Current State of Reality
Recently I have had the conversation about timeline and workload over and over. We are in strange times and I am not talking just about COVID. COVID, plus extreme real estate market and building demands, the lowest mortgage rates in history and the strangest times to get things done have made for a very interesting soup. As it relates to time lines all I can say is my Crystal Ball is broken.
We are not to busy to build your house, we do not feel things are backed up so that we cannot get to your house, and while saying that, I am fully aware I might be lying at some point in the future because the landscape keeps changing. A few months ago we were told that windows and siding availability issues were likely going to protract production times. Before that happened that gap was filled and we had some houses actually get done early but the next warning was going to be appliances. Prices have gone up, we are told some will come back down and others may rise. All that said, the simple answer is we are uncertain. What I do know, without question, is that if you delay starting the process delaying the finish is guaranteed. If we start now, getting it done will be sooner then if we do not.
A really good illustration of this confusion is a letter we got today from one of our suppliers. You do not need to read the whole thing to understand how this has become a bit like nailing jello to a tree. So I am sharing it for those who enjoy the deeper understanding
February 6th, 2021
To our valued customers,
We appreciate your support and commitment to Curtis Lumber throughout these challenging times. Included in this communication is information on current market conditions, price changes, and what we anticipate happening in the near future. Please keep in mind that markets change rapidly and often without much notice.
Covid-19- I can’t stress enough the amount of disruption throughout all supply chains that continues to occur due to the pandemic. Mills and manufacturing facilities across the globe are struggling with surges in demand while simultaneously dealing with Covid outbreaks, raw materials shortages, and labor shortages. Ocean freight lines are struggling to manage ship and container availability which is leading to sharp price increases in freight all while reliability is decreasing. With housing demand strong and forecasted to remain that way, I believe we will be dealing with extreme price volatility, tight supply, and extended lead times for much of 2021 on many products.
Resin- There is a nationwide shortage of resin that is affecting many product lines, especially manufacturers of OSB, Engineered lumber, polyethylene, PVC, vinyl siding, and vinyl windows. This shortage is leading to higher prices and production delays.
Lumber Markets-SPF- Prices continue to climb steadily although the rate of increases has slowed compared to the last few weeks. Strong demand, favorable weather (until recently) across the country, high log costs, production issues, trucking and rail car delays, and log shortages at the mill are all factors in the current market. Price is secondary to availability in a market like this. There is no time to shop for the best price, if you find a mill that has what you want you buy it on the spot, or it will be gone. Most dealers are buying hand to mouth as no one wants a lot of inventory at these high prices. Current lead times are 3-4 weeks. The Random Lengths Framing Lumber Composite currently sits at $940. A year ago, it was at $388. It peaked in mid-September at $955. We expect prices to remain on a firm footing through mid-late March. While commodity markets are extremely difficult to predict further out, there are some signs that we may see some relief in pricing as we get closer to late Spring/early Summer.
SYP/Treated Lumber- Demand remains steady and prices are on a firm footing. Wet weather has made logging difficult throughout the South and is leading to a shortage of 2×12. Availability is tight and lead times are 3-4 weeks. Freight rates continue to climb, and delays are common in both rail and truck. Covid outbreaks and a shortage of logs have prevented mills from running at full capacity.
OSB- The OSB market continues to climb further into record territory as open market availability is virtually non-existent across North America. Most mills remain off the market while they try to catch up on late shipments. Transportation delays are only adding to the problem. Availability is more important than price. The Random Lengths OSB Composite is currently at $865. A year ago, it was at $263. Demand/Capacity ratios at the mills are running in the 92+% range. Availability will be tight, and prices are forecasted to be strong well into March.
Plywood- Similar to OSB, the plywood market continues to grind higher. Availability is limited and prices are expected to be firm into March.
Engineered Lumber- All manufacturers have implemented or announced upcoming price increases due to significant increases in raw materials, labor, and both inbound and outbound freight. Price increases for the most part are in the 8-15% range although we have heard of some manufacturers raising prices significantly more than that. All engineered lumber producers continue to struggle to keep up with the overwhelming demand and remain on allocation. The nationwide resin shortage is affecting some suppliers more than others however they are all dealing with it to some extent. Several suppliers are dealing with raw material shortages in addition to labor and trucking issues. Availability of all engineered wood products regardless of manufacturer is expected to remain tight for most of the year.
Roofing Market- The shingle market is extremely tight and will remain that way for most of the year. All manufacturers are struggling to keep up with demand and remain on allocation. GAF and CertainTeed continue to limit the amount of colors they are producing. Lead times on accessories remain extended up to 6 months in some cases.
Eastern White Pine- Pine prices continue to climb as strong demand and Covid related production issues have led to price increases, product shortages, and extended lead times. Availability is tight as wholesalers’ inventories have been picked over and mill direct lead times are out 6 weeks.
Steel/Metal Markets- Steel prices continue to climb which is affecting many products. Steel stud manufacturers had 10% increases Jan 1st and Feb 1st. They have announced future price increases of 10% March 1st and another 10% April 1st. Rebar pricing has jumped significantly in the last 60-90 days. Several Metal roofing manufacturers have had increases and continue to announce upcoming price increases. Expect prices to climb 10-20% or more over the next several months and plan on extended lead times. Expect to see double digit % increases on fasteners, trim coil, drip edge, fascia, adjustable and cement filled steel columns.
Insulation Markets- Strong demand, Covid, labor shortages, and trucking delays are leading to a shortage of fiberglass insulation. Lead times are running 8-12 weeks. Lead Times on Rockwool are currently running 10-12 weeks. Availability is expected to remain tight through much of 2021 due to strong demand and supply disruptions.
Drywall- Demand continues to outpace supply. Most, if not all suppliers are on allocation. Trucking delays are only adding to the problem and extending lead times even further. In a normal market, lead times are less than a week, but we are currently dealing with 8+ week lead times. Expect longer lead times to last well into Q2 or longer. We anticipate tight supply and strong demand through 2021.
Composite decking- We anticipate strong demand again in 2021. Trex increased their production capacity with the startup of their new production facility and barring any unforeseen issues, product availability should continue to increase throughout the year as they become fully operational.
Vinyl Siding- Strong demand, escalating raw material and labor costs, and production delays due to Covid continue to push lead times further out and costs up. Lead times are as much as 8-12 weeks on siding and 6 weeks on blocks, vents, and shutters. GP Vinyl Siding had a 6-8% price increase effective on 2/1. All brands produced by PlyGem including Mastic, Variform, and PlyGem had a similar increase. We have seen notices from other vinyl siding manufacturers experiencing the same issues and implementing similar increases. Expect extended lead times to last for at least the next 60-90 days. Plan accordingly and try to get ahead of any special-order jobs that you know of.
Composite and Fiber Cement Siding- Lead times are ranging anywhere from 3-8 weeks.
Boral TruExterior Trim and Versetta Stone- Lead times have really extended and are currently running 2-3 months on Versetta Stone. Expect extended lead times to persist well into 2021.
HB&G/Crown Columns- Lead times are up to 4+ weeks. HB&G has announced a price increase of 5-10% effective February 15th.