Since I wrote my previous letter OSB prices have moved up considerably. It appears to me that any OSB production in the United States is being sold into whatever market is willing to pay the most. Sound familiar? This is how I started my January letter and it is still true. The only issue with that statement is that we are now at higher prices than when I wrote in January. It appears we had a pause in price in late January and the first few days of February, but then it was ‘off to the races.’ The prices I am seeing today are now reminiscent of the highs we saw in 2005. The pullback that I thought would happen in February is simply not happening. I still maintain that as new production comes online we will see a pullback that will bring us down to more reasonable levels. As I said in the last letter, that pullback should occur as we enter the third quarter of this year. The question is however, what price will we pull back from? The next few weeks should tell the story.
Lumber prices have also risen but at a more reasonable pace. The increases have been felt in all segments with yellow pine leading the way. Yellow pine was somewhat of a bargain in the fall but now it has jumped past hem fir equivalents in cost. Until more production comes online expect the increases to hold.
As can be expected, related products such as engineered products are showing increases. Every major manufacturer is taking an increase from 6 to 8 percent on the product line. Expect those increases to filter into your cost over the next 30 days.
What to do?
Price your jobs defensively. Even though you may wish for lower prices, do not reflect those wishes into your quotes. Higher prices are a reality and are going to be with us going forward.
To cut some costs let us help you engineer cost out of your homes by using alternative products like LSL, jack studs , 2×4 shorts, etc. Buying all prime lengths and refusing to change methodology by using shorts, LSL and the like, will cost you profits besides putting you at a competitive disadvantage. Check with your salesperson or call John Colley (616-879-1165) or myself (616-879-1102) and we can show you some potential savings.
Here’s to the coming spring and a great year of building.