OT: OSB at it again

[Jeffreauxdawg]

Sorry to keep posting this, but it's getting to be so ridiculous, that I cannot keep from sharing. I'm not even going to get into lumber...

For simplicity sake, a normal price for 7/16 OSB sheathing is $10 per sheet wholesale or $320/msf (1000 square feet.) As if this week it's selling for $70 per sheet wholesale. To put that into perspective, if normal gasoline price is $2.50/ gallon, this is like $17.50 per gallon gasoline.

Chemical plants went offline for weeks in Texas and the mills can't get the resins. My builder has been waiting for a month on my framing package. If a hurricane hits the coast, the government will have to get involved. It's the most ridiculous thing I have ever seen in the building industry.

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[Grove Sh*tter]

Unreal

 

[dorndawg]

Sorry to keep posting this, but it's getting to be so ridiculous, that I cannot keep from sharing. I'm not even going to get into lumber...

For simplicity sake, a normal price for 7/16 OSB sheathing is $10 per sheet wholesale or $320/msf (1000 square feet.) As if this week it's selling for $70 per sheet wholesale. To put that into perspective, if normal gasoline price is $2.50/ gallon, this is like $17.50 per gallon gasoline.

Chemical plants went offline for weeks in Texas and the mills can't get the resins. My builder has been waiting for a month on my framing package. If a hurricane hits the coast, the government will have to get involved. It's the most ridiculous thing I have ever seen in the building industry.

View attachment 20083

Homebuyers seem to continue to absorb the costs. The low inventory of available homes for sale is equally shocking.

 

[RocketDawg]

Kinda makes the housing squeeze we're seeing now understandable.

There's no telling what your house will wind up costing. I looked a few days ago and the price of a 2x4 stud for 8 foot walls was $7.99 + tax at Home Depot, which would be $8.71 locally, and their quality sometimes isn't the best in the world.

 

[karlchilders.sixpack]

Price on metal stud? Just wondering.

 

[msstate7]

Just checked Lowe's on 1/2" plywood pine, and it's $54.65. OSB has to be close to pushing people to plywood, right?

 

[ZombieKissinger]

How do you financial experts see housing prices going over the next few years? There's a huge crunch where I'm living now with people from Seattle and California swarming in and almost nothing is being built.

 

[Arthur2478]

OSB is stronger than plywood

 

[Dawgbite]

I talked to the lumber buyer at my old employer today. A year ago a truck load of 3/4 osb was under $10000. He booked ten loads this week and it’s over $28000 per load. The thing is that the mills are paying the same now per ton for logs and chips that they were a year ago. Everything else is going through the roof. Some suppliers are passing on 35% price increases. All this is going to implode eventually.

 

[TrueMaroonGrind]

I talked to the lumber buyer at my old employer today. A year ago a truck load of 3/4 osb was under $10000. He booked ten loads this week and it’s over $28000 per load. The thing is that the mills are paying the same now per ton for logs and chips that they were a year ago. Everything else is going through the roof. Some suppliers are passing on 35% price increases. All this is going to implode eventually.

If logs and chips are the same price as a last year, where is the price increase coming from? Is this just strictly a shortage and prices are skyrocketing?

 

[Uncle Ruckus]

And our slab is being poured in the next couple weeks...

 

[o_Hot Rock]

And our slab is being poured in the next couple weeks...

I shut down my remodel because if this. You might want to consider it as well

 

[patdog]

Yeah. I wouldn't be building anything right now.

 

[turkish]

The crash will be epicer.

 

[Jeffreauxdawg]

My build price was locked in in September luckily.

To answer one of the questions, OSB and lumber prices move up on supply and demand. Mills have contracts with distributors and dealers that are tied to market prices put out by a publication called random lengths. Let's say 70% of a given mills production is contract wood. The other 30% is open market. That's where price is determined.

As of right now, OSB mills are making more money than ever imagined. The prices will tank at some point, probably around the time the fed raises interest rates and new construction slows.

 

[xxxWalkTheDawg]

I shut down my remodel because if this. You might want to consider it as well

hell.. I downloaded plans to build a new gate into out backyard. I’m not building that thing till next year. I for sure am not starting any kind of building project.

I still see new construction going on.. blows my mind. This could be another housing crisis in the making.

 

[Eleven Bravo]

Well, I’ve got 350+ acres of pine plantations that need to be thinned (second thinning). They are offering me $4/ton for pulpwood, $9/ton for chip and saw (what they make OSB out of compared to $18/ton pre-COVID) and they won’t even give me a price for saw timber. Something stinks in Denmark. These jackasses at Weyerhaeuser and other places that buy timber are raping us. I’ll let my **** sit there and grow at those prices. Hell, I would rather set fire to it all before I’ll bend over to organized crime (which is what is controlling timber these days). 17 these criminals...

 

[IBleedMaroonDawg]

Well, I’ve got 350+ acres of pine plantations that need to be thinned (second thinning). They are offering me $4/ton for pulpwood, $9/ton for chip and saw (what they make OSB out of compared to $18/ton pre-COVID) and they won’t even give me a price for saw timber. Something stinks in Denmark. These jackasses at Weyerhaeuser and other places that buy timber are raping us. I’ll let my **** sit there and grow at those prices. Hell, I would rather set fire to it all before I’ll bend over to organized crime (which is what is controlling timber these days). 17 these criminals...

I needed to know that information. My brother and I have a very, very small acreage of pine land and he wants to sell the timber.

