Market Recap: RISI Crow’s Construction Materials Cost Index
A price index of lumber and panels used in actual construction for Oct. 5, 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: Trading activity in the SPF market, along with most prices, was flat. Late sales the week prior helped mills firm up prices and keep discounts at levels closer to quotes. Wholesalers reported decent activity. Buyers remained cautious in a Southern Pine market that remained weak overall. Treaters countered mills deeply but purchased sparingly. Wholesalers back-to-backed orders and took moderate positions on items they believed were near a price bottom. The number of sales and their volumes in the Coastal species lumber market were largely dependent on how bad a particular mill needed an order. At the same time, mills turned away deep counters. The Inland species lumber market started the week on a soft and declining note, but by week’s end, mill inventories were manageable and prices had firmed or even improved slightly. The bulk of market activity was for narrows. The market for Radiata Pine Shop was virtually non-existent, as producers sent lumber to destinations outside the U.S. or ran it to millwork in their own facilities. Adequate Ponderosa Pine Moulding and Shop inventories at mills allowed buyers to make their purchases on an as needed basis. Prices were firm. The overall market for Ponderosa Pine Commons remained lackluster, as buyers only made purchases on items they had to have. Eastern White Pine producers reported a "steady but unspectacular" market, with order files out one to two weeks. Western Red Cedar suppliers have turned much of their attention toward next year, trying to get deals done that will absorb sizable chunks of production during the front half of 2013.
Panels: A wide range of reported prices circulated, as some OSB producers got more aggressive with their pricing. Mills offering steep discounts to their customers were able to put some volume business together. Sales did not keep up with production in the Southern Pine plywood market, continuing to place downward pressure on most prices. Instances of deep discounting kept customers on the sidelines. Lingering volumes owned by wholesalers also placed pressure on prices. Not much demand and a lot of plywood to sell presented a predicament for Western Fir plywood producers. Floor stocks accumulated, as some producers did not want to go into the market with deep discounts. Canadian plywood producers reported a quiet week. A two point drop at mid-week did little to increase activity. Distributors concentrated on moving contract commitments but did little in the way of cash market purchases. Even though MDF producers continued to nudge some prices higher for certain segments of their customer base, both particleboard and MDF markets have settled into a steadier flow from week to week.
Australian regulators oppose Lowe’s acquisition
The Australian Competition and Consumer Commission (ACCC) has announced its opposition to the proposed acquisition of G. Gay & Co, a three-unit chain of hardware stores in Ballarat, Victoria, by the Woolworths/Lowe’s retail joint venture.
According to the M2 PressWIRE, the ACCC ruled that the proposed acquisition would remove one of Woolworths/Lowe’s two closest competitors in the Ballarat area, resulting in a substantial lessening of competition. The only other remaining key competitor of Woolworth/Lowe’s would be Bunnings, a national chain that operates almost 300 locations across Australia and New Zealand.
"The ACCC is concerned about the removal of a key independent competitor from the market to the detriment of competition and local consumers," ACCC chairman Rod Sims said in the news report. "G. Gay & Co is a vigorous and effective competitor in terms of price, product range and service, and is likely to provide a strong competitive constraint on Masters in the Ballarat area."
Masters Home Improvement is the trade name of stores being operated by Australia-based Woolworths and North Carolina-based Lowe’s in a joint venture. The first Masters opened in 2011; at the time, the two retailers said they planned to roll out 100 units in the next five years.
The ACCC’s investigation indicated that the remaining home-improvement stores in the Ballarat area were either too small or too limited in their product offerings when compared with G. Gay & Co stores. As such, they would be unlikely to compete effectively against the new Masters store, the ACCC said.