18 | Focus on OSB: North America
units of 2021. Multi-family units were 35% of total 2022 starts compared to 30% in 2021. This changing proportion is relevant for OSB makers because multi-family units use one- third to one-half of the building materials of a single-family unit. While less volatile than US trends because
of tighter banking regulations, the Canadian housing market responds to parallel economic forces. Canadian housing starts of 271,000 in 2021 slightly decreased to 261,000 in 2022. Canada always has a higher proportion of multi-family units compared to the US, and multi-family increased to 72% of total residential starts in 2022 compared to 70% in 2021.
Above: Timber frame construction site PHOTO: APA
Most North American OSB is used for construction, instead of as an industrial raw material. Prices and demand for OSB correlate with construction activity; demand and prices go up when construction activity increases and vice versa. The pandemic housing construction boom lasted from summer 2020 to the middle of 2022, and OSB prices were extraordinarily high over those two years. OSB prices briefly reached a new record during 2022, after breaking records in 2020 and 2021. According to Random Lengths, the March 2022 price of US$1,235/m3 for benchmark south-eastern US 7/16in (approximately 11mm) OSB exceeded the prior June 2021 record of US$1,125/m3
.
However, the pandemic economic stimulus caused inflation to rise, starting in 2021. Central banks have repeatedly raised interest rates to bring down inflation. At the end of 2022 the average mortgage interest rate exceeded 6.5% versus 3% at the end of 2021.
The apparently small increase in mortgage
interest rates, a steady upsurge in average house cost, and slow wage growth has adversely reduced housing affordability. The median mortgage payment for a typical home purchase almost doubled from about US$1,420 per month at the end of 2019 to US$2,720 at the end of 2022. Since median
Openings: OSB Mills Company
Huber
Roy O Martin West Fraser Tolko
TOTAL (2022) Source: public announcements
household income only grew about 6% over the three years, the payment for an average newly originated mortgage consumes a much higher proportion of family income. Total US residential construction starts for the first half of 2022 exceeded the same period of 2021. However, total housing starts of 1.6 million in 2021 declined to 1.55 million in 2022. Construction particularly fell in second half of 2022 as housing affordability declined.
The decline in residential construction entirely resulted from single-family units as the 545,000 multi-family units that started construction in 2022 exceeded the 475,000
However, the year ended much worse than it began. 2022 started at US$600/m3
as housing construction activity ebbed. The December 2022 minimum fell below the typical pre-pandemic price of about US$215/m3
peaked in March, and ended the year at US$200/m3
.
North American OSB production almost equals North American OSB usage, with Canada a net supplier to the US. Total 2022 shipments, as measured by volume, from Canada to the US increased by 2% compared to 2021. However, shipment volumes weakened in the second half of the year as prices declined. The total USD value of the
,
Estimated capacity Location Cohasset
Corrigan (#2) Allendale
High Prairie
MN TX SC AB
Event
greenfield greenfield reopen mill extension
Opening date
2023-2024 2023-2024 2023-2024 2023
millions
(3/8” basis) 675
600 760
2,035
thousands m^3
597 531 673 115
1,916
Investment USD
(millions) $440
$211 $350
not known $1,001
WBPI | April/May 2023 |
www.wbpionline.com
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