The RoMac Building Supply Wood Commodity Index (Index) for December 2018 continued to decline, as the collapse in OSB pricing persisted despite some strengthening in lumber. The Index dropped 2.6 percent to $302.47 per thousand—overall, the market is still trying to find an upward direction. With cold temperatures, snow, and rain, finding higher prices may be too challenging.
The dimensional lumber portion of the Index increased 3.0 percent to $348.31—yes, increase. Spruce studs showed some strength by adding $7-$55 per thousand, depending on the cut. This tells me pricing is being driven by on-time delivery and availability. 2x4 dimensional spruce was up 5.4%-10.2% for short lengths but dropped on some of the longer sizes by as much as 9.4%. These are mixed messages for sure. Pine lumber was similar with 2x12 wide pine adding 3.4%-8.2% while 2x4 treated pine gave back 7.3%. Overall, it is a specific supply-by-size issue and availability pushing these numbers.
The sheathing portion of the Index is much clearer. CDX pine plywood was flat to $5 adjusted in either direction while OSB sheathing retreated 10.7%-16.7% on continued over-demand. Obviously, the manufacturers did not come close to their break-even production numbers to not be announcing curtailments. This is the problem when new mills are introduced and the housing market declines.
Mills and manufacturers are itching for reasons to get these prices up—they are too low. Winter weather won’t help, nor will competitors intensifying their efforts to improve sales. Although short-term prices may moderate, expect manufacturers to develop a strategy through curtailments to find the numbers they need and want. For this reason, builders should be slow to quote current pricing numbers for spring jobs—it could end up being costly.
Have a Merry Christmas and be sure to enjoy every minute of the holiday season!
Don Magruder is the Chief Executive Officer of RoMac Building Supply in Central Florida (romacfl.com), and he is a former President of the Southeast Mississippi Home Builders Association, and past Associate Vice President of the Home Builders Association of Lake County. To contact Magruder, email him at