Tag Archives: Wood

UC: Wood products set record

Wood products set record

May 7, 2013

By Rick Sohn,

Umpqua Coquille LLC

Wood products set records in April and pushed all prices higher, as log shortages still are  an issue. Housing starts finally broke through 1 million for the first time in 5 years.  Seven-year trend of lumber, logs, housing, and mortgage statistics are shown below.

chart-sohn-may13

$445 for studs is higher than any number I can remember.  But looking closely at weekly reports:

$395 on March 15

$430 on March 22

$452 on  March 29

$460 on April 5 and 12

$445 on April 19

$415 on April 26

Random Lengths printed a high of $417 as a monthly average in March, 2005.  This “Timber industry Reports” usually uses the third week of the month.  Normally, prices of lumber above $400 are very short-lived but have been going now for 6 weeks.  Current issues of Random Lengths report price weakness, but weakness that is still above $400 is an exceptionally strong number by historic standards.  These prices happen because basic production infrastructure cannot keep up with demand, for product.  For simplicity, this report tracks studs, but other products are also following suit.    Two lessons here:  No rest for lumber salesmen, and  low cost studs at the big boxes may be a thing of the past,  for now.

With such a strong spike in stud prices, the March stud number is well over 50% of the log number, so good money is being made by mills, as well as by the timberland owners.  A steep drop in both stud and log prices can be expected, as the increased supply of logs from summer road systems becomes a factor. Log sellers tell me that these decreases in price will be more evident when reported next month.

Housing starts are setting a new high, again, finally surpassing 1 million starts annualized – the first time since June, 2008.  This is another important milestone.  More markets are becoming seller’s markets. Unsold inventory is hovering around very healthy levels.  The 30-year fixed rate mortgage is stabilized, moving slowly upward, each month.

Zillow median home value prices are interesting.   A study of these numbers shows a significant lag in the low price, compared to the other measures in this report.  The low reported in in 2012, fully 3 years after the housing starts, building permits and stud and log prices hit their lows.  Of course, many factors contribute to the lagging home prices, not the least of which is the SLOWNESS of the recovery.

One of our next milestones will be when housing starts and building permits both print above 1 million units in the same month.

Data reports used with permission of:

1Random Lengths.  Through Sept. 2012, 2”x4”x8’ precision end trimmed hem-fir stud grade from Southern Oregon mills.  Starting Oct. 2012 the stud grade was consolidated with and is now reported as  Kiln Dried Studs, Coast Hem-Fir 2x4x8’ PET #2/#2&Btr. Price reported is Dollars per Thousand Board Feet, generally the third week of the month.  One “board foot” of product measures 12 inches by 12 inches by one inch thick.

2RISI, Log Lines.   Douglas-fir #2 Sawmill Log Average Region 5 price.  Current report is for the prior month.  Dollars per Thousand Board Feet of logs are reported using standardized log measurements from the “Scribner log table,” which includes expected saw trim.  This is much larger than a product board foot.

3 Dept. of Commerce, US Census Bureau.   New Residential Housing Starts and New Residential Construction Permits, seasonally adjusted, annual rate.  Current report is for the prior month.   Recent reports are often revised in bold.  Also, major revision made each May, reaching 2 1/2  yrs back.

4Regional Multiple Listing Service RMLSTM  data, courtesy of Janet Johnston, Prudential Real Estate Professionals  Broker, Roseburg, OR.  Inventory of Unsold Homes (Ratio of Active Listings to Closed Sales) in Portland Oregon, for most recent month available.

5Freddie Mac.  Primary Mortgage Market Survey.  30-year Fixed Rate Mortgages Since 1971, national averages.  Updated weekly, current report is for the prior full month.

6Mortgage-X Most recent weekly rate of 30-year Fixed Rate Mortgages, national average.

7Zillow.com Median value of homes sold in the United States during the month, weighted according to the population of each area.  The Median is the  midpoint value with  equal numbers of homes selling above and below this value each  month.  Medians tend to remove the effect of outlier values.Revisions in bold

Issue  #6-4.   © Copyright Rick Sohn, Umpqua Coquille LLC.  , e-mail rsohn@umpquacoquille.com

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B.C. forest companies can’t get enough rail cars to ship products to customers

B.C. forest companies can’t get enough rail cars to ship products to customers.

