April 8, 2019
Veneer and panel markets have been remarkably stable over the last month, although, they haven’t stabilized at very good levels in relation to log costs. ½” 4-ply prices hit $345 at the end of the year and improved slightly to $375 according to Random Lengths. Unfortunately, nationwide weather seemed to stall prices again. Oregon was hit by late February storms which threw a kink into production schedules and transportation. There were nationwide railroad disruption notices as regions dealt with unusually cold weather and snow pack, followed by issues with flooding.
Unpredictability Still a Factor
Weather has only been a back drop as customers still try to adjust to an extremely unpredictable market. Additional OSB capacity recently added to the market may be a tipping point to lower panel prices until the market adjusts. At the end of 2018 mortgage rates seemed to be on an uninterruptible march upward. Thirty-year mortgage rates fortunately stopped short of 5% and have since corrected to about 4.3%. Mortgage rates can have a large effect on housing affordability, so we hope lower rates are a precursor to better markets.
There is no doubt there is still a grave housing shortage. The fear is that impediments to housing market growth are structural to the market, such as high regulatory and development costs, lack of available, experienced labor, and a shortage of developable land. Only time will tell.
Projects Continue to Drive Progress
Regardless of market conditions, we are always looking to the future and have many projects in the works to make us even more competitive going forward. Last week we finished the installation of a new clipper scanner system at Plant 1. The project went very well and the new scanner is performing very close to expectations. The new robotic PLV line at Plant 3, which is one of our most complicated recent installations, is showing great promise, but we still have some kinks to work through. We are moving forward with an investment in a new plywood press by the end of the year at Plant 3. We will also continue to invest in the development of new products at Plant 6 so that we can create truly unique products currently unavailable in the market. A new beam and column processing line, the next step in this process, has been ordered. We appreciate everyone who has invested a huge amount of their time developing these projects.
A Promising Season Ahead
I am looking forward to the market report in which I can say there has been a dramatic improvement in our product pricing. It has felt like a long slog this winter. Fortunately, Spring is here and Summer is right around the corner.