Brian Malone, Corporate Purchasing Manager at Millard Lumber, examines current lumber prices and predicts future performance. Take a look at the latest industry trends.
Lumber
The uncertainty of the U.S./Canada Softwood-Lumber Agreement (SLA) being renewed by October 2016 has caused considerable confusion and delay with the supply of Canadian exports of lumber to the U.S. Canadian officials have warned their country’s mill producers that when an agreement is reached, the U.S. could impose back tariffs and penalties for lumber mills that have been deemed to be “dumping” cheap Canadian softwood to the U.S. This insecurity has prompted the big Canadian producers, West Fraser, Canfor, and Tolko to limit the amount of lumber supply being exported to the U.S. thus keeping lumber prices stable and on the rise over the past few months.
We have seen such an increase in lumber prices throughout 2016, that at the current price levels, lumber dealers and analyst have warned that lumber prices are now approaching 10-year average highs. This outlook has caused distributors and retailers to prepare for sliding prices and buy just enough inventory to cover their immediate needs thus keeping price levels flat to down 5% over the last couple of weeks. With supply and demand in check, uncertainty about the renewal of the SLA agreement, and labor and lot shortages nationwide, I believe that we will see a fairly flat lumber market trading range to finish out a very prosperous 2016. This variety of factors points to a fairly flat trading range of 7% up or down from where we are at with current prices to finish out the year.
OSB/Panels
Panel prices have recently been soft throughout all U.S. regions. Inventory levels at all ranks of the supply chain have been thin as purchasers sit on the fence waiting for confirmation of pricing trends. Our North Central region specifically has seen the most stability in panel prices with other regions’ prices falling more aggressively. Texas and Louisiana, key consuming regions, job sites are still rain-delayed or flooded, which has curtailed consumption. Historically, September and October are high consuming months for OSB and panels, so expect OSB panel pricing to remain flat to slightly soft.