Preparation for spring building season sends average price for Southern Yellow Pine US$25 higher to US$270/mbf in January, price gains continue despite late-month decline in sales volumes
CHARLOTTE, North Carolina
February 9, 2012
– The SYP Weekly Lumber Price figure below (Figure 1) summarizes pricing data gathered for Forest2Market’s weekly lumber market report, Mill2Market. For this market report, Forest2Market aggregates sales order data submitted directly by report subscribers. (For more information about how the data is collected and reported, see the description at the end of this post.)
This figure charts sales order prices from January 2010 through year to date 2012 and compares sales order data, FOB Mill on a volume weighted $/MBF basis. The prices in the figure are composite prices; they include dimension lumber, timbers and boards.
The purpose of this chart—which will appear here monthly—is to provide a year-over-year view of the southern yellow pine market. This longer view is helpful when identifying trends in the market and making assessments about where it may be headed.
In this month’s chart, a close look at Week 52 of 2011 and Week 1 of 2012 shows the traditional seasonal drop in demand for the holiday season and corresponding mill curtailments.
Since the first week of 2012, the average price for southern yellow pine lumber has increased, starting at $245/MBF and finishing the month at $270/MBF. This increase of $25/MBF can be explained by the post-holiday preparation for the spring building season. As the year-by-year overlay reveals, this is a fairly traditional pattern for the market.
What can’t be explained, however, is that prices have continued to escalate throughout the month, even though sales volumes have begun to drop. This suggests that price may decline in the coming weeks, similar to the trend exhibited in early February 2011.
An examination against the previous year also shows that even with the increased number of housing starts reported during 4Q2011, orders and volume sales are still trailing the point where they were at this time last year. Buyers and sellers are operating on a just-in-time delivery schedule and making careful decisions about building inventory in an uncertain market.
For Mill2Market, Forest2Market collects 100 percent of all transactions—both sales orders and invoices—from 100 percent of all its subscribers. All prices are reported not as simple averages, but as volume weighted averages. For instance, if one order included 10 MBF at $260 and another included 100 MBF at $280, instead of reporting the average price at $270, Forest2Market would report the volume weighted price, which is calculated as follows:
($280 x 100 MBF) + ($260 x 10 MBF) = $278/MBF
Using this method, Mill2Market provides an analysis of the southern yellow pine market in two ways: