MSR Demand Continues to Be Very Strong
The calendar has turned the page, and we are now firmly planted in October with fall in full swing. We saw yet another week of strength being reported from mills with balanced takeaway throughout the week, culminating with print moving up again to finish off.
As in previous weeks, there was not a feeling of a stampede of activity. Rather, it was quietly and cautiously strong, with very good takeaway being reported from the prefab and truss industries. As well, commercial and contractor yards continued to try to fill needs cautiously.
In response to the uptick from last week, we see prices creeping up modestly. At the same time, lists continue to be a little more spotty, with holes in certain areas overall.
The wholesale and secondary communities continue to move off their positions. The question remains, how much volume is in the hands of secondaries? Over the last couple of weeks, however, we have seen the price gap continue to narrow, which leads us to believe that there really is not much of the cheaper wood available at the distribution level.
There have been some reports of shipping delays that are still hampering consumers, and this looks like it may continue with the larger issues of our global supply chain still struggling. We anticipate shipping issues to remain a focus as we roll through the remainder of the year.
The anticipation of the global supply chains finding some semblance of balance is not even on the radar at this point in time, so caution is really warranted when looking at your purchasing needs and your timelines.
Supply & Distribution Update
The market has remained steady, both out of mills and distribution. Order files through mills have continued to extend into November. Prompt loads direct from mills are available but are priced at a premium and often bought quickly.
Short-term demand is slightly ahead of available supply, and the feeling in the market is of cautious strength. We have seen some broader availability on certain SPF #2&btr materials, but largely, SPF, MSR, J-grade, and appearance-grade in studs have continued to be tight through mills. Longs are particularly difficult to source at the moment, so expect to see pricing to reflect that.
Buying remains largely to fill needs, which when mixed with the relatively strong activity in the market and limited availability of materials, continues to push prices upward.
Activity out of distribution yards remains steady as buyers are utilizing the availability of more difficult to source materials on an LTL basis.
Transportation delays of material out of Northern mills into Southern markets remains an obstacle as those lanes are not seeing consistent back and forth of materials and goods. Otherwise, train and car shipments are moving on par in reflection to the larger ongoing supply chain issues.
News We Are Following
Lumber Prices - What’s Happening Now?Candyd Mendoza - MPA
Lumber futures now stand 40% higher than they were in late August and nearing their pre-pandemic levels. Western SPF softwood lumber is also up about 7% over the previous month. Industry experts expect prices to continue to rise, creating a balance in supply and demand. “We think this $100 run that we’ve seen so far, that we’re not done yet,” Paul Jannke, a lumber analyst for Forest Economic Advisors, said in a statement. “We do think over the next few years, on average, that prices are going to come off, but they are going to remain high relative to history.”
Housing Starts in Canada Reach Levels Not Seen in More Than 40 YearsJoel Schlesinger - Calgary Herald
An RBC Economics report shows that housing starts in Canada are at levels we have not seen since the 1970s, the number of new homes under construction at all-time highs. The report indicates that starts have surged since last summer and continued through this summer with numbers at 26% higher than the average over the last five years. There are nearly 320,000 new homes going up in the country, the most ever for the nation.
Old-Growth Protesters Gather Outside Premier’s Office as Minister Promises Legislative ChangeDirk Meissner - The Canadian Press
With a tree stump said to be 1200 years old in hand, protesters flocked to BC Premier Horgan’s office to ensure the NDP government’s promises for old-growth logging changes are kept. Forests Minister Katrine Conroy said Monday, “We’re going to do this, and we’re going to do this right. It’s about our forestry, significant changes.” While she did not provide specifics, she noted that she hoped people will see that they are moving forward.
BC Business Reconsidering Their Ties With China After the Meng and Two Michaels AffairGeorgie Smyth - CBC News
Some lumber producers, like Tom Sundher of Sundher Timber Products, are feeling uneasy about selling their products to China after the release of Michael Kovrig and Michael Spavor quickly on the heels of the end of Huawei executive Meng Wanzhou’s detention in BC. "I would favour India over China because I'm more comfortable there; because they're a more democratic country, there's rule of law," said Sundher. And he’s not alone, The Surrey BC Board of Trade is urging local businesses to reconsider having ties to business with China.
The dimensional market continues to be a hot topic across the North American marketplace. It has been dimensional lumber that has led the charge over the last 4 or 5 weeks now through this run-up, and it will continue to be dimensional lumber that carries us through fall as the main conversation piece at this point.
We have seen a strengthening across all widths, and this continues to be led primarily by the main indicators, 4” and 6”.
