The Lumber Market Remains Stable with Sentiment Simmering of a Potential Uptick Coming as we Move Closer to Spring

We’re another week into February and unfortunately, we don’t get the sense that much has changed regarding market sentiment from last week to now. We would certainly like to tell a story of excitement in the marketplace and a resounding surge in demand as the market starts to pick up toward spring. However, there still seems to be more confusion and a bit of unease in the market at this point in time.

From the mill perspective, we continue to see more of the same. There appears to be a relative balance in supply as we don’t see large inventory buildups at any specific mills and lists week to week are changing with some material thinning out or disappearing entirely.

This certainly isn’t being led by a robust demand and takeaway, however, we will say that we are seeing a fairly steady stream of buyers coming to market. It continues to be cautious buying for the most part as many consumers still feel that there may be a little more value to come out of the market.

More of these same consumers have certainly acknowledged over the past few weeks that there doesn’t seem to be much downside risk. That same acknowledgement regarding supply and demand being reasonably balanced is leading many to feel that in the face of an uptick in demand, it would move numbers up quite quickly and tighten the market.

This conversation about the tightness in the market and the potential for demand to cause some disruption has been at the forefront now for a little while. It could be having an effect on some buying patterns.

Although we’ve stated that buying has been relatively stable, there has been somewhat of an uptick in some of those purchasers willing to step out a little further to take on a position looking to protect themselves as we move into spring.

Lumber futures have been bouncing around with relative stability, which again, leads many to feel that the overall market is not really poised to make much of a move one way or another save for some kind of an event that could be the catalyst for movement up.

This unease in the market has everyone watching closely, ourselves included, and there is a feeling that everyone is ready to make that move if need be. The question is, who might act first?


Supply & Distribution Update

In most North American species, prices of framing lumber were narrowly mixed with little movement in either direction. Recent trends remain largely entrenched from previous weeks.

Supply disruptions, including an announced curtailment from a BC mill, did little to pull disinterested buyers off the sidelines. Buyers strived for discounts, but mills, citing seasonality and general tightening of supplies, refrained from accepting counters. Most sales were at or a little below reported levels. Sales have not been strong enough to prevent prices from drifting lower.

Supply is more in line with demand currently, while demand has the potential to cause disruptions in the near future due to supply constraints.

Distribution remains healthy and continues to drive sales. Producers are holding firm on their numbers while buyers strive to push the same number down. For those customers who continue to sit on the sidelines waiting for a market bottom, utilize distribution more often, filling inventory holes and some new orders.

Items offered for prompt shipments have been more desired by buyers due to their discounted prices and quick shipment. Purchasers who are unable to find full truckload needs for prompt shipment are happy using distribution to fulfill their immediate needs.

Transportation remains highly competitive within the industry while multiple modes of transportation are readily available. This is coupled with the lack of freight available to be moved this time of year. Those who have core customers or suppliers are the organizations that are seeing the business while outsourcing is uncommon.

Rates have stayed relatively flat as transportation providers continue to offer the best rates they can within the highly competitive industry while still being profitable.

Fuel pricing increased slightly once again this week. That is the second week in a row that a one percent increase has been recorded.

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Dimensional Lumber

Summary

The dimensional market was again moderately positive last week. Pricing tended to trade within a fairly narrow range as we saw some of the national mills continuing to tie their pricing relatively close to print levels and moving up and down based on those levels.

It was more the regional mills that continued to price material more in line with their availability and the amount of takeaway that they were seeing. This is once again leading to some pricing gaps between print and ask levels at certain mills. Again, there were reports of some mills achieving these numbers in some instances, however, in certain cases, the same types of products were reported selling well below these levels.

This adds to the confusion in the market as to what is truly happening, as there is a sense of stability yet there can be deals found in certain pockets.

The overall sentiment at the mills remains relatively stable but in the same situation, we did hear about some areas where mills were willing to listen on volume for items that they may have been building up.

2x4

The 2x4 market had a fairly flat week with respect to pricing. We did see print down modestly on the shorter lengths and it was 16’ that printed down a little stronger overall. This wasn’t surprising, as 16s have been continuing to show a lot of strength versus randoms.

Whether it’s consumers looking to substitute products, not wanting to pay the higher premium, or a bit of a buildup in inventory with some mills willing to take on counters as the numbers looked quite strong, regardless, we did see a slight pullback on pricing.

Decent availability was shown on some of the national lists and we did see regional availability in a positive light. Most of the smaller mills had some, although perhaps not large volumes. We did continue to hear that there was 4” in the hands of wholesale and distribution, so consumers did have options in looking to source their short-term needs.

We expect 4” to remain somewhat flat and stable as we move forward. Again, the feeling is that we could see numbers move up quickly if there was a large buy-in that took place south of the border.

2x6

The 6” market was down modestly on print across the board. We continue to see a little less volume at mills and there is some sentiment that 2x6 value could show a bit of strengthening in the short term as supplies do seem to be more constrained.

