Across the Country, MSR Demand Is Strong
Good day. We find ourselves feeling slightly disjointed with the upcoming observation of Remembrance Day and Veteran’s day falling mid-week. As most businesses are closed Thursday it is leading to shipping challenges across most areas. This tends to have ripple effects that flow into the following week so it could be a bit challenging as things settle back down into mid-November.
We continue to see a market that is offering a lot of confusion on both the supply side and with takeaway. As well, it appears to be developing into what some might consider a multi-tiered market in the short term.
There are still rumblings that takeaway remains relatively strong in some areas, particularly in the manufacturing sector and the truss component sector. Although, on the flip side, there are those that have been commenting that at the retail yard level, there has been a lackluster feel, leading to a little more disinterest in prompt purchasing.
Couple this with mills that at the larger scale, have been falling back on order files looking to hold prices firm. Meanwhile, some of the smaller, more regional mills seeking to bolster order files are willing to discuss some pricing concessions depending on what they are producing.
Further complicating the issue, it seems that we are starting to see the secondary market coming back to the table looking to entice buyers to purchase with lower pricing and prompt available shipment on material that may be in the pipeline, owned, or in inventory. This is causing a bit of confusion, as we had indicated earlier, with pricing spreads becoming a little wider, depending on who is motivated to move what.
We have yet to be hit with any real winter weather as well, which is helping takeaway. But at the same time, this is fueling concerns that if we do see a bit of a winter wall hit us, it could slow things down even further. Couple all this with the uncertainty over the determination of the duties that are supposed to be coming out at the end of November, and we find ourselves with more questions than answers about the market with customer content to try to keep things fairly tight. Concerns abound that the market could move in either direction with arguments being made on both sides.
Supply & Distribution Update
Takeaway from mills in distribution remained steady this past week, somewhat more active than is typical for this time of year, particularly in MSR.
Mill order files range between 3 to 4 weeks out, and availability of prompt mill direct loads is still infrequent.
With the remaining high demand for MSR and cautious production, mill lists remain thin on MSR items, particularly longs. We expect this to be the case over the coming weeks.
Availability on #2&btr dimensional remains broad as well as in J-grade and appearance-grade materials.
LTL shipments out of CEWP reloads have remained active and are booking shipments into next week. Shipments of material out of inventories and mills through Western Canada and abroad are moving unhindered.
News We Are Following
VIDEO | BC Wood, Know-How at the Heart of Google’s First Mass Timber Office BuildingSimon Little - Global News
Google is building its first mass timber 5-storey, 182,000 square foot building in Sunnyvale, California, using BC’s timber. The project, which is scheduled for competition next year, will cut the carbon intensity of the building by 96%, according to architect Natalie Telewiak. It is said to be part of a “net-zero solution for construction” that will offer sustainability to the forest. This type of project allows for faster construction with prefabricated components that can be assembled quickly.
US Softwood Ruling, Old-Growth Plan Adds Uncertainty to BC Lumber TradeTom Fletcher - Saanich News
Uncertainty remains in the search for an agreement to preserve more old-growth forest regions. There are also further delays in working out a deal to handle the steep US-imposed duties on Canadian softwood lumber.
The latest deadline for the anti-dumping ruling has also been extended to January 28, 2022. This extension will allow for an analysis of sales and costs from Canfor and West Fraser Timber, two of BC’s largest lumber producers.
Meanwhile, old-growth discussions continue to take place with input sought from indigenous communities in the region. However, BC’s First Nations Forest Council has pointed out that “First nations have been given 30 days to review and respond to the proposed old-growth deferrals within their territories. Nations are being brought into this process after the fact, and now the province is asking nations to hurry up and respond.”
Restoring Balance after Biased Forestry Panel Requires Empathy and TransparencyStewart Muir - BIV
Against a backdrop of sensational headlines generated by activist antics and heated rhetoric about old-growth logging, B.C.’s NDP government is setting out to modernize forestry in the province.
Alberta Renews Tolko’s 272k-Hectare, 20-Year FMAMaria Church - CFI
Tolko’s forest management area, spanning 272,000 hectares, has been renewed by the Alberta government. The renewed agreement allows the company to forest Crown land for the next 20 years, leading to $3.6 million in holding and protection charges, $29.7 million in timber dues, and adding over $864 million to Alberta’s GDP.
The dimensional market had what felt like a slower, quieter week last week. We have seen longer lists coming from mills, as well as price concessions being considered from some of the smaller mills looking to move prompt production.
