Check Your MSR Needs 3-5 Weeks Out
Our weekly report finds us wrapping up September, and much like each and every month as we have been rolling through the last year and a half, it feels like it went by in the blink of an eye. For many, September was an especially challenging month, as the back to school transition was exercised fully and people once again began to navigate managing the lives of their children, as well as their households and careers.
At the same time, the lumber market had a fairly interesting September that saw a slow and steady increase in the pricing of lumber, as well as a reported slow and steady climb in lumber takeaway across the North American Market.
We saw prices starting to firm up 4 weeks ago, and print reflected that each and every week with modest increases. As we start this week, we find ourselves once again with mills reporting reasonable takeaway, much of it US-driven. With the balance of curtailments still firmly in place at many mills, we seem to have found quite a strike of balance between supply and demand. This is allowing mills to cautiously move numbers up on many items as they have sold through.
Many eyes are focused on the October fall run and what the takeaway will look like as we roll into November. The feeling from many is that we will see a strong fall, and at the same time, many believe the mills will be content to try to continue to gently move prices up if they can on the balanced market.
One note that is coming into play: BC mills are now in the midst of their highest priced log costs. With these firmer prices, this is a welcome reprieve and is going to lend further strength to those mills to do everything they can to continue pushing prices up. Prices on certain items are still at levels that are not sustainable long term for many mills.
Supply & Distribution Update
The steady market activity continues into this week. Mills are still extending order files, and most materials will be mid-to-late-October shipment as this week opens.
SPF MSR, J-grade, appearance-grade, and stud availability continue to be tight through the mills. The volatility of the past year is still very fresh in the minds of those that purchase lumber and panel products. This has continued buyers' cautious approach to buying, requiring them to be in the market more frequently, which has maintained pricing.
Prompt loads mill direct continue to be challenging to source, and short-term demand has begun to outpace available supply.
Activity out of distribution yards has been steady. Buyers are continuing to utilize the availability of more difficult-to-acquire material on an LTL basis to fill holes in their inventories. LTL deliveries are shipping a week out from the order date, so expect 2-week delivery windows.
Transportation of material out of the Northern mills into Southern Markets remains an obstacle, as lanes are not seeing consistent back and forth of materials and goods. Otherwise, truck and car shipments are moving well.
News We Are Following
US Housing Starts August and Softwood Lumber Prices September: 2021Madison’s Lumber Reporter
August housing starts increased by 4% over July’s numbers, which saw a 7% decline. The August rise saw a total US residential increase of 12.3% year over year.
Meanwhile, the benchmark softwood lumber price was flat for the mid-month week after incremental increases seen since Labour Day.
Commodities Continue on a Supercycle Trajectory...For NowStory by Benzinga.com
With many positive signals coming out of the financial markets, from low-interest rates to the impending release of pent-up demand with consumer savings on the rise, the beginning of 2021 saw a call for a commodities supercycle. That commodity rise has continued well into the second half of the year and it has outpaced the last supercycle in the early 2000s. After seeing lumber reach record highs, it has since cooled off, but the overall picture shows that commodities, in general, will maintain their current upward move.
Softwood Lumber Imports to US from Canada: Duty Rates IncreaseMadison’s Lumber Reporter
After a US Administrative Review this past spring to reverse a decision to decrease lumber duties from Canada into the US that took effect last November, This November will see an increase back up to roughly 20%. Currently, Quebec sawmills are seeing the effects of the increase.
Dimensional lumber had another relatively good week, with mills reporting steady sales pace and takeaway across most dimensions.
We continue to hear that the US market is driving the majority of activity, as the Canadian market tends to be playing some catchup.
As we start this week, we see slightly firmer ask prices. At the same time, there does seem to be a range of pricing. Wood in the hands of distribution and wholesale may be purchased within a range, and there are those who are willing to move off product below replacement levels, even in the face of this market showing relative firmness.
In 2x4, we see good takeaway, and mills are starting the week with offers available, albeit at slightly elevated numbers. There are still 2x4 loads reportedly being offered in the hands of the wholesale community at levels slightly below current replacement levels.
