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Market Recap: RISI Crow's Construction Materials Cost Index

A price index of lumber and panels used in actual construction for Dec. 23, 2011

*Western - regional species perimeter foundation; Southern - regional species slab construction.

Crow's Market Recap -- A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow's Weekly Market Report.

Lumber: Experiencing better demand than what they might have expected for this time of the year, buyers continued to purchase significant volumes of SPF lumber for a second consecutive week. Demand kept prices firm or moving higher in both the East and West. Sporadic sales activity ranging from slow to moderate in the Southern Pine lumber market kept downward price pressure on most dimension lumber items. Prior production curtailments and those around the upcoming holidays kept most dimension prices from dropping more than $5. Dry Coastal species lumber prices were firm to higher, while green Doug Fir exhibited considerable weakness. Having continued to keep inventories at low levels, buyers were forced to again enter the market after selling previous purchases. Inland lumber profited from an improving SPF market, which was bolstered by favorable housing and economic news, as well as an improving futures market. Mild weather in many of the consuming regions kept materials flowing out of DCs to job sites at a better pace than dealers expected. Idaho White Pine buyers were faced with a scant selection when looking to fill needs. Light activity but firm pricing was the story for Eastern White Pine. Buyers who began to place orders for their January Ponderosa Pine Mldg&Btr and Shop needs reported good availability and firm prices. Producers reported sales activity for Radiata Pine Mldg&Btr was quiet, but inquiries for first-quarter business were encouraging. Most Western Red Cedar producers drew little sales activity prior to the Christmas holiday. Those orders meant to fill inventory holes for the near term were highly mixed and usually consisting of modest volumes.

Panels: OSB producers reported a strong finish after a somewhat slow start. Mill order files out to the week of Jan. 16 on some items gave producers firm control of the market. Light inventories at reloads were reported, which also helped bolster mills' positions. Steady demand for Southern Pine plywood continued to leave prices firm and extend mill order files more solidly into mid-January. Distributors continued to participate after holes again appeared in inventories. Western Fir plywood mills needing to move buildups of spot items were forced to lower prices to do so. Sales activity prior to the holidays was light and spotty. Better-than-normal weather kept Canadian plywood panels going out of distributers’ gates. Some buyers anticipating mill closures over the holidays put on an extra load or two for insurance. Market improvement over the past few weeks in particleboard and MDF markets prompted some higher expectations among producers for the first quarter of 2012.

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