Market Recap: RISI Crow's Construction Materials Cost Index

A price index of lumber and panels used in actual construction for Aug. 19, 2011

*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 discounts were widespread, although some mills were able to cling to quotes used the week prior. A willingness among mills to discount off of those quotes, however, did exist, lending to overall weakness in the market. Customers expressed little interest in purchasing Southern Pine lumber while watching prices decline. Major distributors reported keeping inventories to a minimum, as they watched retailers pull orders of a few units from their yards. Most prices for Coastal species lumber items drifted lower, as mills tried to persuade buyers to sit with them at the negotiation table. Immediate needs were all buyers wanted to cover. Inland lumber producers reported continued softness in the market, punctuated by customers wanting specific tallies and immediate shipment. Mills reported light inquiry levels, as buyers sat on the sidelines. Activity was quiet for Ponderosa Pine Mldg&Btr and #2 Shop, and prices reflected the softer tone to the market by adjusting down slightly. Both 5/4 and 6/4 came off $10. There has been much discussion on the price of Radiata Pine Mldg&Btr. Depending on origin and/or certification, pricing differences of $45 have been noted. The quiet market extended to Idaho White Pine as well. Prices for Sterling were unchanged, but Standard was a little more difficult to move and required a few dollars off to get the job done. Tallies and delivery times were as much a determining factor as price in the Eastern White Pine market. Hopes for some improvement in the Western Red Cedar market this fall were high, as the current market remained bogged down, partially due to summer heat. Producers continued to manage output in response to buyers' needs, which included a diverse range of product available for quick shipment.

Panels: Momentum in the OSB markets shifted from producers to secondaries, as a two-tier market developed. Reports of volume discounts being offered by some mills were heard. Eroding order files forced some Southern Pine plywood producers to look for rated sheathing sales by lowering quotes. Not all producers were in the same predicament, some hanging on to order files reaching into the week of Aug. 29. Prices dipped in the Western Fir plywood market, as order files shrank and producers were forced to seek levels that might entice buyers to purchase. Limited production and mill order files into September kept Canadian plywood producers in control of the market. Some contract wood was selling below replacement cost, but those sales were in the minority. Relatively little changed in particleboard and MDF markets. Newly achieved prices were used as benchmarks, sometimes discounted moderately to move off buildups at mills.

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