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Madison's Weekly Lumber Market Update: Bad weather hits demand

Keta Kosman
0 Comments|February 28, 2014

Forest products’ industry players had trouble staying awake at work this week as bad weather continued to dampen demand and ongoing transportation issues dominated business. Dimension lumber sawmills reported they were “chewing through their order files” as production caught up with strong mid-winter sales. Most producers were down to around one week of orders booked but not yet processed.

No one fretted however because never-ending rail car unavailability has delayed, by two weeks in many locations, shipment of solid wood products already manufactured.

In many regions, customers remain in no position to take delivery. As spring comes on there will be a bounce in shipments as pent-up wood makes it’s way through the supply chain. A usual spring surge in lumber consumption will bring a rising price trend similar to those seen on older historical (i.e.: 2003) trends.

Lumber buyers and sellers across North America have been in heavy negotiation for the past year and half, settling on terms acceptable to both, in view of a recovering US housing market and the new circumstance of significant offshore customers in China. The extreme price volatility of 2013 should now be behind us, and more regular seasonal cycles should occur.

On the west coast, Douglas fir producers reported strong demand for wides (2x10) while 2x4 and 2x6 were sought after in #3/Utility grades only. This was true across all species and regions actually: there were not enough narrows of lower grade available for hungry customers. As a result prices popped nominally on almost all utility grade 2x4 dimension lumber commodities.

Industrial customers in the US and Canada, and the usual buyers in China, were responsible for this market strength.

Panel traders also seem to have settled on price levels for the moment. After several weeks of up & down waffling, benchmark panel product Oriented Strand Board 7/16” Ontario lost $10 this week to settle at C$220 msf. For their part, Canadian Softwood Plywood prices in the major markets of Toronto and Vancouver did not change.

In company news, the West Fraser Timber (TSX:T.WFT, Stock Forum) and United Steelworkers agreement, recently reached, was this week ratified by an average 65 per cent vote at the five West Fraser mills in BC’s northern interior affected, the union announced Friday.


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Keta Kosman, Publisher

Madison's Lumber Reporter

604 984-6838


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