VANCOUVER – B.C. forest companies say they can no longer get enough rail cars to move their products to market at a time when the U.S. housing market is going through a major recovery.

U.S. housing starts topped one million in March on a seasonally adjusted rate, more than double the low point hit during the recession, prompting a run on rail cars that Canadian mills use to get their wood products to market. It’s not just lumber that’s being affected. Oriented strand board, plywood and even pulp inventories are building at the mills, forcing companies to turn to trucks – which are also in short supply.

“If you had a pickup truck, we would use it,” Bob Hayes, transportation vice-president at Canfor Corp. said Tuesday.

Earlier this year, Canfor came within four hours of shutting down a pulp mill because of a rail car shortage. Pulp production is also up and because it is perishable, it cannot be stored outside, Hayes said. Canfor has erected a big-top style tent at one of its Prince George pulp mills to store inventory but so far hasn’t had to use it.

However, the rail car crunch is adding to costs, from additional trucking to causing ships to be delayed in port, he said.

“We were trucking this week from Prince George to Squamish terminal. We have never done that before. We had to find emergency trucks this weekend to go from Prince George to Squamish to keep the product flowing to the vessels and to keep the warehouses from overflowing,” Hayes said.

“I think transportation and the lack thereof, is going to be the biggest challenge for B.C. forest products companies to get their product to market in 2013 and beyond. Usually economics will drive solutions, but right now, that solution is to constrain the industry.”

Catherine Cobden, executive vice-president of the Forest Products Association of Canada, said the rail car shortage is systemic, with both CN and CP unable to deliver enough cars to meet growing demand.

“It’s very disappointing at a time when markets are rebounding and we are gearing up to support and supply, not just our traditional markets but our growing emerging markets,” she said.

“Our members are saying in some cases they are only getting half the cars they need to service their marketplace. Obviously this is a very difficult and untenable position for us.”

U.S. housing starts reached 1.036 million units in March on a seasonally adjusted rate, seven per cent higher than February and 46.7 per cent above March 2012, according to the U.S. lumber publication Random Lengths. March’s rate was the highest since 2008. The 2013 forecast had been for from 885,000 to 985,000 starts.

Doug Routledge, acting president of the B.C. Council of Forest Industries, said B.C. sawmills have responded by returning to two shifts. Employment in the forest industry has climbed marginally, from 51,490 direct jobs in 2009 to 56,340 in 2012, according to Statistics Canada.

“Most mills are back on a two-shift capacity which would be equivalent to normal production levels. A few mills, not many, have added in a graveyard shift. But it’s being buffered by transportation issues – not just railcars – where people are not able to get rid of finished inventory. That is buffering the ability to put on that third shift here and there,” Routledge said.

“We aren’t currently not supplying the U.S. market with quite as much product as I think they would like. It’s shortage of rail cars, a shortage of trucks and generally, a shortage of all transportation vehicles.

Further, a shortage of skilled labour is hitting the supply chain.

“There’s no question: There’s a shortage of drivers and a shortage of trucks, whether lumber or log, to move the product,”

The rapid rebound in housing coupled with the rail car shortage has forest industry leaders wondering if the two rail companies will be able to provide enough cars on a long-term basis to meet the U.S. appetite for Canadian wood products.

In an email statement, CN said since January, CN has been challenged by extremely cold weather in Western Canada, snowfall and several line disruptions.

“As a consequence, train velocity has declined, while terminal dwell times at classification yards have risen. These factors have adversely affected the productivity of the rail network, as well as service levels for all customers,” CN spokeswoman Emily Hamer said in the email.

“Throughout the winter we have been in close communication with our customers to keep them informed of these situations. We continue to work with customers to address their service needs.”

Routledge said CN has told the industry that rail cars got sidelined and then frozen in the snow.

ghamilton@vancouversun.com

Read more: http://www.vancouversun.com/business/resources/forest+companies+enough+rail+cars+ship+products/8251305/story.html#ixzz2QlhepptT

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CR: Lumber Prices up Sharply, Suppliers Scramble to Keep Up

Lumber Prices up Sharply, Suppliers Scramble to Keep Up

by Bill McBride on 3/21/2013 

From the WSJ: Amid Housing Recovery, Humble Plywood Shines Anew

Growing demand and tight supplies have pushed up plywood prices by 45% in the past year, and U.S. producers are scrambling to get back up to speed after slashing output of the basic construction material during the housing bust.

