August 3, 2020

Lumber markets rocketed past all-time highs last week, as dealers and distributors scrambled to find any affordable lumber in any specie, from any producer.  Prices continue to surge for a number of reasons, including strong demand from builders, continued production problems from covid-related mill shutdowns, shipping problems from both truckers and railroads due to covid-related shutdowns, and a general lack of buying in the early Summer out of fear of a pending economic downturn.  Most mills are booked out 30 to 45 days on nearly all dimension lumber items.  2×4 RL #2 SPF prices jumped up another $45 per mbf last week, bringing prices up well over $150 per mbf since the 4th of July holiday.  Inland producers are all off-the-market on WF and DF dimension, making it difficult to gauge the actual market price of products from these mills.  Wide dimension lumber out of California is also difficult to source, and trucking problems from this region have made it difficult to price any of the lumber coming from there.  MSR lumber?  Almost non-existent from any producers.  Studs are still available from some mills, but at significantly higher prices.  Decent 2×4-8’ PET studs are now selling at nearly $800 per mbf in the southwestern U.S.  Low grade lumber prices, which had been fairly stable relative to everything else, also jumped up by over $50 per mbf, and availability was limited.

Panel prices also skyrocketed last week on strong demand and limited mill availability.  4×8 7/16” OSB prices have now exceeded their all time record highs, and prices for rail cars into the southwest have now exceeded $600 per msf.  4×8 ¾” OSB T&G prices have exceeded $800 delivered in the southwest, and very little open-market OSB is available.  Southern pine plywood mills have been off-the-market for several weeks, making it difficult to know where market prices are actually trading.  Based on Random Lengths published market data, 4×8 15/32” CDX is now selling around $750 delivered into New Mexico or Arizona.  Ironically, prices for western premium plywood items such as AC sanded, plyform and overlayed plywood items have not changed much.  We would expect this to change in the near future, however, if prices for commodity panels keep going up.  As they say, “a rising tide lifts all boats.”

Steel markets were quite a contrast to lumber and panel markets.  Prices for rebar and remesh were generally flat, although we began to sense that a bottom in the market had occurred.  News came out that the U.S. government had set new anti-dumping duties on some Mexican remesh producers, and this firmed up prices for these items.  On rebar, we actually saw a $.75 per cwt price increase from one of our Mexican suppliers, who cited the anti-dumping duty as the reason for the change.  A weakening in the value of the U.S. dollar against other currencies such as the Euro could firm up prices in the near future, even though demand for scrap steel is flat at this time.  Unless the worldwide recession from Covid gets worse, we would expect that steel prices are close to investment levels.  Call us if you are interested in laying in some extra inventory!