New
Statistics Suggests 2002 Could be Good Year for Wood Products Industry |
||||
| New Statistics Suggests 2002 Could be Good Year
for Wood Products Industry Widman's Market Barometer Update Happy New Year to all our subscribers! And indeed, 2002 could be a good year for the wood products industry, based on a spate of encouraging statistics as the old year drew to a close: November U.S. housing starts were up sharply, by 8.2% to 1.64 million units; Building permits for November were revised to 1.59 million units, up 7.4%; November sales of existing homes were up a strong 6.4% to 934,000 units; and December mortgage applications were reported to be running at record levels. Bolstering the optimism was the Consumer Confidence Index (a closely watched economic barometer): it rose unexpectedly in December despite continuing high unemployment. It seems increasingly clear that earlier forecasts of a sharp drop in U.S. home construction in 2002 were too negative. With forty-year lows in interest rates, another year of starts close to the 1.6 million level seems more likely. Current Market The strong pre-holiday rally in the lumber market cooled as winter weather blanketed major consuming regions in the U.S. Midwest and Northeast. As producers return to full production during the week of January 7/02, prices will probably weaken as consumers take a cautious attitude toward purchases. Still, downside price adjustments could be moderate, since consumer inventories remain on the lean side and spring construction activity promises to be favorable. Eastern SPF Most producers are getting ready to resume full production during the week of January 7/02. Mill sales managers will be looking to build order files in response to stepped-up output. Asking prices for std & btr 2x4 are around $325 (Great Lakes), with studs at $305. A continuation of winter weather, however, could weaken these levels next week. Western SPF Most producers are trying to maintain price levels for std & btr 2x4 in the $230 range, but secondary sales have been made at $225 or less. With several producers moving to a #2 & btr grade, the downside adjustment on std & btr could be limited. With full production slated to resume next week, producers will have to be flexible in pricing if order files are to be rebuilt. Southern Pine Rumors were rife that a major SYP producer was planning extensive production curtailments in January. Meanwhile, prices continue to be relatively stable, with std & btr 2x4 and 2x6 hovering around the $295 (West) level. However, heavy rainfall has hampered logging, firming the prices of wide-width items: 2x10 was selling at $360 or higher and 2x12 at $385. Inland Hem-Fir Limited production in this region has kept most hem-fir items strong: std & btr 2x4 sold for as high as $292 (Spokane) and wide widths were hard to find at $310-$345. Douglas Fir Green Std & btr 2x4 weakened to $283 (Portland) or less as winter weather discouraged purchases by Northeast buyers. California buyers were taking a cautious stance, waiting to see how the market reacts to the resumption of production next week. However, prospects for spring building are positive and prices could strengthen if weather in the consuming regions moderates. |
||||
