The COVID-19 pandemic is at the front and center of everyone's minds. Its effects, as we all know, impact the health and safety of individuals and disrupt business, trade, and the global economy.
We are currently seeing a lot of disruption to saw mills and primary producers as they manage the safety of their staff amongst these difficult times. With that said, most mills are still producing material to capacity and we expect to see a continued buildup of material as takeaway has certainly fallen off and supply continues to grow.
At the distribution level, we are also seeing limited takeaway as many customers are mainly focusing on filling their immediate needs. This is definitely causing challenges when trying to interpret where the current market pricing levels stand with distributors evaluating the situation case by case.
Wholesalers are looking to move off any positions they have while also trying to assess current price levels. This market as a whole seems to be a moving target as more and more information is released daily.
At CEWP, we understand this is a challenging time for everyone and that there are many concerns beyond the day-to-day business activity that we are all involved in. It is important to keep pushing forward and support each other. Please reach out to us if you have any questions or concerns on navigating your purchasing decisions through these difficult times.
West Fraser Adds Solar Power to its Energy Mix
West Fraser has signed a Power Purchase Agreement with innogy, a European-based renewable energy operator. This agreement will provide solar power to West Fraser’s Alberta mills from innogy’s Canadian Vauxhall solar plant (27 MWp). It will cover an essential part of the electricity that West Fraser needs to hedge its on-peak sawmill load in Alberta and to meet its environmental targets.
Global Sawlog Prices Continued Decline in Late 2019: WRQ
Wood Resources International (WRI) has released the Wood Resource Quarterly report on the global forest industry’s performance in the fourth quarter of 2019. It is a report tracking the prices for sawlog, pulpwood, lumber & pallets worldwide.
The dimensional market will continue to see an influx of available products and we suspect this is going to have a negative impact on pricing in the short term across all dimensions.
Mills are still posting numbers that are above what we’re seeing in secondaries and distributors. We do anticipate seeing print fall off and numbers come down until we find positive news and a balance point.
Your purchasing decisions should be based on your individual needs for the short term.
6” product is readily available from most mills but there are some that show spotty offerings as production hasn’t been as robust on 2x6.
2x8, 2x10, & 2x12
8”, 10”, and 12” material are not seeing the same attention as the smaller dimensions. As takeaway is currently limited, the increase in supply will likely result in a drop in price.
The stud market won’t be immune to the drop in activity and we will see pricing slide as mills and secondaries look to move product. In the short-term pricing held up, however we don’t see that trend continuing as product begins to accumulate. Pricing in 2x4 - 9’ studs could be most at risk as it did appreciate the most in the run-up.
We are starting to see more MSR come available as mills approach the end of their order files. Select items are still a bit tighter to come by, but for the most part, MSR is readily available for delivery over the next 1-3 weeks.
As always, we do have LTL MSR available at all of our locations for prompt delivery.
The panel market is in much the same trend as dimensional lumber. Both plywood and OSB were toting a fairly reasonable order file but that timeline is quickly eroding with the lack of current takeaway.
Plywood prices are looking for a level to garner activity, the problem remains in establishing what exactly those price levels look like.
We’re in a situation where most consumers had filled inventories over the weeks prior. Until the market demand increases, we will continue seeing downward pressure on plywood.
A 2-tier market has opened up. Mills are sitting on order files which have seemed to have stalled out for the week on April 13th.
Distributors with contracts for prompt shipment or fully-stocked inventories are trading at print levels which are already a discount to current mill ask prices. They are doing so to get OSB into the marketplace and out of inventory.
We are urging a bit of caution as we get closer to the order files dates. There is some potential for downward movement on the mill ask numbers. There is still a long way to go, however, mills are still $60-80/1000’ over expected market numbers.
We are in the market every day to understand and anticipate your business needs. We understand that a quality product goes beyond just wood, and will work diligently to provide you with innovative product and services solutions.
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