Expectations for a Strong Fall Continue to Become More Positive
We find ourselves once again looking at a market that is offering somewhat mixed messaging, depending on the day and the hour that you choose to view it. We saw print up at the end of last week following a relatively reasonable sales week reported by most mills. That said, there is still some unease in the marketplace. We have seen mixed reports where some are commenting that supply seems tighter and more balanced, although we did not see a robust takeaway by any stretch of the imagination to finish off the week.
With that in mind, lumber is moving off, as we have seen mill lists thinner to start the week than they were the week prior. Mills are continuing to cautiously hold or raise numbers slightly, looking to continue building on order files.
Many are commenting that the pace of takeaway has improved quite a bit, and the expectations for a strong fall continue to become more and more positive with each coming day.
We certainly see this across the Western provinces, and it has stretched into the Eastern market as well, which was slightly behind the west as far as the uptick in activity is concerned.
Supply & Distribution Update
Reports from mills are that takeaway remains steady going into this week. Pricing continues its measured rise across the spectrum of material, reflecting the general tone we have seen over the last week.
SPF MSR, J-grade, appearance-grade, and stud availability remains tight through mills, and mill order files are beginning to extend past the 2-3 week mark. Many buyers' inventories remain lean, and prompt loads mill direct are increasingly difficult to source. We may be getting to the point where short-term demand outpaces available supply.
Pricing between Eastern and Western Canada has begun to equalize as takeaway in that market picks up for a busy fall construction season. While the Western Canadian SPF market has tightened as a result of the short-term emphasis at some larger mills on fir production, the sleeping giant that is the retail market has begun to wake and is exercising its influence as we see more SPF appearance-grade material gravitating toward that market, often cross-border.
Activity out of distribution yards continues to be steady as buyers utilize the availability of more difficult-to-acquire material on a prompt LTL basis, filling holes in inventories. Pricing is advantageous but increasing in parallel to that of the broader market.
News We Are Following
Lumber Crash Leads to ‘Blowout’ Sales as Prices CraterAmanda Stephenson - The Canadian Press
While many homeowners took the opportunity during the pandemic lockdowns to renovate, many others resisted for various reasons, with the high cost of lumber being one of them. But now those homeowners that didn’t take on renovations are getting a second chance with lumber prices coming back to earth. Glen Peacock, owner of Peacock Lumber, a family-operated business in Oshawa explains, “It was amazing it went as long as it did before people said, 'This is too much money,' " Peacock said. "People who waited, if they could, to do their projects are going to be in a much better position." What was $12.65 on June 1st for a piece of 2x4 framing lumber is now selling for $3.95.
Homebuilder Sentiment Improves for First Time in Three Months After a Big Drop in Lumber PricesDiana Olick - CNBC
With lumber prices easing and buyer demand growing, homebuilder sentiment is starting to climb again for the first time in three months. Prices peaked at around $1600 per thousand board feet over the spring but have since fallen to about one-quarter of that. But there is still caution out there. “Affordability remains a challenge, even with mortgage rates near historic lows; if the pace of income growth doesn’t keep up with inflation and interest rates rise more than expected, we’d expect housing activity to slow from our current projections,” said Doug Duncan, Fannie Mae’s chief economist.
Fire Tears Through Northeastern B.C. Log YardBritish Columbia CBC News
A fire was spotted by employees at a West Frasor log yard in Northeastern BC on Thursday, September 16th. Chetwynd volunteer firefighters were on the scene getting air support to extinguish the blaze. The fire did not affect the mill itself and no one was hurt.
The dimensional market had a strong week last week, running into our current lead week. We saw lists from the larger mills either thin to begin with or that were thinned out as the week went on. With takeaway being reported fairly robustly on the US side, Canada is participating, albeit at a slower pace.
Regional mills and the smaller localized mills continue to produce, bringing product to market and looking to find levels to move material.
There has been a price range offered from mills that are dependent on tallies and volumes. However, most mills are showing firmness and limited interest in listening to any type of counteroffers regardless of their situation.
In 2x4, it certainly feels a little tighter overall in the market. If you are looking for a specific tally with specific quality in mind, it is not as readily available as we have seen in the past several months. With that said, there does seem to be some material in the hands of wholesalers, so with a little flexibility, you should be able to achieve what you’re looking for. Again, expect to pay current levels with very limited room for price concession.
In 6”, once again, the gap is closing as 2x6 moves up closer to 4”. We do continue to see a gap between the printed levels and where mills are comfortable selling.
