Market Caution Continues Amid Spring Optimism

As we've reached the third week of March, the market has continued to send out a variety of very mixed signals, causing further confusion across the entire spectrum from the cash and carry, do-it-yourself buyer, all the way to large-scale manufacturers. Everyone is uncertain of where the market is heading as we move into April and the start of the spring building season.

The week finished with a flat print again, which caused a bit of confusion for some, as there was a sense that we may see a downturn in print due to some of the aggressive pricing that was being reported in certain areas. However, other factors in the market continued to quote and report sales much closer to print levels, helping to factor in the flat reporting. 

This same sense of confusion has propagated itself into our current week as we are seeing, yet again, a spread between larger, national mills holding their numbers and citing continued transportation issues, as well as some success in putting business together at these levels. This is juxtaposed with the regional mills, where some have been looking to bolster order files with prompt offerings and listening to potential relatively strong counters on a case-by-case basis. 

At the same time, the third level, which represents wholesale and distribution, appears to continue signalling more apprehension, as strong discounts to print and reported cash sale levels have been cited on certain items and specific tallies. 

The sense, once again, is that it really is dependent on what type of position the distribution or wholesale community has. Also a factor, is how eager they are to perhaps lighten some of their bought-ahead positions if their costing is advantageous over the current market.

All of this continues to confuse buyers who are looking to replenish inventory as in the field, inventories do seem to be quite lean. But these buyers certainly do not want to overpay for product at a time when there is a feeling that things could be lower come next week. 


Supply & Distribution Update

While fuel costs and freight rates remain high, truck and car availability remain reduced from historical levels, and late loads continue to slowly make their way through to buyers, we have a bright spot to report in the transportation world: CP management and union leaders have agreed to enter binding arbitration, which will allow union members to return to work as of March 22nd. This will aid in taking some of the growing uncertainty in transportation out of the supply and distribution equation. 

We have seen increased prompt availability on #2 SPF, especially out of regional Western Canadian mills, which we believe is somewhat the result of buyers' ongoing reluctance to step out on large buys, but more so, it is a reflection of mills ongoing difficulty in shipping material. 

Availability of MSR products is strong both out of distribution and mill direct. Mill order files remain 3 to 4 weeks out. Plywood availability remains limited to contract and distribution, OSB being more broadly available direct and out of distribution. 

We continue to suggest adding 2-4 weeks lead time on prompt material to your purchasing strategy.

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Dimensional Lumber

Summary

The dimensional market had a relatively quiet week overall, leading to today. Reports were mixed about sales, and as mentioned before, depending on mill position, there was room for price movement if material could be shipped in a prompt manner. There is a much more firm tone on anything that has a strong order file out past a couple of weeks. 

Customer demand seems to be relatively strong, although restraint continues to be shown in the dimensional purchasing, as those customers are looking to hold as long as possible, hoping for lower pricing.

We remain somewhat concerned that this could set up a perfect storm of too many customers coming to the table at once and the transportation situation remaining a challenge, resulting in a delay in getting the product in their hands in the required timeline.

2x4

It was again a fairly balanced week for 4”, as it was a quieter tone overall. We are seeing a mix of prices being quoted and that range would certainly be triple-digits in some specific cases. Again, this depends on what you are looking to source and from what location. Look for this range to continue until there is a solid signal from the market regarding takeaway. 

2x6

It is still a quieter market for 2x6 as compared to 2x4, with noticeably less interest in that dimension. There doesn't seem to be quite as much 6" on the market, but again, there is certainly product available for prompt, as well as several weeks out with a range that is anywhere from $20 to over $100 per thousand, depending on tally and ship time.

2x8 & 2x10

In 8" and 10", we have continued to see a relatively quiet space. There appeared to be a little more interest in 10" last week, with mills reporting reasonable sales on the heels of consumers running out of time to wait. 

Overall, it was a better week for 10" over 8", with the 8" market languishing and showing up on lists. But again, if it is primarily from some of the larger mills, expect to see higher ask prices. 

2x12

The 2x12 market did not attract much attention last week. We were seeing lists pop up as the week went on, with increased availability. Ask prices remain much closer to print, but as we said in previous weeks, it does feel like there is an opportunity to purchase below print with firm offers in hand. 


Studs

As with all things in the lumber market over the last 2 weeks, purchasers have maintained a cautious approach with studs and remain judicious in covering mostly prompt requirements. 

Somewhat subdued market interest has kept buyers firmly on the sidelines hoping to limit their exposure to any perceived downside risk and price decreases. However, despite a growing list of mill offerings, most are now showing extended order files into mid to late April. They have not adjusted pricing much from weeks prior. Any decreases were moderate, with mills largely hoping to ride out their order file and expect purchasers will have to step back in to cover under-bought and light inventories before long. 

As this week progresses, we can expect to see continued pressure on prompt availability and fill-in stock through distribution amid fickle demand, as purchasers continue to hold off, hoping to see a more clear and sustained market direction develop. 


Treated Lumber

There seems to be a mixed tone in the treated market as well, which really isn’t that surprising when looking at the overall situation facing our industry. 

On the supply side, we have seen the pricing increase somewhat on new business being quoted out as we move toward the spring season really getting underway. Reports are mixed in the field about takeaway and the anticipation of what this upcoming season will look like. If we look back several months, there was certainly a sense that pricing was going to be much lower in the treated market, and heavy inventories from last year continued to lag the contract yards. 

Looking at our current situation, price appreciation in whitewood, along with the treated market, is certainly going to be something that consumers will have to contend with when making decisions on projects starting in the spring. We will be watching this market closely as March leads into April.


MSR Lumber

The MSR market has remained relatively firm overall as the high-value MSR items, specifically 2100 and 1950, continue to be in high demand from our truss customers. Strong order files dictate that we will see this continue. 

Mill availability has improved somewhat, so there has been a flattening on the upward trajectory on pricing, but we do anticipate seeing these prices hold relatively firm as we move through March and into April. 

Lower-grade MSR, specifically 2x4 1650, might be one of the softest spots with more availability in the market. But again, the standoff between mills and consumers continues while pricing looks to remain flat for now. 


Panel Products

Plywood

The plywood market printed flat again last week, which wasn't a surprise as most producers were off the market on any cash sales. 

Some cash sales were reported early in the week, which pushed the order file into the first and second week of May. However, a shipping backlog remains, so at this point, it looks like a firm and flat approach to plywood with the sense that field inventories are quite lean. 

It certainly feels that mills also get this sense and that there will be a greater need for purchasing in the near term, and that will continue to hold plywood pricing firm. There is the potential that any uptick in activity and the continued challenges of shipping could bring an uptick in pricing.

OSB

Inbound inquiries on OSB have stopped in the last week out of the western market. Buyers are exercising caution on the heels of a flat print, trying to move off any high-costed inventories to stay light. They have reported that a busy spring season is upon them but are steering clear of high prices in the hopes that a cheaper buying opportunity will come up. In some cases, they have already seen cheaper offers coming out of distribution over the last 2 weeks.

Mill order files are approximately 2 weeks out, with late shipping on deliveries adding an extra week or 2 weeks in most cases. 


Trusted Partnerships

With the continued uncertainty throughout all sectors, the current business climate in North America, the ongoing situation in Ukraine, the fears of inflation, as well as rising interest rates, business decisions are increasingly becoming more and more challenging every day to try to make the right choices.

As always, if you have any questions, please reach out. We would love to talk about how some of these issues may be impacting our business and yours, and we will do everything we can to assist you in making the right choice in this difficult climate.

Contact CEWP Today

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