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Market Recap: RISI Crow’s Construction Materials Cost Index
A price index of lumber and panels used in actual construction for July 15, 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 a decent start, trading in the SPF lumber market slowed as the week progressed. Eastern mills continued to experience improved demand for limited production. The ability of Southern Pine lumber mills to sell enough volume to keep buildups from occurring helped establish a better tone in the market. Dry Doug Fir remained the highlight of the Coastal species lumber market, although dimension prices in that species did not gain more than $5. While the price of green Doug Fir 2×4 Std&Btr managed to hold at $260, at least one producer looked to move volumes of that item quietly at $255 and lower. Prices of all Inland Hem-Fir items have pushed up from $5 to $10, depending on the item involved. Fir-Larch has been considerably firmer for some weeks, and it remains the stronger of the two species. Prices, however, have not changed this week. Ponderosa Pine 5/4 Shop shows little price pressure either up or down, but it is very firm. In the same way, 6/4 Shop is firm and a little more accessible than it was earlier. Commons, in general, are strongest in #3, with #4 termed "OK" by sources, and #2 Common the laggard of the lot. Radiata Pine is being steered by global demand, a demand that seems strong enough to bring price increases, according to key sources. Eastern White Pine mills continue to minimize production, matching it to core customer demand. The spring buying season brought little in the way of price increases for most Western Red Cedar items, and demand remained steady but pedestrian for many products.
PANELS: Most Western Fir plywood producers ended the week carrying order files extending into the week of July 25, but price concessions were made in some instances to move product. Sales activity in the Southern Pine plywood market was notably better. The activity was not enough to propel prices to higher levels, but mills did extend order files into the week of July 25. OSB prices in most regions have eased down from their levels of two weeks ago, some more than others. Some regions attempted to hold to established numbers, while others sense an ongoing erosion in both prices and buyer interest. Canadian plywood mills have little Spruce plywood to sell, and the price ranges from C$293 to C$308. U.S. plywood is coming into the market at eight to 10 points below Canadian plywood. Production capacity continues to limit enthusiasm in both particleboard and MDF markets, although producers have definitely learned to contain production.
Housing starts for June to be released tomorrow
All eyes are on the residential construction report for June, to be released by the Commerce Department Tuesday, July 19.
Analysts are expecting starts to come in at a seasonally adjusted annual rate of about 570,000. If correct, that would be a 1.8% increase over housing starts for May. Starts have been under the 600,000 mark since January, when they were at a pace of 636,000.
Tuesday’s residential construction report will also release building permits, which are expected to be between 600,000 and 609,000 as a seasonally adjusted annual rate in June, compared with 609,000 in May.