22 | Sector Market Update: Plywood & OSB
SUMMARY
■ Worldwide demand for plywood and OSB is at unprecedented levels
■ Many suppliers are attracted by the high prices in the US market
■ Container prices have skyrocketed, putting pressure on break bulk space
■ Double-digit prices increases are now commonplace for plywood and OSB
■ The cost of resins, glues and shipping are also rising
INSATIABLE DEMAND STRESSES MARKET
No-one in the timber industry has ever seen such high demand for plywood and OSB and it could be sustained into 2022. Keren Fallwell reports
“The prices paid in the US are enormous,” said a contact. “The prices are fixed weekly, so it’s like the stock market. They go up and down more than in Europe but because they pay so much they’re drawing a lot of volume.”
Brazil and Uruguay’s struggles with Covid have impacted plywood production and now the massive US demand is absorbing most of what they are producing. As a result, in the past six months, prices of lower end constructional grades have risen by around 80%.
Above: The cost of containers has risen dramatically
Plywood and OSB markets – in fact, all panel products markets – are so busy it’s dizzying. Globally, supply is failing to meet phenomenal demand and this is turning the market on its head. The hunger for plywood is accelerating OSB substitution, while one contact reported recently fulfilling an order of 9mm hardwood plywood for stair risers because it is now cheaper than MDF which would normally do the job.
Being a timber trader at present is a double-edged sword. The demand-led market is providing margins rarely seen in the timber industry and order books are full, but it comes with the challenge of securing enough stock to keep customers happy.
TTJ | May/June 2021 |
www.ttjonline.com
“Normally we pride ourselves on looking after our customers and making sure we have the material but there are times now where it’s out of our control, when we’re struggling to dictate what’s going on unless we pay the highest price,” one plywood contact told TTJ. It’s the same for the OSB sector. “Customers are frustrated because they’re not getting as much as they could sell,” said a trader. As demand for plywood and OSB has risen, so have prices. The cost of resins and glues has increased but also the US’s huge appetite for products, and its willingness to pay high prices, is influencing rates worldwide. The higher prices also make the US an attractive market for many of the world’s plywood mills, and European OSB manufacturers.
When US demand softens so too will prices but, with President Biden committing trillions of dollars to reinvigorate the economy, that’s not likely to happen soon. “We’ve seen these things before but it does feel different this time,” said one trader. “There’s a worldwide increase in demand for timber products and it’s not a flash in the pan. There is a serious supply issue.” Availability of Chinese plywood was reasonably consistent last year but it is now under pressure as buyers unable to source other supplies are turning to China. “Anyone buying material away from China is being forced to go back there because they’re the only ones who can come up with solutions. Everyone’s done the same thing and now there’s not the extra material everyone was hoping for,” said one contact. The dramatic market developments are now affecting birch plywood. It was stable over the past 12 months and prices were low, partly
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