Ladies and Gentlemen:
It was truly difficult to gauge the strength of the lumber and panel markets on this the second consecutive holiday shortened week. There were a few more traders in their offices this week than last. However, many buyers had successfully purchased their mid to late-January needs during the previous weeks of trading. Those still in need of replenishment were clearly frustrated by the lack of prompt shipping products and were further concerned by the lack of materials in the hands of the secondaries, who have consistently been their go to sources when mill availability has been tight. Mills and wholesalers end 2021 firmly in the driver’s seat. Buyers who had hesitated to purchase were reminded during the week that they could have purchased material previously and paid less than current quotes. Most producers are quoting production scheduled for shipment the latter weeks of January.
According to the latest Federal Housing Finance Agency (FHFA) House Price Index (HPI®), released today, (12-28-21), U.S. house prices increased month-over-month 1.1% in October. House prices increased 17.4% from October 2020 to October 2021. The previously reported 0.9% price change for September 2021 remained unchanged. For the nine census divisions, seasonally adjusted monthly house price changes from September 2021 to October 2021 ranged from -0.3% in the New England division to +1.7% in the East South-Central division. The 12-month changes ranged from +13.2% in the West North Central division to +23.2% in the Mountain division.
Spruce & Stud Markets -: The inquiry and sales pace of Western and Eastern Canadian SPF Std. &Btr. and No. 2 & Btr.,seemed almost pedestrian like when compared to the previous several weeks. Most buyers had covered the bulk of their early to mid-January needs earlier in the month and seemed comfortable with their inventory levels. Recent gyrations in the CME Lumber Futures gave buyers further reason to limit their exposure to the marketplace. Mills started the week quoting at or above last week’s levels and prices traded at or trended higher from there; for production available for shipment the week of 1/24+/-. Low-grade sales were also less robust than in previous weeks. Mills started the week quoting low-grade at or above last week’s levels and prices traded in a similar pattern from there; for production available for shipment the week of 1/24+/-. Demand for stud trims also moderated. Producers started the week quoting stud trims at or above last week’s levels and prices traded at or trended higher from there; for production available for shipment the week of 1/24+/-. Transportation issues continue create pinch-points in the supply chain.
**CME Lumber Futures –:**The CME Lumber Future Contract for January will expire on Friday, January 14th,2022,at 12:00 Noon CST. For the past 2- days (12/27 – 12/28), CME Futures were up 2-days. CME Lumber futures have gained $ 90.00 and are trading above last week’s Cash Market of $1015 by $127.40 CME at $1142.40. One Year Ago, today (12-28-20) CME Futures closed at $885.00
**Hem\ White Fir -:**The inquiry and sales pace of Coastal and Inland Std. & Btr. No.2 & Btr., White and Hem-Fir remained active this holiday shortened week. Limited availability and strong demand had buyers in need of replenishment searching through the markets during the week in the hopes of securing much needed coverage. Snow and cold weather forcasted for the Pacific Northwest and Western Canada also raised buyers concerns about production and already dicey transportation issues. Producers started the week quoting above last week’s levels, but the upward movement was not as great as in previous weeks. Mills are quoting production available for shipment the week of 1/24+/-. Low-grade sales remain stout. Mills started the week with limited availability and quoting above last week’s price levels and prices edged higher from there; for production available for shipment the week of 1/24+/-. Stud trim sales volumes continue to astonish even the most seasoned traders. Mills started the week quoting stud trim above last week’s levels and prices traded at or above from there; for production available for shipment the week of 1/24+/-. Transportation issues abound.
Green Doug Fir -: The inquiry and sales pace of Green Douglas Fir (GDF) Std. & Btr., & No. 2 & Btr., slowed in step with the ongoing holiday festivities. Nevertheless, mills started the week quoting at or above last week’s price levels and prices traded at or trended higher from there; for production available for shipment the weeks of 1/24 – 1/31. The spread between KD and GDF products continues to expand and with it the number of buyers who are making the switch to GDF. Buyers’ focus remains on the narrow widths but demand for the wider widths was not far behind. Demand for long lengths (22+) continues unabated, and as a result, their prices movedhigher, withlead times extending into early February. The industrial sectors need for low-grade remains robust. Mills started the week quoting low-grade above last week’s levels and prices traded at or moved higher from there; for production available the week of 1/24+/-. Stud trim availability remains tight, and supply continues to trail demand. Mills started the week quoting stud trims above last week’s levels and prices traded at or pushed higher from there; for production available the week of 1/31+/-.