It’s a similar situation here in that we feel 6” is probably relatively stable in the immediate term. We do feel there is potential upside pressure coming, it just hasn’t materialized quite yet.

2x8 & 2x10

Both 8” and 10” were down slightly on print across specific lengths and we continue to see relatively limited availability from mills.

There is an opportunity to find 8” product at mills, although long lengths remain tougher to source. The price range is fairly narrow, working in a reasonable band of perhaps 5% up or down.

Scarcity in the wides looks to continue so we feel relative stability is built in as we move toward spring.

With respect to 2x10, it seemed to be a little tougher to source so there appeared to be a little bit better sales in 10” over the last couple of weeks. This thinned out lists in a number of instances.

Some of the comments from mills regarding the lesser production in the wides are leading some to feel that we will certainly see a strengthening in numbers as we move closer to spring and demand picks up. It shouldn’t take a lot of increase in demand to see movement in the wides at some point.

2x12

We saw 2x12 flat on print and it was reported that there were some reasonable sales. Again, 12” has really been stumbling along without much change in pricing at this point. It doesn’t seem like there will be much to change that moving forward.

The 12” market seems to be stable at best heading into the spring season.


Studs

Somewhat muted demand and downward pricing trends again permeated the stud market. Mills continued to marginally discount their available stud offerings across the board, searching for viable levels amid consistently quiet interest again last week. Discounted pricing materialized throughout the week, with the most evident drops seen in 2x4 and 2x6 9’ trims, while 2x6 8’ supply continues to remain elusive.

Prompt availability has again begun to creep into mill lists. Many purchasers expect they will continue to be reliant on LTL distribution, or mixed TL varieties, adamant further price cuts are ahead, and holding in the hope of seeing deeper discounts yet. Field inventories reportedly remain very slim, so those that have held off until now, are seeing validation in being able to approach the market again with firm counters in hand looking ahead to spring coverage soon.

We can expect that caution will remain the prevailing market tone as we roll further into February. If you are looking to step in over the next two weeks, know there will be ample opportunity for decisive purchasers to step in in the coming weeks and no shortage of coverage in the near term.


Treated Lumber

Treated sales coming out of yards are starting to trickle through, although the real demand is still not going to materialize yet for several weeks to another month.

Most of the treated material has found its way into the contractor and retail yards and we do get the sense that there is enough material to get the season rolling.

We’ll be watching closely to see how replenishment levels look once we get into the summer months. Mills were hoping to push numbers up slightly as we get into the cash season. We’ll have to wait and see to find out if they’ll be able to maintain those levels. Certainly, if we see an uptick in whitewood takeaway, treated lumber prices should continue to be strong and firm as we move through the season.


MSR Lumber

Relative stability in the overall market is leading to relative stability in MSR as well. We’re seeing modest spreads on pricing with respect to 2x4 and 2x6 1650. Availability seems to be reasonable for those items and mills are content to keep those products moving.

We’re not seeing much of an upward push on price momentum currently, however, in the same vein as the overall market, we are watching closely, as an uptick in demand could cause availability to tighten up very quickly.

With regard to 2100 in both 4” and 6”, availability seems reasonable as well with pricing spreads within the normal range, as we are not seeing anything egregious.

Long lengths continue to hold at a reasonable premium and availability is certainly not quite as robust. Inventory levels for distribution are adequate, however, we do maintain that you ensure proper lead time for your needs so that you are not short on any specific products.

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Douglas Fir & Larch MSR

The DFL MSR market witnessed bursts of activity over the past week. While overall inquiry has picked up, sales volumes remained modest and centred on prompt loads for existing projects.

Availability from mills continues to be uneven with holes shown in some common items on mill lists. Accumulation has been observed in short-end tallies from most mills and longs for some others. Overall availability in lengths 14’ and above remained in the tightest supply and garnered the most interest from buyers. Mills have begun to quote into March on some high-traffic items and have maintained a strategy of holding as close to ask prices as possible but remained open to counters where tallies aligned with mill availability.

Recent discussions with mills have noted significant difficulties in acquiring the logs to maintain the already reduced production levels we saw throughout 2023, and that may be the case for an extended period of time. Given the current availability on lists and the likelihood of an inbound round of buying for spring needs, there is the potential for cash options to get snapped up quickly. There is also potential for mill order files to become extended uncomfortably for the short-term buying structure that has become the norm, and for pricing to see upward pressure.


Panel Products

Plywood

Plywood activity last week was very steady midweek until the close of print on Friday. It appears we may have found a bottom in that market on the Canadian side, as wholesale and distribution were able to step in on moderate block volumes covering early spring business for late March shipment.

Numbers were up on print and order files pushed into late March/early April in some cases.

OSB

OSB continues to be at a standstill while business in the US outpaces Western Canadian markets. Production is perceived to be limited and order files are pushed out into late March/early April in most cases.

Demand from home centre yards is mixed. Most have covered a month's worth of inventory for now.


Market Experts

Lumber is what we do! Our traders are in the market all day, every day. Let us share our knowledge with you, if you have any questions, please give us a call.

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