Market Recap: RISI Crow's Construction Materials Cost Index

A price index of lumber and panels used in actual construction for March 17, 2017.

Western - regional species perimeter foundation; Southern - regional species slab construction.

Crow's Market Recap -- A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow's Weekly Market Report.

Lumber: SPF lumber producers began to field more inquiries Tuesday. By Wednesday, sales reached a peak in response to short covering and a need for yards to purchase replenishment volumes. Traders pointed to futures as a catalyst. Early discounting faded, prices firmed and then moved higher. Mill sales continued to lag Southern Pine lumber production, again forcing those prices lower. Buyers held out when possible, expecting prices to decline further, and purchased only minimal volumes to cover near-term needs. Coastal species remained in the weak part of the cycle, with mills forced to lower prices on some items. Other prices managed to hold up well. A good US housing construction report Thursday morning drew attention. Inland lumber producers, like much of the national economy, were beleaguered by an abortive storm forecast in major northeastern cities. Much of the overall price decline occurred in Hem-Fir #2&Btr. A number of stud prices ended lower, but many were on firmer footing by week’s end. This was especially evident in SPF stud pricing. SPF mills grew order files extending into the first week of April. Radiata Pine from Chile shows change, brought about by production issues caused by recent fires in Chilean forests. Demand for Radiata is good, but the fires created production lags, which mills are working hard to correct. Ponderosa Pine industrial grades have shown a tendency to increase in the last few months. Additional supplies will enter the market soon, which could alleviate pressure on Mldg&Btr, Clears and #1 Shop. The season for increased activity in Ponderosa Pine boards is here. Unfortunately, the issues of supply and demand are not in synch. This is an annual imbalance, brought on by weather-related timber harvesting issues and unpredictable increases in market demand. The higher Western Red Cedar producers raise prices the greater concern they show for longer-term repercussions. Despite the potential for lost market share in reaction to escalating prices, it is not stopping them from raising prices more.

Panels: OSB markets varied from region to region this week, from lethargic to active and mostly dependent on weather conditions. Sources broadly agree, however, that wood will be needed soon as spring approaches. Seeing order files thin, Southern Pine plywood producers lowered rated sheathing prices and negotiated deals in an effort to sell carload volumes and extend lead times. Willing buyers took advantage of some deep price cuts, which allowed those producers to edge order files into the first days of April. Sales activity in Western Fir plywood began the week slow. Producers approached the market with significant CDX price cuts. Activity increased Wednesday and then again more sharply Thursday. Prices firmed and mills began to raise quotes. Canadian plywood markets woke up late. Following a slow, cautious start, discounts were offered midweek and buyers jumped in. By the week’s end, prices firmed and order files moved out. Particleboard and MDF producers reported little change in their sales activity from the prior week. A significant increase in first quarter sales, which producers still expect, has not taken place.

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