MARKET UPDATE – NOVEMBER 2022
Shrinking demand and seasonal slow downs have resulted in a considerable adjustment in lumber prices over the past 3 months. Mills have done their best to keep numbers up through production curtailments with limited success. With that said though, it’s still unknown if prices will get all the way back down to their previous lows. This rings especially true for OSB. In spite of muted demand for OSB nationally, the mills have been pretty successful in limiting production, enabling them to keep their “basement” pricing higher than we were used to in the past. Not saying it won’t happen, but it seems unlikely at this point we’ll ever see single digit 7/16” prices again. Louisiana Pacific has shifted a good portion of their plants from OSB panel production to siding which has also taken away supply. An especially frustrating trend among OSB manufacturers is their ordering requirements. To get a truck or a railcar, a certain amount of the product has to be ¾” underlayment. Some even require their customers to take a specified level of the “added value” underlayment (Advantech or Dryguard equivalents). This puts considerable constraints on which manufacturer you can buy from or forces you to take product you don’t want/need. The supply and availability of ¾” OSB underlayments has been increasingly trying and will be even more so in 2023.
As the market contracts on the building materials side of our business, not only will lead times continue to improve but there will be pressure on prices to come down. Manufacturers faced with the reality of fighting over their share of a smaller pie will be forced to lower prices to defend their market or gain new customers. This won’t happen as quickly as lumber and panel prices go down but it will happen to some degree. It’s also a certainty that we will never return to the levels of $40 per square roofing or $8 per sheet drywall. Arguably some price appreciation was due in our industry but nothing close to the degree of what prices have done over the past two years.
We hope everyone finishes the year busy and has a nice order file heading into the new year.