Market Recap: RISI Crow’s Construction Materials Cost Index
A price index of lumber and panels used in actual construction for Feb. 3, 2012
*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 rumblings suggesting an increase in sales activity at the end of the previous week, more buyers entered the SPF market early to pull significant volumes from mills in both eastern and western Canada. By Thursday the pace had slowed, leaving prices firmly perched at higher levels established the prior few days. Buyers showed limited interest in chasing Southern Pine dimension prices any higher, preferring to sell from inventories and wait for potentially lower prices. Consequently, sales at the mill level were light. Some discounting did appear; however, as producers, particularly on the Westside, chose to sell straight-length loads with moderate discounts. Demand at the mill level increased in the Coastal species lumber market, allowing producers to move greater volumes than the week prior. In light of the improved sales activity for dry items, producers chose to increase their order files rather than risk losing business with higher prices. Green Doug Fir prices tended to climb moderately. Inland species lumber producers reported a market that improved in early trading. Futures gains brought traders back to the market for not only SPF, but inland species as well. Producers focused on building order files. Ponderosa Pine Moulding and Shop lumber producers reported a steady but uneventful week. Limited production helped keep prices firm, in spite of a quiet market. Inquiries for Radiata Pine #2 Shop and Blanks increased, but availability continues to be tight. Limited supplies of Idaho White Pine boards kept prices firm to up slightly. Eastern White Pine producers reported steady sales and prices that were firm or slightly higher. Activity throughout the distribution chain in Western Red Cedar was moderate yet steady, greased by mild winter weather throughout much of the United States.
Panels: The strength of OSB markets this week relied on mills’ order files. Producers reported a quiet week of activity. Better order files enabled western producers to keep a firmer stance than their eastern counterparts. Limited demand in the Southern Pine plywood market forced a few producers to reach deep with rated sheathing prices to sell what was needed. The deepest discounts remained on the Westside. Thin order files forced Western Fir plywood producers to lower quotes on CDX items by double digits, while sanded panel items sold for shipment through February and at significantly higher prices. Canadian plywood producers reported another quiet week of sales. Although activity was not robust, order files helped producers keep some semblance of firmness in the market. Any momentum gathered in January in regard to particleboard sales volumes did not have a lot of push behind it entering February. MDF sales activity was modestly improved.
Unemployment rate falls to 8.3%
Total nonfarm payroll employment rose by 243,000 in January as the nation’s unemployment rate declined to 8.3%, the Bureau of Labor Statistics reported Friday.
The better-than-expected jobs report produced an unemployment rate that is down 0.2 percentage points from December and down 0.8 percentage points since August. It’s also the lowest rate in almost three years.
Employment in construction increased by 21,000 in January, following a gain of 31,000 in the previous month. Over the past two months, nonresidential specialty trade contractors added 30,000 jobs, according to the bureau.
Employment in retail trade continued to trend up in January. Job gains in department stores (+19,000), health and personal care stores (+7,000), and automobile dealers (+7,000) were partially offset by losses in clothing and clothing accessory stores (-14,000). Since an employment trough in December 2009, retail trade has added 390,000 jobs.
The employment situation summary can be found here.
Amid challenges, Fortune Brands posts sales gains
Deerfield, Ill.-based Fortune Brands Home & Security reported mix results for the fourth quarter.
The company posted net sales of $876 million, up 4% from the prior-year quarter. Net income was a loss of $68.4 million, compared with earnings of $11.2 million in the same quarter last year.
“Our sales growth continued in the fourth quarter, despite a market for our products that remained challenging. Overall, we performed at the high end of our expectations, and we believe we continue to outperform the market for our products,” said Chris Klein, CEO, Fortune Brands Home & Security. “We continued to see solid sales increases, ranging from mid-single digits to low-double digits, in our Security & Storage, Plumbing, and Cabinets segments, thanks to our ongoing innovation and market expansion activities. Our Windows & Door segment was impacted again by lower window sales lapping relatively high year-ago comparisons, due to the energy tax credit that expired at the end of 2010. In total, adjusted pro forma operating income was up slightly, reflecting the continued promotional environment in our Cabinets segment and softness in our Windows & Door segment.”
Security & Storage net sales were up 13%, on increased sales of Master Lock padlocks and safety products, as well as Husky garage organization products.
Plumbing & Accessories net sales were up 8%, with strength in U.S. retail and wholesale channels, as well as Canada and China.
Kitchen & Bath Cabinetry net sales were up 5%, driven by growth in new business.
Advanced Material Windows & Door Systems net sales were down 11%. An increase in door sales, helped in part by growth in Canada and a recently launched exclusive relationship with a major window & door brand in which Therma-Tru will be making all of their entry door panels, was offset by a sharp decline of more than 20% in window sales. The company believes last year’s energy tax credit pulled substantial windows demand forward into 2010.
For the full year, sales increased 3% to $3.3 billion. The company posted a loss of $33.0 million for the year, compared with earnings of $63.8 million in 2010.