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26 | Sector Market Update: Plywood & OSB


SUMMARY


■ OSB availability and prices have softened slightly


■ Brazilian plywood has dipped as US demand has weakened


■ Demand for both plywood and OSB remains exceptional


■ Container prices continue to rise ■ The UK’s shortage of HGV drivers is delaying deliveries


SUPPLY PRESSURE US DIP EASES


Pressure has eased slightly on plywood and OSB but the trade will have to wait until the autumn to see whether it’s a seasonal blip or a more sustained change. Keren Fallwell reports


Even the most confident of gamblers might hesitate to put a wager on the plywood and OSB markets at present.


Both products are still in extraordinary demand but OSB availability has improved, partly as the US market has eased, and prices have softened slightly. They are still at record levels, however, and whether this is a seasonal blip and the US market turns again is why few would place a firm bet on where it’s going.


“The general feeling is the US market won’t crash and it will come back. It depends on demand in September/October but nothing is normal now,” said a distributor.


An importer agreed that the market was easing and, after a frantic May and June, he believed “we’ve reached the ceiling”. The change in the US market means the price of Brazilian plywood has come off a bit, with elliotis pine plywood prices down 20-25%. While Brazilian plywood competes with OSB, the importer said the price had not come down enough to have a notable impact. Some buyers had turned to Chinese pine plywood as an alternative to elliotis pine but are likely to revert to Brazilian product as it becomes more readily available. Meanwhile birch plywood, which was slower to feel the impact of the heightened


global demand, is now following the same trajectory as other panels and from around May to July prices nearly doubled. Around July the FOB price of Chinese plywood also rose because of raw material costs. Heavy rain limited harvesting and made transport difficult and manufacturers had to kiln dry logs, rather than relying on the usual air-drying.


Demand for Chinese plywood remains so fierce that one contact said shippers were renegotiating signed contract prices – something he had never seen before. “Shippers are saying ‘if you don’t renegotiate and agree to a higher price, we won’t ship’,” he said.


Above: Plywood availability is being impacted by limited shipping capacity and port congestion TTJ | September/October 2021 | www.ttjonline.com


China’s poplar resource is already insufficient to meet the plywood industry’s needs and now it will reduce over time as the government recently announced that land use must give priority to food production over plantations. TTJ was told that a lot of manufacturers are now importing logs from New Zealand, South America and Europe to shore up their raw material supplies. The rise and rise of container prices is another factor affecting plywood. A significant shortage of shipping capacity, particularly from Asia, is still putting pressure on both break bulk and containers. “Even if you’re able to buy product competitively, you will struggle to have it shipped competitively, if you can get it shipped at all,” one contact said. The container rate from China is now an eye-popping US$15,000-17,000 – up from US$2,500 in January this year. Even when a container rate is accepted it doesn’t


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