In 2x4, the week starts out again with prices creeping up slightly. However, there continues to be a range in pricing, as mentioned previously, across different mills and different perceived qualities.
Although demand does remain strong, there is still a sense that in some areas, it is not as robust, leading some to feel that there is a bit of awkwardness or uncertainty in the market. This may stem from, at the retail level at least, an abundance of caution, especially as prices have inched up quietly over roughly $100 per thousand through the last several weeks with little fanfare.
There continues to be a strengthening in the 2x6 market. Again, there is still some imbalance between print pricing and mill asks for prompt or available material that they do have an order file on. So there is a bit more of a range on 2x6 with most mills feeling, at least on the regional side, that the numbers should be higher as they look to command a bit more of a premium than print may allow.
There is some confusion coming from the 8” market, as print numbers are certainly not reflective of where many mills are looking to take on business.
There seems to be some tightness in the 8” market, and perhaps, this is leading the mills that do have some products available to be a bit more bullish with their pricing at this point in time.
In 2x10, it has been a relatively good run over the last several weeks, and right now, we do not see as much inventory on lists. Pricing certainly remains firm, and availability is spotty, especially when looking for long lengths.
The one area that continues to struggle more than the others in the marketplace is 2x12. Again, in previous weeks we had mentioned that the treated market is having an effect on this or rather a lack of a treated market.
Stud demand this week continues to mirror more of the same stance from weeks prior. Mills were largely able to maintain upward pricing pressure amid tightening prompt supply and thinner mill offerings. Robust sales across most mills have pushed order files into late October and early November in some instances.
More purchasers are now stepping in out of necessity, looking to cover their near-term needs, but with sparse prompt offerings, they are now reaching out on mid to late October coverage for fear of missing out on a strengthening market.
Of note, 2x4 and 2x6 9’ trims remain the most scarce. What little offerings do appear are quickly snapped up and are also the lengths seeing the steepest premiums in pricing week to week.
As we continue to build on this current demand, you should fully expect limited availability and persistent pricing increases to maintain this pace well into November. Look to cover your requirements sooner rather than later.
October usually begins the process at the treated level of looking toward next year, with the retail locations beginning to assess what their needs will look like for the spring buy. Meanwhile, the producers are beginning to put together their pricing strategies and options to compete for the spring business.
This year will have a different feel, as we have mentioned previously on a number of different occasions. With the treated season not being what was expected for most across North American markets, many continue to hold heavier inventories than what they would like or anticipated. This has resulted in questions surrounding what a program will look like for next year. This is certainly weighing on everyone's minds. The producing mills are trying to assess what they need to lock up for substrate to produce, while consumers are trying to assess their best strategies going forward into next year and what takeaway may look like after the 2021 season.
There is a bit of a standoff in place at this time, with all parties trying to ascertain more information to make plans accordingly.
The demand for MSR continues to be very strong. Most truss plants are reporting order files out 4 to 8 weeks and are continuing to quote. Some plants are working down inventory and cautiously filling holes as they arise. Others are covering their needs to fill their order files and averaging in inventory.
Mills remain busy as well, adding to their order files and slowly raising prices each week. Random MSR truckloads are being quoted out 3 to 5 weeks with little flexibility on tallies. This may seem repetitive, but longs in all grades are still difficult to source, and mills are not shy about asking for a premium if they can quote them.
We encourage you to look at your October needs as availability from the mills is sparse, and our LTL shipments out of inventory locations remain very busy.
Plywood print remained flat last week after another week of decent sales reported from the mills holding prices steady without much fluctuation up or down.
Mills continue to hope and anticipate for a bit more of an uptick in demand, looking to push prices up, but thus far, it has not materialized. Look for plywood to remain balanced, as mills are certainly still not enamoured with the pricing levels, and they would be forced to take another look at potential curtailments if there was weakness that crept into the market.
We anticipate more flatness from the panel market moving forward. Demand has been decent but certainly not a runaway from the retail side throughout the Western Canadian provinces.
OSB order files are established at the end of October, early November shipments. Open market cash offerings remain scarce in Western Canada. Availability in certain pockets of the United States is slightly better.
Of note, many buyers will now be receiving wood purchased months earlier at higher prices as part of a fourth-quarter committed block purchase. Buyers and end-users will have to work through this material before being able to step back into the open market to get cash purchases more in line with today’s market price.
We are seeing a measured, steady rise week over week on sheathing and flooring now, which is a welcome change to the craziness that the first 6 months of the year brought to the OSB market.
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.