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[flatfloor]

I added this all by myself. ;)

http://www.stopstart.fsnet.co.uk/mica/ranton.gif

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[Mike2]

A little voice is telling me, this one has promise mr. rantfloor. :talk:

[Mike2]

Since the Rant light is on, what I want to know is: What in the world is causing plywood prices to skyrocket. Last fall I was paying $23 a sheet for 3/4" Sturdi-Floor. Today, same place, $32 a sheet - 39% increase in the past 6 months. Bought 6 sheets of 3/8" underlayment today, $21 each. Also, while not plywood, one 8' stick of 5/4's red oak, 7 1/4" wide, $34+.

Same thing happening in other parts of the country? How do you builders even bid a job with prices escalating like that?

[Ron]

That happened to me in November.All of a sudden 3/4" spruce plywood was $45.Then it was down to $32 again in January.For $2 more I could have bought 3/4" paint grade maple veneer plywood.

Transport companies must have the same thoughts as builders when fuel is up and down and the per mile rates stay the same for decades. :rolleyes:

[cx]

What in the world is causing plywood prices to skyrocket. 9/11, of course. :rolleyes:

Gotta be some mistake on that Red Oak, Mike. Gotta be.
By my count that's shy of 5 board feet. My price on rough 5/4, random lengths and widths, right this minute (direct link to supplier), is only $2.83/bd.ft. That makes your board worth less than half what you paid for it in my market. Plus tax, of course. Maybe y'all's Red Oak is real special. :D

Flatfloor:

Are you settin' yourownself up as the o-fficial Rant Police hereabouts? A fella hasta get approval afore he can rant? Don't seem right to moi. :mad:

[stullis]

According to the signs I've seen they are blaming it on the rebuilding of Iraq.

I think the Red Oak price is pretty close to right on for my area.

[cx]

I think the Red Oak price is pretty close to right on for my area. Mike's price, or mine, Scott? :confused:

[Mike2]

No mistake CX. I'm thinking there might be significant regional pricing differences in hardwoods. I know we (left coasters) have always paid way more for hardwoods in general. Another recent example, 4/4's red oak (1" X 6" X 8'), $17+ or $4.25/bd. ft. (and relatively speaking, that's a VERY good price out here...I've seen Alder for more). I bought some cherry not too long ago, $7.50+ /bd. ft. These are 'Big Box' retail prices.

OK, now back to plywood. So what is the connection between 9/11 and/or Iraq on the plywood market? Either Supply is down or Demand is up but what's the driver?

I thought (maybe wrong) it might be the US gummint playing dirty politics :bang: with Ottawa, jacking up the tarriffs in this so-called Free Trade Agreement with our friends up North. A lot of forest product comes down across the 49th parallel, or use to.

[Hobbit]

I think the generally accepted view is that fuel costs are driving transportation costs and since transportation represents a significant part of the costs of doing business to a retail establishment (especially with lumber), they are not shy about passing them on to the consumer.

In addition, a tremendous amount of the plywood being manufactured is currently being shipped to Iraq for the re-building process. So, with the domestic supply down because of the above reason and demand on the increase because the economy is rebounding and because its SPRING!:yipee:..........I guess the supply/demand equation is working.

Anyone who has been involved with the manufacturing sector can add........it takes a long time to "ramp up" production to meet demand. Additional raw material has to be ordered and received, additional workers need to be hired and trained to operate a second or third shift, additional production lines might have to be installed (capital expense), etc. Usually, by the time all of this occurs the temporary shortage has been worked through and supply has once again stabilized. Prices will then tend to stabilize too in the absence of additional outside forces (transportation costs ??). Unfortunately when prices stabilize, they will almost never fall back to the pre shortage level.:(

Some manufacturing industries have been known to artificially create these "shortages" short term.....in an attempt to drive prices. And it works.....sometimes! (OPEC is a good example of how this works, although they are a cartel, not a manufacturer).


:)

[Steven Hauser]

Yeah Mike,

What Howard said.

or
You are just getting screwed because you live in the hills.

Pick either scenario. Doesn't change what you have to pay.:mad:

[flatfloor]

http://www.stopstart.fsnet.co.uk/mica/rantoff.gif
:D

[Mike2]

Bull Pucky!!:D

[Mike2]

OK, now that we have this back on track.

