OCTOBER 2022 BUILDING MATERIAL MARKET REFLECTION
The market in October was a bit confusing. The fall push we typically see magnified as builders are trying to get as much of the backlog they have in the system out to the field before the end of 2022. This combined with suppliers keeping inventories lean heading into the winter has created a very tight supply-demand situation. The question everyone is wondering is once the backlog clears the system what will supply/demand look like?
Lumber was relatively flat on most trims with a slight decrease of approx. 2% on 2×4 and 2×8 and increase of 3% on 2×10. Interestingly 2×6 saw a big jump of 13% and is now trading at a premium to 2×4, which we do not see very often. Supply is tight with mill order files reaching 2-3 weeks.
OSB pricing had zero movement the entire month on R/L print. With mills down for maintenance throughout the month, there was very little product available allowing distribution to fetch up to a $200/M premium for prompt product out of their yards. Mills are pushing order files into December as they want to cover sales for the rest of the year at current levels. An indicator to what they are forecasting for 2023 prices?
Plywood pricing had little price movement for the month as well. Supply was tight and towards the end of the month, mills were trying to get an 8% premium on the Select grade items. Order files are also into December, and it looks like plywood mills are also trying to sell out the rest of the 2022 production.
With builders pushing hard to get as much to the field as they can to close out the year it has put huge pressure on truss production, most plants are running flat out. Joist and LVL supplies are back in balance as allocations have been lifted by most mills.
Supply issues in other Building material products are coming back to normal. LP Smart panel and trims expect to have back orders caught up by the end of the year, and extended lead times on other items are coming back in line. Exterior drywall is still an issue and with possible building code changes coming in some regions this could continue to be a major supply problem unless some alternatives are found.
Finishing products remain in good shape, although we are seeing some delays on products produced offshore.
Looking Through the Crystal Ball
With demand waning in North America, and the supply chain correcting itself, it feels there are more negatives than positives in the markets. Yet we see ourselves in a tight supply/demand cycle. This could flip very quickly as builders work through their backlog of sales they have for 2022. A strong indicator is mills actively trying to push order files out through the rest of this year at current prices.