This Week In Wood

 

Treated Is a Bright Spot in the Overall Lumber Market

As we prepare to bid farewell to May, much like April, it seems the month has flown by faster than many might have anticipated.

Looking back, the overall market tone in May bears a close resemblance to that of the month prior. We find ourselves entrenched in a market that can best be described as underwhelming.

Trading levels have been very much range-bound. While there's been a slight drift downward in the overall market during this period, the change has been minimal, and movements continue to be relatively small.

The previous week exhibited flat performance across all markets. Trading continues daily, with a significant number of customers reporting decent activity levels. Nevertheless, the supply of material in the market remains more than sufficient.

Over the past few months, various discussions have been held in the hope of identifying a catalyst that could trigger a real surge in demand and potentially lead to an increase in pricing. Whether these discussions have centred on the fire situation or numerous curtailments, numerous opportunities have presented themselves for the market to react significantly, yet we haven't observed such a response.

This lack of response has led to a growing sentiment that we may continue to witness this tight, flat range as we transition into June and proceed further into the summer. This outlook remains unchanged, regardless of a possible steady uptick in takeaway. The market appears balanced to slightly oversupplied, and we are yet to observe a shift in demand that could disrupt this equilibrium.

---

Supply & Distribution Update

Curtailed supplies have largely matched lacklustre demand in the past week. Along with ample transportation supply, buyers continue to fulfill only their immediate needs. With an unclear direction, the market brings hesitancy among users resulting in an overall sluggish activity. End user takeaway remains below average, resulting in abundant supply. Lumber yards continue to run thin inventories. Product and transportation supply is favourable for developing lower carrying costs while utilizing just-in-time delivery. Supply and demand have narrowed in margin, but the market still portrays a feeling of oversaturation.

The demand on distribution yards has been intermediate. Previous weeks report a steady pace as this week starts off with ample availability. The Canadian holiday had little to no effect on distribution and transportation, which is out of the ordinary. The need for distribution is strong and a very valuable service to many lumber yards in such a cautious market. 

The transportation market remains highly competitive. There have been fluctuations in fuel pricing that have not had any substantial effect on freight rates. The movement of material is still steady but not busy. Trucking organizations are fighting for more business while offering just-in-time deliveries. This remains unchanged from previous weeks. Ample availability means its imperative for customer service to help drive sales in this predatory market. There has yet to be any indication that this will change in the foreseeable future. 

Contact CEWP Today

---

News We Are Following

---

Dimensional Lumber

Summary

The dimensional markets over the past few weeks have posed a challenging situation in terms of finding unique and new perspectives. This past week was no different, mirroring a very flat market overall with little price movements.

Daily activity persists, with buying and selling taking place, and opportunities for specific deals continue to emerge. However, the market remains predominantly flat, with consumers generally inclined to purchase based on their immediate needs, usually not extending their foresight beyond 2-3 weeks.

2x4

Overall, the pricing for 2x4 remained flat, with slight downward pressure on the longer lengths concluding the week on print. The availability of random length continues to be satisfactory, spanning various quality levels through #2&btr and appearance grade items.

Looking forward, we don't anticipate substantial changes in the 4" market. As we've noted on multiple occasions, the downside is quite limited since mills have established a base level and are reluctant to go below that. Concurrently, there doesn't appear to be enough demand to significantly drive prices upwards, maintaining the 4" market in a flat trading range.

2x6

The 2x6 market continues to command a slight premium over 4”, albeit experiencing a gradual erosion. This trend has led some consumers to believe there might be more opportunities to delay purchases of 6” items in anticipation of slightly lower prices.

Such a scenario could potentially materialize. However, if prices do continue to drop, we anticipate the rate of decline to remain slow. Therefore, consumers will need to balance their needs and shipping times against the potential for modest savings on the purchase price.

2x8

The performance of 2x8 has been notably lackluster over the past several months. Pricing for 2x8 is expected to remain weak, given the diminished availability at the mills and a lack of incentives for mills to produce 8” at the current levels. Therefore, we don't foresee an improvement on the supply side.

However, there seems to be more than an adequate supply to meet the relatively modest demand we're witnessing for 8”. Therefore, expect the 8” market to continue its flat trend, with minimal downside.

2x10

The 2x10 market is demonstrating slightly stronger performance than 8” material. We're noticing more 10” on mill lists, and it feels like there’s limited downward pressure, indicating a better balance in mill supplies.

Covering your 10” needs shouldn't be an issue while not taking on a tremendous amount of risk.

2x12

2x12 continues to maintain a significantly higher value on print. However, demand for 12” remains minimal.

Despite this, we see lists and availability remain robust. There have been opportunities for savings when submitting firm offers to mills with realistic orders in hand. However, such opportunities are relatively rare. Therefore, we don't anticipate any steep dips in the pricing for 2x12. Yet, there is a noticeable gap between print pricing and the actual transactional prices where business is being done.

---

Studs

As with all things in the lumber market these past 3 weeks, demand has remained uninspired and more muted than expected. Purchasers continue to have adopted a cautious approach, as many have yet to see the necessity in stepping into much volume, and instead remain reluctant to cover much more than only their near-term needs.