Cedar Lumber -: The inquiry and sales pace of Western Red Cedar (WRC) boards, fencing, dimension, radius edge decking, siding, pattern stock was unusually active for the week between Christmas and New Year’s. Especially, when considering the number of traders who were away from their offices this week. Buyers started the week searching through the handful of mills that were open, for available products to meet their replenishment needs for at minimal Q1 and beyond. Most found that availability was even tighter this week than last and what was available did not come close to meeting their immediate needs. Many buyers were hoping for better results once the mills returned from their holiday breaks and resumed full production.A lack of trucks and empty rail cars to load further delayed shipments that were finally ready for shipment which only further added to buyers’ angst. With limited production available for sale, producers started the week quoting at or above last week’s price levels and prices traded in a narrow range from there.
**Shake & Shingles -:**The inquiry and sales pace of Western Red Cedar (WRC) Shake and Shingles experienced a sluggish start following the long Christmas holiday weekend. A majority of the mills remained off market for sales, while several others were totally shutdown as part of their end of year holiday downtime. A blast of winter weather in B.C. interrupted production at the few mills that were scheduled to be in operation. Causing them to deal with the frigid temperatures and its impact on production equipment and log shipments. The number of buyers in the marketplace was also limited. Those buyers in the market continued their search for additional materials needed to cover Q1 and beyond needs. Most however, came up empty handed, again, and that coupled with late shipments and ongoing transportation issues only added to buyers’ frustration. Several buyers insisted that 2022 would be the year that they shifted to either alternative species or manmade products to compensate for the ongoing WRC product shortage. Mills started the week quoting (as a price guide only) at or above last week’s levels and prices held in a similar pattern from there during this holiday shortened week. Transportation issues are unrelenting.
Southern Pine Lumber -: The inquiry and sales pace of Southern Pine No.1 & No.2-dimensional lumber was not quite as active as in the previous weeks. Mills started the week quoting at or above last week’s price levels and prices traded at or moved higher from there; for production available for shipment the week of 1/24+/-. Buyers started the holiday shortened week focusing on the narrow widths, but it did not take much time before the wider widths joined the markets activity. Mills started the week quoting at or above last week’s levels and prices traded at or moved higher from there; for production available for shipment the week of 1/24+/-. Demand for high-grade product remains unrelenting, with sales well outpacing availability. Mills started the week quoting high-grade above last week’s levels and prices traded at or moved higher from there; for production available for shipment the week of 1/31+/-. Industrial sector buyers just cannot find enough low-grade to keep up with their insatiable demands. Mills started the week quoting low-grade at or above last week’s levels and prices traded in a similar pattern from there; for production available for shipment the week of 1/31+/-. Stud trim sales remain slow but steady. Mills started the week quoting at last week’s levels and prices traded at or on either side of last week’s levels from there; for production available for shipment the week of 1/24+/-. Sales of small squares and timbers have also moderated. Mills, however kept upward pricing pressure on 4x4 – 4x6 – 6x6 as lead times expanded into the week of 1/24+/-. Demand for 5/4 x 6 Standard and Premium Radius Edge Decking continues to exceed limited mill production levels. As a result, mills started the week quoting R.E.D. above last week’s levels and prices traded at or slightly above from there; for production available for shipment the week of 1/24+/-. Transportation issues continued to deteriorate, with limited hope that trucking availability will improve following the New Year holiday.
Pressure Treated -: The inquiry and sales pace of pressure treated lumber, panels, and specialty items were in better alignment with seasonal norms this week. A spike in brite feedstock pricing, the arrival of a more traditional winter weather pattern across North America, coupled with the end of the year festivities provided buyers with a reason to limit their purchases to must have fill ins. Many buyers noted that they had covered their early to mid-January needs during the previous weeks trading. Large box store buyers who had been active in the markets over the past several weeks were also noticeably missing in action this week. One thing that has not changed is the number of transportation issues on both inbound and outbound freight.
