June 26, 2017
Freres Lumber Market can report a welcome change has come to the western plywood markets – mostly since the beginning of June.
Looking back to the lethargic and listless buying from mid-April through the end of May, it is always amazing how quickly things can make a U-turn and go the other way. We should never be completely surprised, but we often are. Such has been the case for the western plywood market of late. We have had three straight weeks of solid sales days. Not crazy in pace, but incredibly steady. The lack of confidence in the market before June has been replaced with positive vibes about the near term course of the market. Why? It simply appears that the negative tones in late spring led to inventory drawdowns in many areas of the country. Yards and distributors alike took things down too low and became too negative. Simple good demand has brought about the changes in prices and tone we have witnessed in the past three weeks. Now, even with the steady buying of late, it would appear that the truck markets, at least in the west, are still under bought. That is apparent in how many customers are pursuing their bought trucks, tracing their orders and trying to get ETD to cover their nearby shipping needs. It is the same all the way through the distribution chain. That is, of course, the one downfall of just-in-time buying. One has to endure and absorb periods of volatility in the marketplace. Essentially, that practice insures that when you decide to buy, you will be paying the going rate on that day, and often, not better than that. It is so easy to quantify market moves after the fact!
With the recent appreciation of prices in the marketplace, people are naturally now trying to figure out when and where the current top of the market will be. It’s difficult to say–while the market has had good appreciation in price over the last few weeks, demand remains good and will likely support the prices and the market, for at least the near term. Get in front of it too soon and you risk getting run over. That said, there do exist considerable spreads in some items between southern pine plywood and western plywood, which is worth noting for the future. Last summer, some hefty spreads in pricing between the two areas persisted through the summer, to the amazement of not a few people. Currently, some of those spreads are even larger than last year. Also, hard to pinpoint the cause of the outside-normal spreads, but most likely pine suffers from being in the shadow of steady imported shipments in the east and southeast – both diluting supply and depressing price. Combine that with the western plywood propensity to sometimes simply go on its own, with no regard to spreads or relationships to other panel items. We are probably in that zone right now.
Here’s hoping for continuing good markets in July!