Lumber and panel trading of almost all products took off like a rocket when business resumed Tuesday after the Labour Day long weekend, writes Keta Kosman in Madison’s Lumber Reporter
https://madisonsreport.com.
This is not a usual time of year for solid wood prices to be rising, and traders were generally taken by surprise as they leapt to fill the flurry of new orders.
The US continued the solid spate of buying customers there have been undertaking for the past few weeks. In western Canada, British Columbia sawmills reported sizable bulk orders from China, for both dimension lumber and studs. Studs producers in particular enjoyed high volumes of sales this week, giving them confidence to pop prices up slightly.
Benchmark dimension lumber, WSPF KD 2x4 #2&Btr, managed to gain $7 to finish the week at US$335 mfbm. Even with the increase in ordering and improved prices, order files at most mills grew -- to a week or two depending on the item -- providing an indication that follow-through in the next couple of weeks will be good.
Panel producers across North America were thrown through a loop with the announcement of
Louisana-Pacific Corp. (
NYSE: LPX,
Stock Forum) taking over the quality mills of
Ainsworth Lumber Co. Ltd. (
TSX: T.ANS,
Stock Forum). Pricing on plywood and Oriented Strand Board was extremely difficult to pin down this week due to the announcement. Panel traders expect to get a better gauge on market conditions once there is more communication with customers over the next few days.
Benchmark panel, OSB 7/16" Ontario, gained $5 to close the week at C$235 msf. For its part, plywood in the east did not do as well. Canadian softwood plywood 9.5mm in Toronto lost $8, to C$382 msf after a few weeks of up-and-down volatility as buyers and sellers negotiated acceptable price floors.
Even as lumber inventories remain dangerously underserved in this burgeoning US home building recovery, log supply at sawmills and panel mills across North America were much improved. Despite raging wildfires in southern Oregon, parts of Colorado, and California recently, the rest of the continent -- particularly the critical timber supply basket of British Columbia -- thankfully escaped significant wildfires so far this year.
With cooler temperatures and major rainfall in the past two weeks, operators were able to get into the back country and fill in their log yards. Most reported having enough fibre to take them through autumn wood production.
Having nurtured a new customer for wood products in China, British Columbia's lumber producers are learning how to serve both their traditional US customers and the new entrants from Asia. Until early this year the lessons were manageable, because demand from the US was still quite low. But going forward the shift in business will prove both challenging and interesting.
Canadian forest companies in the west are going to keep working with customers in both regions. Veteran buyers in the US tend to order a regular supply on a weekly basis, while new customers in China generally make large bulk orders every few months. Canada's mills are learning to provide product for the needs of both, and will be keeping up with this new way of doing business even as US housing starts passes the 1 million annualized mark next year.
Citing a stall in talks, the United Steel Workers announced this week they will be seeking a strike mandate from members next week, against
Canfor Corp.'s (
TSX: T.CFP,
Stock Forum) northern interior BC operations. Negotiations between the USW and Canfor will continue in September.
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Keta Kosman
Publisher
Madison's Lumber Reporter
604 984-6838
www.madisonsreport.com