Good Morning and Happy New Year!
I will dispense with the 2020 vision jokes, since they have been so overdone. With the start of a new decade, it is interesting to look at the last 10 years, and see what has happened in the building products industry. We started the decade coming out of the worst recession since the Great Depression, and most companies (ourselves included) were still in “survival mode.” Those who did survive were rewarded in the coming years, and the economy improved each year thereafter. Industry consolidation continued at a rapid pace. We lost several large, independent dealers and industrial fabricators that were either closed or bought out by larger companies. We started the decade with President Obama and the looming “Obamacare” bill that was signed into law in 2010. This was cited as one of the reasons that the Republican Party won the House and the Senate in 2010. By 2014, most of the provisions of the law came into force, and businesses were forced to deal with its implications. Still, Obama won re-election in 2012. 2015 saw one of the most vicious presidential elections in history with each party screaming about foreign interference and hacking. Donald Trump went on to a fairly strong electoral college win over Hillary Clinton, and Democrats were livid, with many swearing even then that they would find some reason to impeach him if they were given the chance. They were given the chance in 2017, after they took control of the House of Representatives. After unsuccessfully trying to prove that Donald Trump colluded with Russia, they were successful in impeaching him in the House in 2019, based on their charge that he abused his power by withholding aide in Ukraine in exchange for Ukraine’s promise to investigate Joe and Hunter Biden for corruption. This will likely go nowhere in 2020, since it will require 2/3 of the Senate to vote for him to be removed from office. The stock market rose dramatically (178%) during the decade, which made investors a lot of money. The economy overall strengthened due to a number of factors, including technological innovation, tax reform, low oil prices and decreased business regulation. On a sadder note, the National Debt of the US government skyrocketed from $13.5 Trillion in 2010 to $22.0 Trillion at the end of 2019. While both political parties played politics, neither President Obama nor President Trump seemed to be too concerned about this ticking time bomb. 2020 is an election year, and with the country politically divided, it promises to be another nasty one. Oh well….Here’s to 2020. We pray that it will bring health and prosperity to you and your family.
Lumber markets started the year relatively strong, which is very different than the start of 2019, when prices were falling. Buyers who were waiting for cheaper prices to emerge after January 1 were sorely disappointed, as many mills had order files that stretched into latter part of the month. 2×4 #2 was especially strong, and the mills that had any availability moved up their prices by $5 to $10 per mbf. 2×6 #2, which had been scarce a few weeks ago, finally started to show up on mill lists at prices near to 2×4. MSR prices remained flat, but with #2 moving up, the mills were not interested in listening to any lowball offers. 2×8 and 2×10 #2 prices remained flat, while 2×12 was soft. Stud prices were flat to higher, depending on the specie and trim. 2×4 – 8’ trims were flat. 2×4 – 9’ trims, which were down a few weeks ago, moved up around $10 per mbf on stronger demand. Low grade lumber prices strengthened. 2×4 Economy became more and more scarce as the week moved along, and prices started to move up.
Panel markets were basically flat last week. OSB prices remained mostly unchanged, but the mills had order files that stretched into the latter part of January, so they were not open to counters. One of the major producers that we spoke with would not budge their numbers, even when offered more than one carload. Rated Sheathing Plywood prices did not change much last week, and the mills reported that they were quiet. 4×8 ¾” CD prices slipped another $5. Specialty panel prices were also fairly flat, but the mills were having a hard time finding customers. ¾” AC sanded prices slipped another $5.
Steel markets remained strong. Rebar prices (domestic), which were increased by $1.50 per cwt 3 weeks ago, remained firm, and the price increase seemed to be sticking. One of the Mexican producers that we spoke with reported that they would probably need to increase their prices to the US in order to avoid any anti-dumping tariffs imposed by the Feds. If they sell rebar into Mexico cheaper than they do into the US, they run the risk of getting hit with the tariff again, and since they were seeing higher prices in Mexico, they would have to raise their US price accordingly. Remesh prices took a large jump in December, based on higher scrap steel and wire-rod prices globally. 6,6,10,10 5×150’ remesh rolls moved up by around $4.
