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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 April 20, 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: A gain in futures Wednesday gave SPF buyers the excuse they needed to purchase enough volume to firm prices in the West. Mill order files edged into the week of April 30. Mills in the East were able to raise prices as a result of solid demand. Demand for Southern Pine lumber remained strong, pushing most published prices higher. Solid spring sales of treated lumber led treaters back into the market to replenish. West and Central zone 2×12 #2 prices surpassed the $400 mark for the first time in two years. Prices were mixed in the Coastal species lumber market, made up of rising dry prices and soft green Doug Fir pricing. Cuts in dry production over the past three weeks have helped keep those supplies in check. Conditions at most mills in the Inland region encouraged firm pricing. Although it was difficult to get buyers to accept increases, it was easy for mills to refuse discounts. Both Radiata and Taeda Pine from South America are tightly controlled in availability and are firmly and stably priced. Ponderosa Pine Mldg&Btr remains unchanged in either 5/4 or 6/4. Little #2 Shop is available, and #3 Shop is “firm and flat,” according to another source. Ponderosa Pine 1×6 and 1×8 #2 Common are mentioned as good performers, on the basis of retail demand for pattern stock. This is also true of Eastern White Pine in both 1×6 and 1×8 Standard. Among items noted for their relative weakness are Ponderosa 1×4 #2 Common and all Eastern White Pine Selects. Western Red Cedar mills continued to try to press prices higher whenever the opportunity presented itself, although demand for most items was in line with supply.
Panels: OSB markets are in a stalemate. Prices are stable in all regions, but it is a fragile stability. Producers were not able to develop the power to push their order files further this week. Southern Pine plywood buyers fulfilled enough needs to keep mill order files moving as far out as the middle of May and rated sheathing prices edging higher. Any potential for lower prices continued to force yards into purchasing conservative volumes at a steady pace. Sales activity in the Western Fir plywood market was good enough to boost some sheathing prices $5 higher and propel ship times of some items into the week of May 7. Mills noted a return of western buyers to the market. Canadian softwood plywood mills sold sufficient material to move order files out a week, giving them leverage to lift the base price to C$353. Still trying to nudge MDF and particleboard prices higher because of urea cost increases, talk from producers of more cost related price increases again surfaced.
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Industry Dashboard for April 23, 2012
The housing starts and sales dials show current residential construction activity well ahead of last year. Month-to-month comparisons are a different story.
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Sales increase 15% at Sherwin-Williams
Sherwin-Williams Co. reported net sales of $2.14 billion for its first fiscal quarter, a 15.1% rise over net sales in the same quarter of 2011. The increase was attributed primarily to higher paint sales volume and selling price increases.
Net sales in the Paint Stores Group jumped 20.9% to $1.12 billion in the quarter due primarily to higher paint sales volume across all end market segments and selling price increases. Net sales from stores open for more than 12 calendar months increased 20.4% in the quarter over last year’s comparable period. Paint Stores Group segment profit rose $43.9 million to $112.7 million in the quarter from $68.9 million last year. Segment profit as a percent to net sales increased in the quarter to 10.0% from 7.4% last year.
Net sales of the Consumer Group increased 8.6% to $320.4 million in the quarter due primarily to selling price increases and higher sales volume. Segment profit increased to $55.3 million in the quarter from $41.1 million last year due primarily to selling price increases and good cost control partially offset by increasing raw material costs. As a percent to net external sales, segment profit increased in the first quarter to 17.3% from 13.9% a year ago.
Commenting on the financial results, chairman and CEO Christopher Connor said: “We are pleased to report record sales and earnings per share in the first quarter on strong sales and operating results of our Paint Stores Group and operating profit increases across the remaining operating segments. All our operating segments grew sales volume and operating profit as a percent to sales in the quarter. The Paint Stores Group volume growth was strong across all end market segments. Our Consumer Group improved their operating results through disciplined cost control and selling price increases.”
Connor added that the Cleveland-based company plans to further invest in the business by opening five net new locations in the Paint Stores Group. “For the year, we expect our Paint Stores Group to open 60 to 65 new stores,” he said. “In the second quarter of 2012, we anticipate our consolidated net sales will increase ten to fifteen percent.”
Founded in 1866, The Sherwin-Williams Co. is a global supplier of coatings and related products to professional, industrial, commercial, and retail customers. The company manufactures products under well-known brands such as Sherwin-Williams, Dutch Boy. Krylon, Minwax, Thompson’s Water Seal and many more. Sherwin-Williams branded products are sold exclusively through a chain of more than 4,000 company-operated stores and facilities, while the company’s other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors.
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