Will Lumber Prices Soften in the Coming Weeks?
We find ourselves wrapping up September and looking toward October. What a difference a month makes in the lumber market! As we began the month of September, we were starting to see some cracks in this lumber market with non-stop print moving up and record-high prices week after week. In the past 3 to 4 weeks, we have seen prices peak, while print has turned a corner in the past week as it has dipped down for the first time in a long while. As well, mills have increased list availability as they have started looking at their prices, and in some cases, they have moved down in search of continued sales into that October time frame.
As we look forward to the next few weeks, the sentiment certainly is that prices will continue to soften and the hope is for many at the mill level that the price decline will be at a measured pace. There currently does not appear to be a tremendous amount of product in the pipeline and indicators are still showing strong business activity through the Fall season.
Once again, the market is certainly sending scrambled signals with what the futures market is doing, what we will see on print this coming Thursday and the wide range of prices being quoted out there. Please reach out to discuss what your specific needs are and the best course of action to assist you in making those purchasing decisions, whether it be now or down the line, as we wait to see the situation moderate.
Softening Lumber Prices Offer Hope for Homebuyers, Renovation Project Builders
While the record lumber prices seen recently have caused a spike in home prices to the tune of about $10,000 for a typical single-family home, as prices start coming back down to Earth, homebuyers and do-it-yourselfers may have a reprieve on home prices and renovation materials. A $14 USD drop in framing lumber was the first such drop seen since April.
Canadian Lumber in Legal Limbo as U.S. Appeals WTO Ruling
In August, the WTO ruled against the US in the years-long lumber dispute with Canada. Now the US is putting in an appeal on the ruling, leaving the issue up in the air yet again. This comes after the US initially claimed that a WTO appeals body was not even necessary. To date, the US has collected nearly $3 billion in duties from Canadian softwood lumber since 2017, when the tariffs were first initiated.
The dimensional #2&btr lumber market has clearly been the first to really show some willingness to start coming down from these precipitous highs.
Mills are certainly showing more offerings, whether they are at smaller regional mills producing week to week and trying to find levels to push their product out to the market or larger national mill lists that are quietly showing more products available both in straight length and randoms. Although, prices on some of those larger mill lists still remain fairly strong at this point in time.
In 2x4 #2&btr, there is certainly a wide range where we have seen prices run the gamut from strong order files and not coming off the highs, to some of the smaller mills that are willing to play ball to try to move product for prompt.
The biggest key is considering the timing for your needs on 2x4, as with more time, you can achieve better purchasing power.
It has been a quieter 2x6 market over the past week than we’ve seen in 2x4. It is a similar situation in that we are seeing more availability on lists. In particular, 10’ continues to be in high demand, so there is not much discounting on that length, however, randoms are certainly feeling downward pressure as well.
The 2x8 market seems a little stronger and more buoyant, as we have noted for the past several weeks. This comes as there is not much available on lists and not a tremendous amount available for prompt.
With that said, surprisingly enough, we did see some mills willing to discuss pricing to put some 2x8 business together this week. So we are seeing some downward pressure on 8” as well.
The leader of the pack in terms of weakness appears to be 2x10. It started before the other dimensions and that remains true for this week. There is definitely more 2x10 available and there has been a softening in prices. Demand in the 2x10 market is weaker overall.
There is not that much attention being given to 2x12. There is material available but we believe that right now, the focus is on the more narrow widths. So there is not much happening on 2x12 but there is again more negative pressure on pricing.
Studs continue to mirror more of the same stance from weeks prior. Purchasers have been more judicious with covering their needs, leaning more heavily on LTL and mixed availability out of distribution centers. The disparity among #2&btr dimensional has not translated yet to suds, as prices have held firm and even marginally up.
Immediate buyer needs paired with 2-week order files through many mills should keep stud pricing buoyant through this season, but expect pricing to open up as supply builds and mill offerings and lists expand.
The treated market is wrapping itself up. We have a good 6 to 8 weeks yet for jobs to finish up the season and mills have been slowly able to get product into the hands of retailers, albeit at very high prices to close the season.
Most eyes are now really shifting focus to next year and what the treated market will look like. At this point in time, there is certainly a challenge as white-wood pricing is dropping, yet treaters are in a position where they need to procure product to begin the treating process for next season. But they may not be able to take advantage of some of the price reductions as quickly as they would like.
So there is a bit of a standoff right now with trying to assess where prices will be next year, where treaters would like to see prices versus where retailers will feel comfortable stepping in and committing to volume. This is something we will all have to watch over the next several weeks.
Although there is more readily available material in MSR, 2x6 and 2x8 remain sparse as they are out anywhere from 2 to 4 weeks with very limited tallies, while 2x4 availability is out 2 to 3 weeks.
We continue to do our best to keep prompt material available in inventory but demand for prompt LTL remains high. Shipping is getting better on MSR for most mills but shipment remains 1 to 2 weeks behind production for most mills. With that, we are encouraging as much lead time as possible for all LTL inquiries.
The panel market is certainly on a slightly different footing than what we’re seeing in dimensional lumber. As we’ve seen the dimensional market start to soften and show cracks across a variety of products, panel continues to hold firm with a strong order file into November and December.
Plywood is currently sitting on an order file that stretches into the first week of December with Van and Super-B shipments. Railcars continue to be offline. Although the pace of sales has slowed over the last couple of weeks on plywood, it is not really a concern at the mills with such a strong order file. Again, falling back on the fact that most sense that the pipeline is not overly purchased on plywood, as most have been buying as needed while order files have been stretched out over the past couple of months.
The anticipation is the plywood will continue to hold strength and we will see a continued purchasing effort as individuals and groups step back in to cover needs for December and January time frames.
A quieter tone has emerged in the OSB market as buyers await shipments, with some stretching out 6-weeks at what is perceived as the top end of the market. Digestion has taken hold as most have covered off their medium-term needs, although there is still a scramble for short-term coverage for those who have something pop up or an immediate need. These urgent situations are more difficult to serve as distribution remains very light.
Overall, OSB pricing will hold firm for roughly the next 6 to 8 weeks, at which time we may see an opportunity for softness to take hold while we catch up to order files at the mills. The general sense is still that the market is under-supplied, demand remains robust, and pricing continues to be firm as we wait to get closer to order files before we get any clear direction.
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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