Your right Steven, absolutely right, but in the spirt of this thread, I gotta complain big time about the reality of which you speak. :D

Seriously CX, you're a builder. With plywood, maybe lumber in general taking off like this, how do you bid a job? Material escalation clause??? Eat it in the short? Bid-in probable increases? :confused:

[John Bridge]

Plywood is, and has for many years been, a commodity which is traded daily in Chicago on the Merc. A guy in a lumber yard once told me that prices change hourly. That's how volatile it is. :)

If what Howard says is correct (and it usually is :) ), that's the deal. ;)

As to red oak. I think there are over forty trees that fall into that category, and it's confusing because most folks use the vernacular and not the real names. White oak is the same way, only there are fewer trees in that group.

Red oak goes for about three bucks a board foot here, and that's S4S. :)

[Ron]

And it comes from good ole Canada,eh?So does the plywood.

Then again you guys give us Direct TV...thanks for that. :D

[John Bridge]

What comes from Canada? B.S., eh? :D

[Mike2]

Ron:

You guys up there got the short end of the stick again. ;)
Direct TV? What can you build with that other than a fat gut?

McMillian Bloedel have a presence out East where you live? In BC, MacBlo is like numero uno, big, everywhere, and into everything made from celluloid.

[jjwq8]

Guys,
Somebody yankin yo chain.

Aint no yankee plywood bein sent to Iraq :shake:

My Office sits in the free-trade zone at the port and vast quantities of goodies rumble past us day and night. Aint not never ever seen no Yankee plywood.

Ply comes from Malaysia and Indonesia hereabouts and costs a whole helluva lot less than you all are paying.

Iraq is just a convenient excuse :nod:

[John Bridge]

Dammit, Jeremy, why not just let us fantasize? Spoil sport.

;)

[tileguytodd]

Sheetrock, now plywood.damn executives are controlling supply to up the prices if you ask me.Everyone wants a new Beemer for a quarterly bonus.
I'll gaurantee ya the loggers aint gettin it at least not in my neck of the woods:(

[John Bridge]

Yep, stumpage is getting skinnier and skinnier both in the Northwest and in the South. Don't know about Warba Minnesota. :)

If you drive through the Piney Thicket in East Texas (logging country) you'll be amazed at the so-called logs their hauling out of there. Some of 'em look like you could only cut 3 or 4 studs out of 'em -- no way would they be worth putting on a plywood lathe. :)

[muley]

Environmentalist. Cursed bastards muck up everything. Greeno's are constantly forcing forest service and the like to court, constantly suing producers, and in general shutting mills all across the country. Fewer mills, fewer goods, fewer trees being cut, prices up, good lumber jobs down, and uncontrollable wild fires, all in the name of protecting mother nature, who, I might add is perfectly capable of taking care of herself.

[cx]

Seriously CX, you're a builder. With plywood, maybe lumber in general taking off like this, how do you bid a job? Material escalation clause??? Eat it in the short? Bid-in probable increases?

Mike: Inna old days, a fella could get a bid on a whole-house package from the lumber supplier that would say the prices were good for 60 days. Then it changed to 30 days. Longest one I've seen recently said two weeks.

Even in the old days, though, it was common to have a clause in the Lumber and Materials section of the contract that said it would be charged at actual cost at the time of purchase. I've never marked up my materials, only add what it costs me to make it happen. I try not to increase the bid price unless there is some dramatic increase in my cost, which does happen sometimes. We've seen plywood prices double in heavy hurricane seasons, sheetrock prices triple for reasons never really explained, etc.

If I were a production builder bidding everything to the lowest penny and actually trying to make money, I might be more concerned. But for my kinda work, so long as it's not a big surprise in the middle of a project, I can usually deal with it.

Muley:

If you want the big lumber companies to come in and "improve" your timber land, I say go for it. But when it comes to my timber land, I want the big timber company to cut the timber in a manner that is actually good for the forest, minimally destructive to the surrounding land, and pay a fair market price for the product, something they are most reluctant to do since they have been able to rape the "public" lands nearly for free for lo these many years. A bit spoiled they became, eh?

