The RoMac Building Supply Wood Commodity Index (Index) quietly eased into 2019 with little or no fanfare with an unimpressive 0.1 percent change in price to $302.47 per thousand. Mills are curtailing production and producers are searching for buyers, which is a huge change from just six months ago. The big numbers matter and these markets need housing demand to bolster.
The lumber portion of the Index dropped 0.3 percent as drops in stud pricing and treated pine offset the gains in dimensional spruce. 2x4-92 5/8 studs were down 6.8 percent while 2x4-16 treated gave back 7.0 percent. 2x12 pine added on average $25 per thousand while dimensional spruce averaged an increase of $10 per thousand over last month. Increases were inconsistent based on demand and availability of widths and lengths.
The sheathing portion of the Index could only manage a measly $5 per thousand increase in OSB with pine plywood staying flat in price. Unimpressive demand along with ample supply were too much for those wanting to raise pricing. Rumblings of large spring buys of imported plywood could keep a lid on pricing.
Two factors could keep pricing down. First, if winter finally settles in with cold, snowy weather across the country pricing will be slow to rebound. Second, a lot of European spruce was purchased in the last half of 2018, which is just making its way to the United States. Some have suggested it is a wall of lumber—not sure if it is that dramatic. If there is a lot of European spruce heading to the United States, mills in North America will have to do more curtailments and shutdowns to hold pricing.
Because the economy appears to be a little softer than in the spring 2018, expect talk of tariffs to be muted and hopefully the spring selling season will be normal. Although low prices are good, in one sense low pricing in lumber indicates the housing market is weak. A little firmness in pricing could be a good sign.
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