This week, benchmark WSPF dimension lumber prices remained relatively flat while all panels experienced sickening price drops, writes Keta Kosman in Madison’s Lumber Reporterhttps://madisonsreport.com
In further indication that even those producing, buying, and selling wood across North America at significant volumes are finding current market conditions confusing, lumber futures firmed up encouragingly while stocking wholesalers on the US eastern seaboard accused sawmills of "either maliciousness or ignorance".
The drastic price drops across all wood commodities in the past month prompted customers from China to buy enough this week to bring some western Canadian mill order files up to two weeks.
Apparently at least some customers from that populous nation found themselves unable to resist current low prices.
The promising sales were credited by players for the one-day futures up-limit trading on Wednesday. Lumber futures remained firm for the rest of this week, in a possible indication that this recent extreme lumber price volatility could be passing.
The US home building, renovating, and remodelling season is getting truly underway. Domestically, Southern Yellow Pine lumber prices stayed flat on the east side this week, while in the west the drops were by $5 or $10 increments only.
It's possible that reluctance on the part of customers to purchase at recent highs has finally served to bring prices down to acceptable levels.
Marked price drops in Oriented Strand Board (OSB) and plywood across all regions did little to raise the spirits of players. Panel manufacturers in the east are hoping their strategy this week will pay off: they slashed the price of benchmark OSB 7/16" in the Great Lakes Zone by $38, or almost 11 per cent, in the hopes that this would be the last of the recent price retracements.
Producers and wholesalers have been struggling to find a bottom for the lumber market, and this week may have achieved just that.
OSB and plywood makers in other regions could do little but also drop their prices in response. As this current volatility settles down, it is precisely the panel mills who will benefit the most first -- in response to even slightly increasing demand they will be able to raise prices more quickly than will dimension lumber makers.
Expect share prices of Norbord Inc. (TSX: T.NBD, Stock Forum), Louisiana-Pacific Corp. (NYSE: LPX, Stock Forum), Boise Cascade Co. (NYSE: BCC, Stock Forum), and Ainsworth Lumber Co. Ltd. (TSX: T.ANS, Stock Forum) to improve accordingly.
Resellers told Madison's Lumber Reporter this week that they were still having trouble unloading the expensive wood they received during the buying frenzy of a few weeks ago.
Concern was palpable across the continent as mills continue to produce wood at a $60 or more discount to what customers paid just four short weeks ago. Until this undervalued wood gets digested though the marketplace, price volatility will continue.
Various producers in different regions of Canada and the US have pulled back on production increases ordered during 1Q, to some degree at least.
However the expense of first increasing capacity then cutting back shifts usually offsets any temporary price fluctuations, so the expectation is that the ramping up will generally be maintained through summer.
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Keta Kosman
Publisher
Madison's Lumber Reporter
604 984-6838
www.madisonsreport.com