Since the end of November, the lumber and panel markets have shown considerable strength across the board in all species and products. In the past 5 weeks the Random Lengths lumber composite has risen over 70% from $611/MBF (thousand board feet) to $1077/MBF. Panels, incorporating all OSB and plywood products, has gone up over 40% from $643/M to $940/M. Limited production at the SPF mills along with thin inventories all along the supply chain have created an extreme seller’s market. Lead times are extended and the mills are getting their asking prices as buyers have few options if they want to insure wood on the shelf through the first quarter. Reloads and distributor’s stock have been picked clean in the past two months as retailers have chosen to keep inventory levels leaner. On top of these factors demand levels have yet to slow much if at all. SYP is showing even more strength than the spruce market as limited production has created a supply and demand imbalance as the treaters are all scurrying to cover their needs for the spring.
OSB supply outside of contracted wood is hard to find and at prices far exceeding even print levels. Producers have limited their production and offerings to reverse the price reductions we saw in the markets beginning in the third quarter. Sadly they’ve gotten pretty good at manipulating the market in their favor. SYP and fir plywood are both in very short supply and price at this point is secondary to availability. I Joists and LVL supply are still a concern as allocations are firmly in place.
Transportation remains a major challenge by both truck and rail. Loads to be shipped far outnumber the quantities of available trucks and drivers. This imbalance continues to push freight costs higher and the price levels of fuel in 2022 are a growing concern. Rail companies are becoming even more bullish (if that’s even possible) in their demands and stipulations placed on both shippers and receivers. Limiting where and how much they will ship in turn places more pressure on the trucking industry as the needed hauls increase in both quantity and distance to be shipped.
The weather will surely have an impact on business for the next few months which will aid in the overall situation but 2022 is starting out as challenging as any point last year.