Market Recap: RISI Crow's Construction Materials Cost Index

A price index of lumber and panels used in actual construction for Oct. 7, 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: After two weeks of modest demand and declining prices, SPF lumber sales improved as early as Tuesday and gained momentum after that. Although still sold at a discount to cash, futures contracts were near limit-up Thursday, prompting some buyers to participate in the cash market. After three weeks of significant price gains in the Southern Pine lumber market, where #2 increases of about 12% were achieved, momentum dissipated and some prices, particularly in the West zone, began to peel back. Increased sales activity at midweek in the Coastal species lumber market was focused on dry items. Mills continued to struggle with log supplies, while rumors surrounding production curtailments spread throughout the market, prompting buyers to cover needs. An improving futures market caused a ripple effect in the Inland species lumber market. As SPF producers firmed and increased 2x4 prices, traders turned to Hem-Fir. Sales of Ponderosa Pine #2&Btr boards were more active than other grades. Idaho White Pine prices remained steady with the exception of Standard 1x8 and 1x12, which both moved up. Rains put somewhat of a damper on Eastern White Pine board sales. Market activity for Shop lumber was quiet but steady. Uncertainty regarding the next few months have buyers very cautious about adding to their inventories. Many door and window plants, as well as moulding and millwork producers, say they have enough inventory for the short term. The beginning of the final quarter of 2011 brought about little change in the Western Red Cedar market. No notable decline in demand was reported.

Panels: A slightly improved OSB market in some regions was reported. Producers moved quotes up and were able to write a bit of business at close to the new levels. Southern Pine rated sheathing order files eroded enough early to force lower prices into the market on the Eastside. Meanwhile, sanded panel sales remained stellar. Western Fir plywood producers reported a lackluster week of sales. Order files provided mills with a cushion, while buyers digested previous purchases and bought sparingly. Once again, a wide range of Canadian plywood prices at the mill level were being reported. A short work week due to the Canadian Thanksgiving holiday contributed to the firmness in the market. Continued good weather also helped keep the market active. Particleboard and MDF producers noted selling greater volumes, but debated as to whether the demand was a late fall push or simply an uptick in an otherwise flat market.

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