Now, if you wanna get into a discussion of the efficacy of the Forest Service as stewards of the federal lands, we can do that, too.

And even more important, and perhaps more controversial, would be a discussion of what the hell the federal government is doing owning land outside the District of Columbia in the first place, no matter how "public" they pretend it to be.

But whup out your copy of the Constitution afore we git started. :D

[Mike2]

Thanks CX.....seriously. :)

[muley]

CX,
First off I agree totally with your point about land outside of DC. Being a member in good standing with the vast right wing conspirators and all, I am all for extremely limited federal government. My point about the forest service is made because they are the ones who administer the bulk of the forested lands.
I live in Montana, close to Missoula. Missoula has more environmental organizations headquartered there then any other place in the country including Washington DC. Every week- two weeks there is a front page story about X greeno's suing the USFS over logging contracts. Currently, logging is at approximately 10% of the total being logged 25 years ago.
Recently, the Rock Creek Drainage area logging plan was approved by the USFS in conjuction with 14 environmental groups, however, two other greens groups are suing and the entire sale was put on hold. I can get in my pick up and within 20 minutes be up in the high country surrounded by literally millions of burned trees just standing there dead, and slowly rotting away, it's ridiculous.

[Hobbit]

After reading Jeremy's post about no "yankee"..(???) plywood going to Iraq, I thought it prudent to do a little research.......

While re-reading my initial post I discovered that I said for "rebuilding Iraq." This is apparently not entirely the case. However, that does not mean that plywood is not being shipped there. The Defense Supply Center which is the purchasing arm for the Defense Logistics Agency admits to purchasing and shipping between 750 thousand and a million plywood panels to Iraq in the past seven or eight months. They also say that most of it is for "troop support" type projects. So........I guess I will just say, Jeremy, that just because you haven't seen it, doesn't mean that it hasn't happened.

All of which may have very little to do with the "rebuilding" of Iraq, but could certainly be a causal factor in the plywood shortage and resultant pricing in the United States.

For those who care....my research also indicated that the fires out west, extremely wet conditions in the forests, above average purchases in hurricane season, and the low mortage rates fueling the highest number of new housing starts and remodeling/additions in years, have all contributed to the rapidly escalating prices of wood panels. Combine all of this with rapidly increasing fuel costs and a sluggish economy that had a tremendous clamping effect on capital expenditures, along with a handful of wood panel mills that shut down or burned last year, and................:(

Any good news in plywood these days? A year and a half ago, wood panels were at "depressed" prices (according to the trade journals) and were actually being sold below cost by a few manufacturers (those who had older, less efficient mills). The journals also indicate that this upward spiral is slowing and if interest rates continue to climb slowly, the rush to build will slow considerably and wood panel pricing will start downward toward equillibrium........So says the wood industry.


:):)

[jjwq8]

Howard,
Ply is shipped break-bulk, not containerized, so unless it's going in containers, I repeat it isn't coming through Shuwaikh Port. It may however go through Shuaiba in the South, though that is the primary container terminal.

[Mike2]

Howard:

Just for giggles I checked the exchange rate (dollar to yen) and the dollar is way up today compared to mid-last summer.

Taking a look at the supply side of the equation, my notion is this:

Out here on the left coast, particularly true in British Columbia, a lot of timber is shipped east, Asia, particularly to Japan, quickly converted into plywood and shipped back to the US. With the Yen now trading at 107 to the US dollar, compared to 120 mid-last summer, it stands to reason (to me at least) that this would have a negative impact on supply. Could also be true in the world market as far as Japanese plywood is concerned.

Do you have access to historical (one year out) plywood import data from Japan? If so, what do the numbers look like?

[Hobbit]

Okay......

Jeremy, I have no idea what ships through which port. I have only contended that the US Defense Logistics Agency has been purchasing large quantities of wood panels out of our domestic market. There are two principals to this purchase. The sellers and the buyer. Both the representing agency for the industry, and the agency for the buyer (Defense Supply Center) agree that the sale has taken place. As far as how they are being moved......remember who the purchasing agency is. The DLA could move these panels to Iraq in any number of different ways (and probably are). Large quantities could be airlifted (C-5's can carry tanks....., I know they can carry plywood) Military vessels could carry large quantities as well.........I don't know. It just seems ludicrous to believe that both parties to this transaction would lie about something as innocuous as plywood.:rolleyes:

[Hobbit]

Mike....