At this point in time, with the uptick in activity, mills are much more reluctant to move 6” product at levels that they do not feel is an adequate return to the mill.
Continuing to be in strong demand are 10’, 12’, and 16’, and we have seen a bit of tightness on the 16’ material.
The 2x8 market also printed up last week with stronger activity reported throughout. As we start the week, we do see some 8” at the mills, and again, prices have firmed somewhat. Similarly to 6”, mills have shown a reluctance to move off 8” at numbers they felt were not adequately representative of the demand for the product.
Look for 8” to continue to strengthen slightly at this point with availability being reasonable.
It was a quietly strong week last week for 2x10. We did see some good takeaway leading to a firming of prices and much less being shown on mill lists. This was welcome news as 10” has really languished over the last few weeks with large lists and sharp counters being reported.
At this point in time, Similar to the rest of the market’s general firmness, mills are more reluctant to pull back numbers, looking to hopefully continue to build on the order fille that is on the books.
Unfortunately, 2x12 is the lone outlier yet again. We continue to see 12” dipping as there is relatively better availability on lists and being reported from mills across most regions.
Interested buyers are coming back with reasonable counters, looking to put the business together. At this point, we anticipate this trend to continue until some type of floor can be established with respect to takeaway.
Strong stud demand has persisted this week after carrying over and maintaining increases through last week. Mills are firming up over weeks prior, gaining support from the more robust interest in dimensional #2&btr and order files touching on 2 to 3 weeks out. Prompt offerings and availability are much more limited. Almost all mills have instituted double-digit increases across all available offerings.
Purchasers looking to replenish immediate needs will find 2x6 9’ remains one of the most sought lengths absent from most mill lists. 2x4 and 2x6 8’ are proving more elusive as of late as well.
Purchasers have worked through most high-priced volumes and are currently eyeing the prospects of a busier fall. We can expect steady demand on more limited volume to be the prevailing narrative this week.
There was a little more of a positive tone being reported in the treated market this past week. After many weeks of feeling like there has just been no takeaway, and stores doing everything they can to entice buyers to move the product that they had hoped to have long sold, we did hear reports of an uptick in certain products. There was a slightly better sales pace in the retail sector across a number of regions.
It is a cautionary comment, as there still seems to be quite a bit of material on the ground and across stores, as we anticipate a flattening of demand through our progression into the fall months.
We anticipate treaters and retail yards are going to be taking a strong look over the next month and a half to try and make determinations as to what type of programs may be in the cards for the upcoming 2022 season. It is certainly going to be much different than we have seen in years past, as trying to gauge levels will be quite a challenge.
As predicted, mills were quite busy with MSR sales over the last week. Most mills did not have much to offer over the next 2 weeks, but what little was available, were sold quite quickly. Because of the limited supply, mills continue to be firm on pricing with very specific tallies.
The majority of our MSR purchases have been bought for our inventory locations across Canada, as the demand for specific tallies on full, or LTL mixed loads remains extremely busy.
Our truss customers continue to tell us they are busy and have order files through the fall, so we do expect prices to be firm to up over the next 4 to 6 weeks.
The plywood market had a notably better week, with mills reporting reasonable sales coming in, both in the Western provinces and out east.
Prices remain flat, but again, we have seen a significant uptick in demand and takeaway. The market continues to feel balanced at this point in time. Mills are doing everything they can to bolster their order file with the hopes that there may be an opportunity to push numbers up ever so slightly if they can develop a file that extends out past a couple of weeks. We don’t see that happening...yet. However, the balance in the market is leading consumers to feel much better about purchasing to their needs, both current and upcoming.
For OSB, we yet saw another week with print up slightly on the back of limited availability in the cash market across all mills.
Contract positions continue to get scooped up as mills remain sidelined within the cash market, we anticipate this price strengthening to remain.
Of note, thin panels continue to be a challenge to source. In particular, ⅜” and 7/16” production seems to be potentially under-serviced at this moment. As a result, demand continues to be strong, with stores both large and small looking to fill current and upcoming fall needs. This might be having an effect on the plywood market too, as there has been an uptick in demand and inquiries for ⅜” plywood as a possible substitution.
We have inventories across the country to help fill your LTL and prompt lumber needs. Whether it’s studs, dimensional lumber, MSR, OSB or plywood, we have material on the ground and can fill your mixed truckload needs.