Overall, it appears that the takeaway is still relatively decent across the dimensional market. However, it certainly feels like there is more supply available than what we had seen in the last several weeks, with some of that becoming much more prompt through some mills, as well as the distribution network.
The 2x4 market felt a little quieter last week, and it did seem like we saw a pullback on numbers. Overall, 14s and 16s continue to be priced at a premium, but we are seeing cracks forming in those lengths where some are willing to pull back on the numbers to entice purchasing.
We don't anticipate seeing a huge drop overall in the marketplace. However, spot by spot, there appear to be opportunities depending on the motivation of who owns the product and if customers are willing to come in with firm offers.
There continues to be a lag in 2x6 as compared to 4”, and some are speculating that the challenges faced by the treated marketplace may be playing into this as traditionally, we see a strong takeaway in the 6” market coming from the treaters.
Pricing for 2x6 seems to be sliding somewhat, and again, depending on the specific situation, reasonable counters may present themselves.
2x8 & 2x10
In 8” and 10”, it was a fairly quiet week again. We do not see the same type of production out of mills, and perhaps many have looked to pull back somewhat due to the lack of interest. Again, this could also be fueled by the disinterest from the treated marketplace, as wides can be a strong takeaway in the fall in that sector.
Look for pricing to soften as the week goes on, although availability is not generally robust from mill offer sheets at this point.
Unfortunately, 2x12 continues to struggle in the market. There seems to be a gap between where mills are hoping to achieve prices and where print levels are, versus where some of those that may have interest in 2x12 are comfortable paying. There feels like a standoff at this point in time on both sides of the 12” market.
The stud market continues to see modest interest, albeit more muted than weeks prior. Tightness remains for 2x6 and 2x4 104” trims, with availability into late November to early December. We have seen some pricing pullback in 104” trims, as it was one seeing the most scarcity and also evidently, carried the most premium when available.
We could continue to see decreases in pricing, as the overall market currently feels quite timid to jump in with mills showing order files reaching 3 to 4 weeks out. Many purchasers will be content to wait and see how this disjointed week progresses before stepping into more volume.
The treated market, traditionally at this point in time, is looking to solidify the spring business for the coming season. We’ve seen a bit of a standoff between the treaters and the consumer base, as both sides are uncertain as to what the needs truly are across the aisle for the interested parties.
It does appear that there has been some uptick in interest from the consumers trying to look at establishing where numbers will be for next year. So the hope is that over the next couple of weeks, we may see some pricing structure put together and perhaps some business being solidified to allow both sides to feel better about the markets and what the anticipated needs will look like come spring.
There is still a tremendous amount of uncertainty, but both sides are looking to come together to try to reestablish what they can with respect to the upcoming season.
Across the country, MSR inquiries and sales remain strong at all mills. Even with the softening on SPF #2&btr last week, MSR demand didn't slow down.
Most truss plants continue to have healthy order files into mid-December, and although quoting has been a lot slower lately, they are slowly adding to their order files.
We are finding that 2x4 2100 longs continue to be like hen's teeth, and if you can buy them, mills are not shy about asking for a hefty premium. On the other hand, 2x4 1650 is the only item showing decent prompt availability, although, with the $200-plus premium over #2&btr, there are more truss plants looking at other options for good visual #2&btr.
We continue to purchase for our inventory locations as the demand for LTL MSR remains strong, as is typical for this time of year.
The plywood market printed flat again for yet another week. However, there does seem to be a little more takeaway in the market as we’ve seen mills push order files in the west out to the week of November 22nd. For vans going out east, we are seeing order files into the first week of December.
At this point in time, it does not seem like we are going to see an uptick on pricing, as mills would like to see a further extension to order files. But the extended order file, although it is only modest, does show that the market has been fairly tight, and as a result, a slight uptick in interest is all it takes to push out files.
Look for plywood to remain flat and steady as we move forward, with inventory in the field and in distribution remaining very light.
A small concession on price was required by one Western Canadian mill to push order file into the back end of December. We don't anticipate much further in the way of reductions in price. The move was necessary to put the mill within firing range of January shipments, which they have achieved.
We expect stability in the OSB market for the next 6 to 7 weeks, getting us to the end of the year.
Overall, open market material continues to be tight. There is talk that contracts in 2022 will continue to be reduced, once again putting more pressure on the cash 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.