Market Update – April 2021

In an effort to keep our customer base informed during extremely volatile market conditions, we will periodically send updates with information regarding price increases, availability issues etc. As we are all well aware, there are significant shortages in the market and correlating price increases are common.

The reasons for this are myriad, but the underlying theme is consistently supply chain disruption. On the import side the disruptions range from reduced wood fiber availability globally, reduced production capacity as a result of Covid related downsizing to insufficient container availability and disrupted shipping corridors. These are coupled with a surging global demand for wood products (plywood, lumber) as markets emerge from Covid stagnation. Shipping corridors are severely out of balance with regard to container availability and ocean freight rates have skyrocketed as a result. The cost to ship a container from Indonesia, for instance, has more than tripled over the course of this year so far and continues to climb. Many importers have plywood and lumber purchased overseas, but are not able to get it shipped due to these disruptions. The major ports of call in the US for wood products shipping from Asia have backlogs that require vessels to wait weeks, in some cases, to get unloaded. All these issues combine to make extremely long lead times that cause shortages and complete outages on some imported plywood items.

Domestic hardwoods and plywood continue to see unprecedented pressure on a diminished supply line leading to cost increases and protracted lead times. Many hardwood lumber and plywood mills are taking orders with long lead times on a “price time of shipment” basis, which leads to a great deal of uncertainty and upward surge in pricing. Distributors are buying on the premise that they must have product to sell and are simply at the mercy of current market conditions. Some hardwood plywood mills are allocating production at this time causing distributors to scramble to cover supply elsewhere which only causes more chaos in the marketplace.

As volatile as the hardwood lumber and plywood market has been, it’s minor compared to some of the disruptions and price increases noted in softwood lumber and plywood, including framing and sheathing material. MDF mills have order files out into mid-summer and large scale stock outs are expected on certain thicknesses.

As much as we’d like to think the market will settle down sooner than later, all indicators are that this is going to be a protracted issue and markets will remain unstable and volatile for the next few months at a minimum. This situation is a cumulative effect of global production and shipping disruption that evolved over the course of more than a year and will take time to correct itself.

If you have any questions feel free to contact us!

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