OSB & Veneer Panels Overview –: The OSB and plywood panel markets remain active. Particularly busy for the week between Christmas and New Year’s, which is traditionally on the slow side. Producers have limited to no open market panels available, and many spent the week off market trying to rein in order files and to have enough additional production time to cover additional contract ownership requests. Others have begun allocating what little open market panels they develop to ‘key’ customers. Mills have production schedules that range from mid-January through the first full week of February. Prices remain in an upward tilt and buyers in need of prompt replenishment are facing price appreciation that is taking them well out of their comfort zone. Transportation issues continue to make a bad situation – worse.
OSB -: The inquiry and sales pace of OSB remains a challenge for buyers in need of January replenishment. Mills started the week with a handful to no open market panels available and quoting above last week’s gains, and prices pushed higher from there; for product available for shipment the week of 1/24+/-. Other producers decided to offer Price Time of Shipment to customers who were willing to place orders for extended production schedule shipments and were surprised at the number of buyers willing to accept those terms. East Coast buyers noted an influx of imported 23/32 panels that were being quoted and sold below domestic mill replacement levels. Anything in the hands of secondaries sold at a significant premium and the faster it could ship the higher the price.
Southern Pine Panels -: The inquiry and sales pace of Southern Pine Rated Sheathing was not nearly as active as in the previous weeks. With the holidays slowing or stopping jobsite activity, the need for buyers to replenish beyond what they had previously purchased was limited. A majority of producers spent the fifth consecutive week off market, with little to no open market panels available again this week. Buyers with contracts noted that the mills were not accepting additional contract orders from them at this time. Mills started the holiday shortened week quoting at or above last week’s gains and prices traded in a similar pattern from there; for production available for shipment the weeks of 1/24 – 1/31. Secondaries were also limited as to what they had to offer in truckloads or units. A continuing lack of imported panels made the market even more difficult for buyers to navigate through. Mill Cert. sales continue to trail Rated Sheathing sales. Mills started the week quoting Mill Cert. at or modestly above last week’s levels and prices traded close to those levels from there; for production available for shipment the week of 1/24+/-. The inquiry and sales pace of value-added panels, underlayment, sanded, siding, concrete form, and other specialty panels remain steady to strong. Mills started the week quoting at or above last week’s levels and prices traded in a similar pattern from there; for shipment the week of 1/24+/-.
Western Fir Panels -: The inquiry and sales pace of Western Fir Rated Sheathing remains unusually active for the week in between the Christmas and New Year holidays. Buyers, although limited in number this week, searched through the mill and secondary markets in search of needed replenishment for January and early February. However, unless they were working for one of the mills ‘better / best’ customers, their chances of getting anything from the producer’s allocation were extremely limited. Mills started the week quoting above last week’s levels and prices traded at or moved higher from there; for production available for shipment the week of 1/31+/-. The sales of CC, CC Plugged & Touch Sanded, Struct I and Mill Cert. remain steady to strong. Mills started the week quoting these items at or above last week’s gains, and prices moved higher from there; for production available for shipment the week of 1/31+/-.The inquiry and sales pace of underlayment, siding, concrete form, and other specialty panels easily built on last week’s increased market activity. Mills started the week quoting specialty panels at or above last week’s levels and prices edged higher from there; for production available for shipment the week of 1/24+/-.
**Food for Thought-:**The year 2021 is sure to go down as one of the wildest years on record in the lumber, panel and building materials industry. Yes, COVID-19 and its variants certainly played a part in the broader markets picture. But so are shipment delays, atmospheric rivers, an out-of-control wildfire season and the list goes on and on. Don’t forget the large number of ocean-going vessels piled up along the East and West Coasts of the U.S. and Canada, all loaded with everything from Halloween costumes and assorted trick or treat paraphernalia (not of much value in January when it gets unloaded) to medicine, to bathtubs,toilets, and everything else including the kitchen sink.
We’ve seen lumber and panel prices go from extraordinary, never seen before highs in April and May, to exasperating lows in June through September, only to witness them turn around and push back towards those record highs.
What will 2022 hold for our industry? I wish I could tell you my crystal ball is clear, and therefore I can see clearly into the future. Regrettably, I don’t have a crystal ball and perhaps its best that I don’t. Good Lord willing we can review 2022 next year at this time.
From my family to yours - - -
Wishing you Health, Happiness, a long life, and the time to enjoy it
Happy New Year