Thursday, March 21, 2013

Lumber Prices up Sharply, Suppliers Scramble to Keep Up

by Bill McBride on 3/21/2013 06:13:00 PM

From the WSJ: Amid Housing Recovery, Humble Plywood Shines Anew

Growing demand and tight supplies have pushed up plywood prices by 45% in the past year, and U.S. producers are scrambling to get back up to speed after slashing output of the basic construction material during the housing bust.

Georgia-Pacific, the largest U.S. producer of plywood, will announce Friday it plans to invest about $400 million over the next three years to boost softwood plywood and lumber capacity by 20%.
...
With demand rising, the composite price for structural panels, which includes plywood and other wood products, jumped to $511 per thousand square feet on March 15 this year, up 45% from $351 in mid-March a year ago, according to Random Lengths, a Eugene, Ore., wood-products market reporting service.
Lumcber PricesClick on graph for larger image in graph gallery.

This graph shows two measures of lumber prices (not plywood): 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

Lumber prices are now at 2004 and 2005 levels.  Demand is far below the levels during the housing bubble, but supply has fallen sharply too.