Commodities Watch


Material: Lumber

Highlights:

  • Construction commodities pricing rose once again in March. Up 2% overall from February’s close, the index has now risen 4% in the last three months and 6.8% over the last year. However, the lumber index as reported by Random Lengths Reporting has dropped for the past six consecutive weeks and the lumber futures market has limited down twice in the past two weeks suggesting that there is little demand in the market to hold prices at current levels.
  • Sawlog prices in the U.S. West were up about 20% in 2010 as a result of increased competition for logs from log buyers in China, South Korea, and Japan, according to the North American Wood Fiber Review. The biggest increases in sawlog prices were in the Pacific Northwest, where the log export market has had a major impact on the supply-demand balance. Total log shipments to Asia from the U.S. West Coast last year were the highest they have been in 14 years.
  • In the fourth quarter of 2010, Douglas Fir log prices in the Northwest were up 19% from the same quarter in 2009. Hemlock log prices have gone up 25% in the last 12 months.
  • Hardwood lumber pricing is up 0.4% and softwood lumber is up 0.8% from February.
  • Wood kitchen cabinets are up 2.6% and engineered wood products are up 2.5% from March 2010.

    Quote:

    “Much of the $30 billion U.S. timber industry is still depressed because of weakness in the housing market, but some companies have found relief in a nontraditional customer: China. U.S. timber exports to China are suddenly surging, especially from mills around the Pacific Northwest, giving a boost to companies like Weyerhaeuser Co.and Plum Creek Timber Co.” – Jim Carlton, The Wall Street Journal, Chinese Demand Lifts U.S. Wood Sales, Feb. 8, 2011


    Graph: Lumber Pricing

    Lumber PPI Commodity Price Index

    Material: Steel

    Highlights:

    • The 2% rise in the construction materials price index in March from February was caused in part by significant increases in diesel and other energy based products as well as steel products, gypsum, and aluminum.
    • Pricing for steel pipe and tube is up 4.7% from February. The index has now risen 23.9% in since March 2010.
    • Pricing for steel mill products is up 5.3% from February, which is the largest monthly increase seen since July 2008.
    • Compared to last year, iron and steel prices have reach levels 14.7% higher, having increased 2.8% from February and 10.6% for the quarter.

      Quote:

      “Steelmakers have increased prices six times, for a total increase of 20% to 30%, since November on basic flat-rolled steel, used in everything from cars to toasters, to offset higher input costs of raw materials, such as iron ore and coal. Higher costs for steel...are hitting bottom lines of companies and prompting additional price increases.” – Robert Guy Matthews, The Wall Street Journal, Steel-Price Increases Creep Into Supply Chain, Feb. 3, 2011


      Graph: Steel Mill Products Pricing

      Steel Mill Products PPI Commodity Price Index