill curtailments are coming, as mills search to find a supply vs demand balance that holds prices at an acceptable level.

FRAMING LUMBER

2×4 is leading the charge down. Keep an eye on 2×6 as it would seem to have the most downside risk with its current premium to 2×4. At these levels mill curtailments could be coming.

OSB

Finally showed some cracks in pricing towards the end of the month. Most mills report selling their production for the rest of 2022 which could hold close to these current levels for the rest of the year.

PLYWOOD

Plywood seeing an upward price push in November was against the trends of most other market items. With U.S. product coming into Canada at cheaper levels this should cause some price pressure on Canadian Plywood.

NOVEMBER 25, 2022 LUMBER MARKET REPORT HIGHLIGHTS:

• Framing lumber sales slowed due to the U.S. Thanksgiving holiday approaching.
• The potential for a rail strike caught traders attention, but did not make an impact.
• There was very little activity in the futures market.
• In Western S-P-F prices declined due to the less demand.

NOVEMBER 25, 2022 PANEL MARKET REPORT HIGHLIGHTS:

• OSB producers lowered quotes prior to the U.S. Thanksgiving weekend.
• Due to the potential for a rail strike, OSB traders showed willingness to purchase.
• Western Plywood demand was dull throughout the week.
• Sheathing demand in Western Canada remained steady.

*All Pricing is in CAD