Plywood, OSB Prices Fall

Portland. OR, Dec. 10--The party may be over for wood paneling producers, according to the Oregonian. For most of the year, makers of plywood and oriented strand board enjoyed an enormous surge in prices. Homebuilders bought as much paneling as they could find, as new home construction surged during the summer to the highest levels in more than a decade. The benchmark price for oriented strand board, used as a base for flooring and roofs, doubled from early May to late August. Companies such as Portland-based Louisiana-Pacific, the largest North American maker of OSB, and Federal Way, WA-based Weyerhaeuser saw their annual sales increase by double-digit percentages. But last week, the benchmark OSB price dropped by $100 per 1,000 square feet, or 23.5 percent, to $325 per 1,000 square feet. Industry observers said the price movement looks to be on pace to drop as quickly as it rose--the result, they said, of a cold-weather slackening in the pace of building. "The law of gravity has not been repealed," Steve Chercover, an analyst with D.A. Davidson & Co. in Lake Oswego, wrote in a research report Monday. The surge in paneling prices had been a bright spot in an otherwise lackluster year for timber companies. Prices for office paper, newsprint and other staples have weakened in the fragile U.S. economy. A tariff dispute with Canada has complicated the economics of lumber businesses. Industry observers agreed that last week's price tumble indicates a seasonal slowdown in home construction--and likewise demand for OSB--that will hold through the spring. But it's anyone's guess how far prices will fall before they stabilize, said Joe Heitz, associate editor of Random Lengths, a Eugene-based forest products market research publication. David Dugan, spokesman for LP, downplayed the price drop. At $325 per 1,000 square feet for the benchmark price in the north-central United States, OSB producers still enjoy prices far above the average of $200 per 1,000 square feet that prevailed through the 1990s. "This is a normal occurrence, these seasonal slowdowns where production and consumption come back into balance," Dugan said. "Inclement weather and holidays seasonally impact the housing market." But forest-products industry analysts said the price drop was unusual in its severity. Prices for OSB have been more volatile than in previous years, Chercover wrote, because consolidation has shrunk the number of wholesalers and distributors that buy the product from mills and sell it to homebuilders. In addition, those distributors have sought to keep thin inventories. As a result, when their supplies of OSB run dry, as they did last spring, they all call in many orders at once, forcing prices up. When demand slows because of winter weather, the order drop-off can be precipitous. "The predicted result for structural panel prices is higher highs and lower lows," Chercover wrote. Discipline among OSB producers also contributed to the run-up in prices this year, said Sam Sherrill, executive editor of Crow Publications, a forest products market research service in Beaverton. Few OSB mills have been brought on the market in the last year or so, which helped keep supplies tight, he said. Sherrill said he expects prices to remain volatile for a few weeks before settling at a modestly lower price. Many distributors won't buy while prices are rising and falling so steeply, he said. "No one wants to pay $350 for a truckload that will be worth $250 tomorrow," he said.

Other Archived Articles

Atllanta Home Sales, Prices Dip in July   Full Article
Atlanta, GA, Aug. 18, 2014 -- Home sales and prices in the Atlanta Metro area fell slightly from June, the Atlanta Board of Realtors saiid Monday.

Multilayer Association Gets Three New Members   Full Article
Bielefeld, Germany, Aug. 18, 2014 -- The Multilayer Modular Flooring Association said it has three new members.

Bamboo Hardwoods Signs Midwest Distributor   Full Article
Seattle, WA, Aug. 18, 2014 -- Bamboo Hardwoods said it has entered into a distribution agreement with Bishop Distributing.

Builder Confidence at Seven-Month High   Full Article
Washington, DC, Aug. 18, 2014 -- Homebuilder confidence rose in August to the highest level in seven months, according to the National Association of Home Builders.

New York Manufacturing Improves at Slower Pace   Full Article
New York, NY, Aug. 15, 2014 -- The Empire State manufacturing survey fell back to 14.7 in August after hitting a four-year high of 25.6 in July.

Consumer Sentiment Falls in Early August   Full Article
Washington, DC, Aug. 15, 2014 -- The preliminary August reading on the University of Michigan/Thomson Reuters consumer-sentiment index fell to 79.2 from a final July result of 81.8.

Investors Wondering About Firm's Stake in Armstrong   Full Article
New York, NY, Aug. 15, 2014 -- Flooring industry analyst Stifel Nicolaus says talk is heating among its clients up that Armstrong World Industries could be broken into separate entities.

Office Environments Acquires Flooring Firm   Full Article
Charlotte, NC, Aug. 15, 2014 -- Office Environments, a Charlotte based commercial furniture dealer, said it has acquired Modular Designs, a flooring firm also based in Charlotte.

FCICA Continuing Diamond Member Club   Full Article
West Bloomfield, MI, Aug. 15, 2014 -- FCICA, the Flooring Contractors Association, said it will continue its Diamond Club member program for the 2014-2015 membership year.

Housing Affordability Declines in Second Quarter   Full Article
Washington, DC, Aug. 15, 2014 -- Nationwide housing affordability dipped in the second quarter as several markets saw a firming of home prices, according to the National Association of Home Builders.

Georgia Unemployment Grows but Dalton Layoffs Fall   Full Article
Atlanta, GA, Aug. 14, 2014 -- Unemployment in Georgia in July rose to the highest rate since last October, according to the Georgia Department of Labor.

Initial Jobless Claims Rise Last Week   Full Article
Washington, DC, Aug. 14, 2014 -- Initial claims for unemployment benefits rose 21,000 to 311,000 in the week the ended Aug. 9, according to the Labor Department.

Higher Downpayments Hitting First-Time Home Buyers   Full Article
New York, NY, Aug. 14, 2014 -- Growing requirements for downpayments are shutting many first time buyers out of the housing market, Bloomberg News reports.

Tarkett Contest Features Commercial Flooring   Full Article
Chagrin Falls, OH, Aug. 14, 2014 -- Tarkett has launched a WeLikeItNatural Creative Contest featuring its commercial vinyl flooring.

Retail Sales Flat in July   Full Article
Retail Sales were flat in July as car demand slowed and consumers remained cautious in their spending. This is the weakest performance in six months.

Mortgage Application Volume Down Last Week   Full Article
New York, NY, Aug. 13, 2014 -- Mortgage application volume fell last week as both purchase and refinancing applications declined, according to the Mortgage Bankers Association.

Valinge Awarded Another U.S. Patent   Full Article
Viken, Sweden, Aug. 13, 2014 -- Valinge said it has been awarded a U.S. patents regarding mechanical locking of LVT/resilient floorboards.

Another Investment Firm Discloses Armstrong Position   Full Article
New York, NY, Aug. 13, 2014 -- Another investment firm has disclosed a large position in the shares of Armstrong World Industries.

Home Price Increases Continue To Moderate   Full Article
Washington, DC, Aug. 12, 2014 -- Home-price growth continued to moderate in many metropolitan areas in the second quarter, according to the National Association of Realtors.

Domotex Turkey 2015 Set for May   Full Article
Hannover, Germany, Aug. 12, 2014 -- The dates for Domotex Turkey 2015 are May 25-28 at the Turkish carpet trading capital, Gaziantep.