Logistics Issues Are Creeping into the Lumber Market
It was an incredibly robust week from a sales and takeaway standpoint across the greater North American market, which jumped off after more news of the flooding and weather catastrophe in BC hit the marketplace.
Last Monday, things continued to feel fairly soft, however, by Tuesday, there had been a material change to the tone of the market. It ran through the rest of the week as the buildup of selling and takeaway that began in the US marketplace pushed into the Canadian market. We saw much material come off lists, and mills pushed order files deeper into December.
Rail issues, transportation, and truck availability issues permeated the conversation, and as we roll into this current week, there have been some solutions in some areas, but many questions remain with further inclement weather nearing the coast this week yet again.
With that said, the tone has calmed slightly to start our current week, and many are questioning if we’ve seen the bulk of the activity behind us. Some feel that many consumers have filled their needs for the immediate and short term, and will now sit back and assess when they need to step back in and at what levels.
Supply & Distribution Update
As mentioned above, the fallout from the winter storm that crippled main thoroughfares through Southwest British Columbia and beyond has led to significant uncertainty as to shipping timelines and material availability throughout the affected areas.
While much work has been done to restore transportation lanes in a very short timeframe, there remains a great deal of assessment and repair to be done before both rail and road are back to normal working order. Essential travel is possible, and some material is moving through the area, but expect delays through Southwest British Columbia going forward.
The market reacted strongly and the divide between availability on dimensional and MSR closing, as mill and distribution centers saw buyers working to cover their needs in the face of this most recent volatility. Mill order files are currently out to 4 weeks on most items.
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Note: The views and opinions portrayed in this article and video belong solely to the individuals involved in the piece and do not necessarily reflect those of CEWP.
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“It’s kind of intuitive that when you remove the tree cover, particularly on steep slopes, it’s going to increase the rate at which the water flows into the creeks without the root structures that leads to erosion,” Wood said. “That’s exactly what science confirms.”
As of Sunday, Environment Canada is expecting snow to change to heavy rain, further impacting the already dire situation.
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The dimensional market was certainly what sparked all the activity across the lumber world last week. To begin with, it was felt in the 2x4 dimension and rolled through 6” all the way into the wides as the days unfolded.
We saw very robust takeaway, limited availability to start the week from mills, and those mills that do have lists being put out, have pushed further into ship weeks with substantially increased ask prices.
The 2x4 market led the charge and the shorting and aggressively low numbers that were still in the market early last week, quickly disappeared. This led to a firming tone with numbers up strong to finish the week.
There continues to be solid activity in 2”, primarily in 14’ and 16’ material as they remain quite strong with a premium over shorter lengths.
In 2x6, there was a little more time needed for the dimension to find its legs last week. It did follow suit as we saw very strong takeaway and activity across all lengths.
Pricing on 6” does continue to lag 2x4, but again, there is some variance depending on what mills have what to offer. We see flatter pricing levels through 10’, 12’, and 16’, with 8’ and 14’ languishing.
Out of all the rest of the dimensions, the 8” market continued to be a little less robust last week than many of its counterparts. We are still seeing 8” prices remain softer, but they did push upward. It does seem to be that 8” cannot find the same footing that other dimensions are finding.
The 10” market definitely picked up last week, and it certainly felt like it was on the back of treaters running out of time to wait and feeling like it was a good time to start participating in the market.
We saw strong 10” activity across many mill systems, and as the week begins, there is certainly a strong order file throughout the market with limited availability for prompt.
It was a decent week last week for 2x12, although not to the same level as 10”. However, there were a little more sales reported, as again, some of the treaters were looking to cover some of their needs for their upcoming spring requirements.
We don’t anticipate robust sales on 2x12. Hopefully, stability can be found in that dimension.
Stud demand posted a quick reversal this week amid the ongoing issues in flood-ravaged BC. A timid market, to start the week, gave way to sharp gains of $40 to $60/m on most trims. Flurried purchasing occurred, pushing mill availability out 3 to 4 weeks again, leaving sparse lists and some mills entirely off the market to close out the week.
Persistent demand will carry through the week, as impacts from supply and production constraints are still developing. Expect mills to continue holding and selling at these newly established levels and look to push order files deeper into December, while demand remains strong and uncompromised.
Treated producers certainly stepped into the market as a result of the BC situation, and we saw stronger takeaway than had been reported from many of the treaters as they look to begin covering their needs for the spring season.
At this point, many of the spring programs have been put to bed, but there are a number still lingering. We anticipate much of the committed business will finalize over the next 1 to 2 weeks, which may allow the treaters to feel a little more comfortable continuing their purchasing patterns in making sure they lock up the material they require to satisfy the demand for spring.
All this said, there are certainly still issues remaining with large volumes of unsold material in the hands of the retail and contractor yards. So the size and scope of these programs are yet to be seen, but the overall market seems to be feeling a little bit better than in previous weeks.
MSR sales, especially in the US, were extremely strong last week. Mills added to their order files, and they are out at least 4 weeks on most items.
The flooding out of BC is causing major disruption to shipments, and because of this, there was purchasing done to help fill in immediate (December) needs. Most truss plants continue to cover off their needs through the next 6 weeks and are exercising caution on purchases into 2022.
Availability on 2x4 and 2x6 2100 continues to be sparse, with most mills out at least 4 weeks with extremely specific tallies. The one bright spot is on 2x4 1650, which continues to be readily available.
With rail shipments in Western Canada being affected dramatically, the toll on truck shipments has increased, and availability is becoming increasingly tight.
We are 2 to 3 weeks out on a lot of our LTL MSR shipments, as mills are asking for flexibility on truck and rail shipments.
Please contact us for any of your MSR needs, both LTL and full truckload.
The panel market did participate in the activity last week. The logistics constraints certainly played a large factor as we saw consumers that were firmly on the sidelines prior to this begin to step in and cover some of their needs through December and into January.
The plywood market that had been sitting and toiling away with flat print for weeks on end finally got on solid footing last week.
Prior to the events in BC, there was a slightly more positive tone to plywood sales that was led by the east, though the west was still holding out. The subsequent activity in BC did cause more of a strengthening position in plywood, and we again saw takeaway strengthening in the east on railcar and van shipments. That followed through by pushing the west into the market.
As the week ran through, one major producer ended up off the market on railcar and van shipments, pushing their Super-B order file into the week of January 17th, with print moving up slightly.
At this point, plywood sales appear to have firmed considerably. We anticipate pricing to now hold into the new year, and mills will be content to try to continue bolstering their order files while being very cautious about potential shipment issues. They do not want to get into a situation like we saw last year with order files extended too far out, causing problems for many.
The OSB market had a decidedly more muted tone last week than its counterpart in plywood. Print was flat on the back of a downward print the week prior. Although there is limited availability in the markets, mills have reported reasonable sales.
As we begin the week, there are reports that logistics issues are creeping into some of the OSB producers and some comments suggest that we may see things reverse course to push up once again. Time will tell, however.
Order files are long and open market availability is tight. Look for a measured push upwards.
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.