It is really a matter of what type of tally someone is looking for, as 16s remain slightly tighter but are not commanding the type of premium some feel they should be from certain areas. Others are pricing them at a bit more of a premium.
We did see some excess of 12' material from certain mills throughout the end of last week.
We find 2x6 pricing continuing to lag behind 2x4, although some are reporting a feeling of strengthening in the dimension from a demand side. This is fairly traditional of a fall market where we do see a slight uptick in 2x6 takeaway, so mills are certainly hopeful that they will be able to increase pricing and continue closing the gap on 4”.
For 2x8 takeaway has been a little up and down. We see some material hitting mill lists, but specific mills are feeling that there should be a better return for them, so they are not overly enticed to push much 2x8 material into the market with the feeling that the numbers are not warranted.
It was a better takeaway over the last couple of weeks for 2x10, and we see a little less offered on lists. Again, there is quite a range of numbers being reported across both US and Canadian sales, but at this point in time, look for 2x10 to show some more firmness as mills are sitting back on relatively decent sales.
Once again, 2x12 is the one area that remains a challenge in the market. There seems to be relative abundance at the mill level and quite a spread in some of the ask pricing, which is leading to plenty of confusion as to where the market really sits for the dimension.
Stud demand continues to mirror more of the same stance from weeks prior. Mills are riding sustained market momentum, posting modest increases and slim prompt offerings.
Mill order files appear extended well into October, with a 3 to 4-week average time frame. Purchasers looking to cover immediate needs will find tighter prompt availability, both mill direct and through distribution, as we continue to see heavier interest in mixed and partial loads.
Of all trims, 2x6 9s, for weeks now, remains more challenging to source and carry the steepest premium. Availability in 2x4 9' has become more sporadic and sparse, while 8' supply in both dimensions is more intermittent, but you should find availability in that 3-week or sooner window.
Purchasers present an overall uncertain tone but steady week-over-week demand, pricing, and tightening supply will have some buyers stepping back in sooner rather than later.
The treated segment continues to go without much attention as we roll through the end of the season. Some reports have shown that there has been a little bit of an uptick in takeaway at the retail level, allowing some stores to lower their on-hand inventory and hopefully put them on better footing to start thinking about the 2022 season.
Meanwhile, others continue to report heavy inventory levels and a concern that they will struggle to ascertain what their needs will look like for purchasing in the upcoming treated season.
All eyes will be watching the market with the hopes that we don’t see a large drop in pricing, with stores feeling that they will be forced to follow suit and find themselves in the midst of a price war for those looking to move material ahead of the end of the season.
Healthy order files at most truss plants across Canada and the US have led to an increase in MSR demand over the next 4 to 6 weeks.
We find that 2x4 and 2x6 2100 longs are extremely difficult to source, and mills are cautious on tallies that they quote. We have seen a slow but steady increase in prices and expect that to continue over the next month as mills are still adding to their order files.
Our inventory locations continue to be busy, and our main focus is on keeping these stocked so we can cover your specific needs. Please allow 2 to 3 weeks for delivery, and we encourage you to look at your next 3 to 5 week needs going forward. Please contact us for up-to-date pricing and availability.
The plywood market reported another reasonable week for sales at the mill level, which resulted in another flat print. Mills are continuing to sell at a pace that is allowing them to hold prices level. But with that said, there is certainly a feeling from the mills that they would like to see a bit of an uptick if they can build an order file to show some price appreciation.
This has not happened as of yet, however, we have seen better interest from the retail level to cover plywood needs, and this continues to move forward.
Time will tell what takeaway will look like as we get later into fall, but for now, the feeling is to keep covering your panel needs. Pricing is certainly in line with a balanced market.
The OSB market continues to show quite a bit of strength, and this was again reflected with print up slightly to close last week.
Mills continue to show limited cash availability, with order files extending out into late October.
The inquiry level from the retail sector remained strong last week, again with many struggling to source adequate supply in the thin panels.
We look for OSB to remain balanced as mills remain engaged in extending their order files and hold with modest price increases throughout the first half of October.
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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