I really am not an economist, but I do understand a little about world markets and the pressures that drive them, as I suspect you do as well.

I really don't want to spend a lot of time discussing currency markets, but suffice it to say, FX markets are totally unlike equities markets. The currency exchange rate is predicated upon a currency pair, unlike equities that are traded (bought /sold) in one currency. So when examining an exchange rate you need to understand what causes the rate to fluctuate. Given the USD/JPN currency pair, the US Dollar is considered the "Base" currency and the Yen is the "counter" currency. Any trading on this pair is done with respect to the "Base" currency. A "Buy" order is not a buy of US Dollars. It involves a buy of Dollars and a sell of Yen. Likewise, a "Sell" order is a sell of US Dollars and a buy of Yen. So, the FX market is inextricably bound to the economies of the currency pair. BTW...If you look at the JPN/USD currency pair, the "Base" currency is now the Yen and the trading assumptions are reversed.

As far as the Dollar versus the Yen (USD/JPN), your numbers as quoted as very much in line with my research. However, the numbers indicate the Dollar is weaker against the Yen (as compared to last year). The Dollar buys less Yen today hence it is weaker. This obviously means that the Yen is stronger against the dollar than it was last year. Remember, Japan has been using interventions to artificially hold the Yen low for some time now. This was a largely successful attempt to drive up the export market and thus increase their GDP. This was a tremendous boost to their very depressed economy. Last year when the exchange rate was 120 or so (Yen per Dollar) Japan was in the middle of this intervention strategy. Recently, amid clamouring in the world markets, the United States has indicated a sharp resistance to allowing the US Dollar to again go above 115 against the Yen. Japan has reduced the interventions and has allowed the Yen to climb against the Dollar which you see reflected in the lower USD/JPN exchange rate.

As far as what drives the FX market...it is the same factors that drive the equities markets....Interest rates.....Unemployment rates....and Geo-political events. And of course each country's finance center (in the US its the "FED" and in Japan its the "Ministry of Finance") will intervene when they consider it necessary.

The rest of your assumption is pretty much right on. And would probably have an effect like you describe IF the United States imported much plywood from Japan. But as near as I can tell, a very large percentage of our softwood plywood is domestically produced or comes from Canada. We apparently import quite a lot of hardwood plywood, but I don't see that affecting the construction industry...????

I haven't tried to research the actual amounts (percentages) that we import, but what I have seen indictes that very little comes from Japan. In fact Japan is a plywood importer. Its mills are old and cannot keep up with its domestic demand. I know that the US exports a lot of wood panels (and Canada as well) but currently is having some difficulty competing in the world market against third world countries with large virgin forests and an emerging wood panel industry that has the most technologically advanced equipment.;)

[jjwq8]

Howard !

Another Iraq conspiaracy uncovered :D

Plywood is being secretly shipped to Iraq to build a false armoured corps (ala D-Day preparations) equipped with all the WMD that no-one can find. Satllite fly-by and BINGO, another timely revelation to boost the election campaign :D :yeah:

[Mike2]

Thank you Howard. For not being an economist you certainly seem to have much more than just a fundamental understanding of the internationl money market which has always mystified me.

Perhaps what I've always heard out here is just a myth, being cut our trees, put 'em on a boat, only to bring it back again as plywood. I know a number of former mill workers, all losing their jobs due to the closure of our smaller plywood plants and as you might guess, they all seem to blame it on the other guy.

[Hobbit]

Jeremy.....

You never cease to.........I don't know.....amaze..???;)

Your ability to relate something like this to Patton's First Army (the imaginary army) is........well, I don't know...and make it sound possible too..;):D

I give up....I can't keep up with you.:bow: :bow:

:):)

[Steven Hauser]

Bull,

You do just fine Howard.

Jeremy uses creative license to nth degree. Thankfully he has great humour to mask his anger.

My .02

[jjwq8]

I just hope Richard Clarke reads these posts:D