Market Update – February 16, 2022

Hopes for a calmer, less stressful year in the lumber and building materials industry have not started out on the right foot. 2021 ended and this year began with more price increases across the board in both lumber and panels. Then in late January it looked as if we might see a correction as many items gave back a good portion of their gains. Levels were still higher than we’d all like them but there appeared to be some relief coming. That lasted all of the better part of three weeks as any items going down started heading back up. OSB is the one product line that has shown extraordinary strength since early December. Since then, the price of OSB has doubled and trying to find any extra loads on the open market is next to impossible. Contracted wood is shipping 2-3 weeks late with trucking availability being the biggest culprit. The Canadian truckers’ demonstration is not the primary reason for the continued transportation woes, but it certainly hasn’t helped the cause. Rail car availability and movement also remains in a very taxed situation as empties are not getting back to the mills quickly enough and the rail companies are still being picky regarding where they ship. This in turn puts additional pressure on trucks as more are needed to get product where the railroads won’t go. Some isolated rail embargoes have also added to the transportation fiasco. The number of container ships waiting to enter the ports is heading in the right direction, but a good deal of congestion remains.

With all this said, the one thing almost all industry pundits agree upon is their lack of knowledge of where the markets are heading. One constant that appears to be allowing mills and manufacturers to keep prices up is the issue with transportation. If some traction could be made in this area it would certainly create some much-needed competition for business. Many retailers and lumberyards also appear to be under bought, or at least were prior to this most recent uptick. The pressure on reloads and distributors to satisfy the demand for prompt product to fill inventory holes has caused some companies to stop taking orders. That is an extremely rare occurrence. Companies that can usually be relied upon to ship a mixed load of lumber in a week or less have 4-to-5-week order files. Every day that we get closer to better weather it seems less likely for a reprieve. But thinking back to last year’s mid-summer collapse, anything is possible.

Some good news on the building materials side is a slow down in price increase announcements along with many manufacturers improving their lead times, even if only in small increments. Doors, windows, roofing, sidings and cabinets has all stabilized at the very least if not shown some improvements. One recent increase announcement worth noting is the EWP market. All manufacturers have declared double digit percentage increases in both I-joists and LVL, some as high as 20 to 30%. Many manufacturers remain on allocation, but the industry as a whole has adapted and is dealing with the hand that’s being dealt. Continue to protect yourself on price quotes and include verbiage for potential increases. Lumber and panels will continue to move up in the near future, for how long is the question.