Georgia-Pacific, the largest U.S. producer of plywood, will announce Friday it plans to invest about $400 million over the next three years to boost softwood plywood and lumber capacity by 20%.

With demand rising, the composite price for structural panels, which includes plywood and other wood products, jumped to $511 per thousand square feet on March 15 this year, up 45% from $351 in mid-March a year ago, according to Random Lengths, a Eugene, Ore., wood-products market reporting service.

Lumcber PricesClick on graph for larger image in graph gallery.

This graph shows two measures of lumber prices (not plywood): 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

Lumber prices are now at 2004 and 2005 levels.  Demand is far below the levels during the housing bubble, but supply has fallen sharply too.

Read more at http://www.calculatedriskblog.com/2013/03/lumber-prices-up-sharply-suppliers.html#by52g5HXfx0IO3fT.99

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Rail Traffic for Lumber & Wood Products was up 5.7%

Weekly Rail traffic for Lumber & Wood Products was UP this week. Combined North America Rail Volume for the week is 6,158 UP by 5.7%. The four week moving average is 5,694 up by 7.9%. Week 4 cumulative total is 22,777 up by 7.9%.

 

This Graph shows the weekly average Carloads of Lumber & Wood Products.

Rail Traffic for Lumber & Wood Products was up 5.7% 2013 week 4

This graph shows the Percentage change in Year-Over-Year of Carloads of Lumber & Wood Products.

Rail Traffic for Lumber & Wood Products was up 5.7% 2013 week 4 yoy

From the Association American Railroads (AAR): AAR Reports Mixed Weekly Rail Traffic

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Rail Traffic for Lumber & Wood Products was up 21.7%

Weekly Rail traffic for Lumber & Wood Products was UP this week. Combined North America Rail Volume for the week is 6,307 UP by 21.7%. The four week moving average is  4,958 up by 6.5%. Week 3 cumulative total is 16,619 up by 8.7%.

 

This Graph shows the weekly average Carloads of Lumber & Wood Products.

Lumber & Wood Products Rail Traffic was up 21.7% 2013 week 3

This graph shows the Percentage change in Year-Over-Year of Carloads of Lumber & Wood Products.

Lumber & Wood Products Rail Traffic was up 21.7% 2013 week 3 yoy

From the Association American Railroads (AAR): AAR Reports Mixed Weekly Rail Traffic

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Rail Traffic for Lumber & Wood Products was UP 7.9%

Weekly Rail traffic for Lumber & Wood Products was UP this week. Combined North America Rail Volume for the week is 6,151 UP by 7.9%. The four week moving average is 4,949 up by 5.4%. Week 1 cumulative total is 10,312 up by 2.1%.

 

This Graph shows the weekly average Carloads of Lumber & Wood Products.

Lumber & Wood Products Rail Traffic was up 7.9% 2013 week 2

This graph shows the Percentage change in Year-Over-Year of Carloads of Lumber & Wood Products.

Lumber & Wood Products Rail Traffic was up 7.9% 2013 week 2 yoy

From the Association American Railroads (AAR): AAR Reports Mixed Weekly Rail Traffic

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Lumber & Wood Products Rail Traffic was DOWN 5.5%

Weekly Rail traffic for Lumber & Wood Products was DOWN this week. Combined North America Rail Volume for the week is 4,161 down by 5.5%. The four week moving average is 4,996 up by 7.4%. Week 1 cumulative total is 4,161 down by 5.5%.

 

This Graph shows the weekly average Carloads of Lumber & Wood Products.

Lumber & Wood Products Rail Traffic was DOWN 5.5% 2013 week 1

This graph shows the Percentage change in Year-Over-Year of Carloads of Lumber & Wood Products.

Lumber & Wood Products Rail Traffic was DOWN 5.5% 2013 week 1 yoy

From the Association American Railroads (AAR): AAR Reports Mixed Weekly Rail Traffic

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