Mill offerings continue to appear somewhat limited, depending on the length. 2x4 and 2x6 9’ trims remain somewhat sparse, while most other trims appear to be held to a comfortable 2-week order file. Prompt options do remain week to week, centred around more regional mills that typically operate with tighter order files and an abundance of on-ground availability. These mills are still looking to capitalize on the just-in-time purchasing mentality and will typically be the most expensive option, in line with or eclipsing even distribution or LTL pricing. Having a familiarity with your inventory turns and extending your purchasing outlook out 3 weeks or further will ensure you are presented with the best pricing available.

As this week progresses, we can expect mills will try to sustain their established pricing. Mill offers have been firmer as of late, but another week or two of similarly soft demand may see producers looking to take on steeper offers in a bid to entice demand that has been so fleeting all of May. Expect that purchaser will continue to hold off in the hopes of seeing a more clear market direction develop in the coming weeks. 

---

Treated Lumber

The treated market continues to be somewhat of a bright spot, showing improved overall consumer uptake. We've also noticed a slight increase in replenishment activity from the treaters themselves.

One noteworthy point is that the volumes of treated product committed in the spring were generally lower. Consequently, the current activity we're observing may not necessarily reflect a surge in demand, but rather a return to more traditional activity. Stores that initially purchased smaller volumes are now having to replenish to cover their usual requirements that they would have fulfilled months ago.

Overall, the treated market remains positive. Given that we could have been confronted with a sluggish treated season, raising concerns about the market's health as we transition into the summer and fall months, the current outlook is reassuring. For the time being, the treated market appears set to maintain relative positivity and stability.

---

MSR Lumber

With the short week last week, we didn't see a lot of change with regard to MSR. Although mills have a lot of material on the ground, some items are proving difficult to get in a timely manner, especially if there is little flexibility on the tally that you need. 2x8 1950 availability continues to be sparse, and 2x6 MSR is being quoted out about 2 weeks. Because of the lack of flexibility in tallies, and truss manufacturers wanting to limit their stock on ground, we continue to be extremely busy out of our inventory locations. We are currently fully stocked with material coming in, but we are still waiting for some items to physically deliver into some of our locations.

Truss manufacturers continue to report being busy quoting, and more are reporting that agricultural jobs are starting to get the green light to move forward. Because of this, as we said earlier, the demand for 2x6 and 2x8 is increasing. We know that it can be tough to give 2-3 weeks' head's up on orders, but as much head's up as possible would be appreciated so we can meet your desired tally demands. Over the next few weeks, we aren't seeing a lot of information indicating that a price surge will be coming, but availability is getting tighter. If there are jobs that you need to cover, we feel that it is relatively low risk to get them covered. 

If there is an update that you need on pricing and availability, please feel free to reach out to CEWP.

Contact Us for Up-to-Date Pricing & Availability

---

Douglas Fir & Larch MSR

The fir/larch MSR market saw spurts of increased activity leading into the Memorial Day weekend in the US as buyers worked to cover their immediate needs for specified tallies with prompt delivery times. The market focus remained primarily on 2x4 1800/2400, which saw enough activity to hold pricing flat as 2x6 trims continued to struggle to find a footing in the market and price depreciation continued.

Mills worked to hold pricing near list levels but did accept counters, particularly on volume and on sore spots such as 2x6 1800/2400. Some buyers utilized distribution's continued liquidation of oversupplied inventories, but the availability of that material appears to be thinning. While the overall supply-demand balance remains weighted to supply, it has been a challenge to source specified tallies with prompt delivery in more in-demand 2x4 and 2x10 products.

As we head into June, manufacturers remain cautiously optimistic that the booking of summer work will carry on at an increasingly steady pace. We continue to anticipate that this is likely the trading bandwidth for the summer. Downside risk remains limited, and mills will continue to work at bringing market supply/demand into balance through reduced production. Buying will remain cautious, non-speculative, focused on specific tallies, and prompt delivery times.

---

Panel Products

Plywood

Last week, the plywood market experienced a minor increase in inquiries, but this interest faded within a few days in the Western Canadian market. Order files remain prompt for supers in the West. Eastern Canada maintains a consistent steadiness, even though print experienced a drop on Friday. Producers have been receptive to volume purchases, but demand in the West hasn't fully materialized as of yet.

OSB

The pace of the OSB market in Western Canada continued to slow this past week, registering a flat print for the third consecutive week. Most buyers have been leaning on LTL or contract loads to meet their needs without the desire to bulk up on additional inventory. Despite this, the balance of supply still feels precarious. US demand has receded somewhat, but if it were to increase again for any significant volume, supply constraints might quickly become apparent. Current order files range from prompt for smaller volumes to the end of June for the majority.

---

Available Materials

We have well-priced weekly lumber, plywood and OSB contracts. We also have fully stocked inventories with LTL options to cover any necessary requirements.

Contact CEWP Today

 

Learn more...