 

[Cooterpoot]

If logs and chips are the same price as a last year, where is the price increase coming from? Is this just strictly a shortage and prices are skyrocketing?

It's not simply a shortage. It's ripping people off. It's falsely inflated. A couple bucks would be normal. It's ridiculous at this point.
Housing is the next big issue. Bidding wars above listings and value are occurring big time right now. Plus, the cost to build is out the roof. Bad situation coming.
Inflation is going nuts right now too.

 

[Jeffreauxdawg]

Well, I’ve got 350+ acres of pine plantations that need to be thinned (second thinning). They are offering me $4/ton for pulpwood, $9/ton for chip and saw (what they make OSB out of compared to $18/ton pre-COVID) and they won’t even give me a price for saw timber. Something stinks in Denmark. These jackasses at Weyerhaeuser and other places that buy timber are raping us. I’ll let my **** sit there and grow at those prices. Hell, I would rather set fire to it all before I’ll bend over to organized crime (which is what is controlling timber these days). 17 these criminals...

Log prices are going to stay depressed. This goes back decades, but many wood products have replaced by other materials:

Plywood and OSB sheathing replaced by thermoply.
Wood studs replaced by steel studs.
Wood decking replaced by composite.
Siding and trim replaced by fiber cement.
Solid section lumber replaced by engineered wood.

All of this has taken off in the last 20-30 years at the same time as everyone (particularly in the South) started using proper forest management to increase growth rates and mill technology increased yields.

As of right now, there is more log supply than mill capacity. The only way the dynamic will change is if more mills are built because of sustained, long term demand. It will take years to build a new ODB mill, right now I now of one that is coming online in the fall. The bigger current issue is a like of resins because of the chemical plants that went offline in the February freeze.

Southern Timber is in the same boat, maybe even a worse boat, than natural gas was 15 years ago. Once we started fracking, gas supply increased at a much faster rate than demand. At the same time, gas fired electricity generation was replaced by wind energy.

What makes timber even worse is if everyone sits in it because of depressed prices, it just keeps growing and when prices do start to increase the supply has increased just as much if not more...

It's a ****** situation, but there is just way more supply than capacity at this point.

 

[FISHDAWG]

Price on metal stud? Just wondering.

I just repriced a hotel that I bid just over a year ago ... Plans didn't change so all I had to do was update the material pricing .... Steel studs were twice the price of a year ago and the lead times are approaching 6 weeks. Mineral wool and fiberglass are several weeks out, gyp board is already on allocation here in Atlanta, and I think plywood and lumber have already been discussed. Funny thing is - I have NEVER before in 35 years of construction estimating seen so much wood framed construction happening right now. The steel roll-formers refuse to quote escalation past 60 days and suppliers here have pulled their material quotations leaving guys like me out to dry ..... Crazy times right now but I'm only in it for another 2 years and then back to the Biloxi beach for me.... I've had enough of a business where everyone now thinks they are a lawyer

 

[GloryDawg]

Well, I’ve got 350+ acres of pine plantations that need to be thinned (second thinning). They are offering me $4/ton for pulpwood, $9/ton for chip and saw (what they make OSB out of compared to $18/ton pre-COVID) and they won’t even give me a price for saw timber. Something stinks in Denmark. These jackasses at Weyerhaeuser and other places that buy timber are raping us. I’ll let my **** sit there and grow at those prices. Hell, I would rather set fire to it all before I’ll bend over to organized crime (which is what is controlling timber these days). 17 these criminals...

My parents have the same situation with about 300 acres.

 

[GloryDawg]

I need a new fence. The cost is just to high right now. I am replacing the ones that can't wait.

 

[Jeffreauxdawg]

Just checked Lowe's on 1/2" plywood pine, and it's $54.65. OSB has to be close to pushing people to plywood, right?

Plywood is just as tight for the most part and the mills are just as opportunistic. Plywood will always be priced higher than OSB... Now Lowes and HD could get caught with weird price descrepencies at times, but it would be temporary.

As an FYI, I was in Lowe's 2 weeks ago and they switched to digital price placards on commodity lumber, OSB, and plywood so they can change pricing real time from a central location. That's how fast pricing is going up.

 

[johnson86-1]

My build price was locked in in September luckily.

To answer one of the questions, OSB and lumber prices move up on supply and demand. Mills have contracts with distributors and dealers that are tied to market prices put out by a publication called random lengths. Let's say 70% of a given mills production is contract wood. The other 30% is open market. That's where price is determined.

As of right now, OSB mills are making more money than ever imagined. The prices will tank at some point, probably around the time the fed raises interest rates and new construction slows.

Is your builder really going to honor that? Not many would.

 

[Mobile Bay]

Same here. I am literally holding parts of mine together with metal straps. But at $10 each for 2x4x8's it's just not happening.

 

[MagnoliaHunter]

Home Depot has 1/2 inch 4x8 OSB for $39. Buy 70 or more at $35. What am I missing? Granted you can only buy 90 at a time and they only have 121 in stock.

https://www.homedepot.com/p/1-2-4-ft-x-8-ft-Oriented-Strand-Board-660663/100072564

Edited to add: what am I missing besides the ability to reply correctly?

 

[mstateglfr]

Plywood is just as tight for the most part and the mills are just as opportunistic. Plywood will always be priced higher than OSB... Now Lowes and HD could get caught with weird price descrepencies at times, but it would be temporary.

As an FYI, I was in Lowe's 2 weeks ago and they switched to digital price placards on commodity lumber, OSB, and plywood so they can change pricing real time from a central location. That's how fast pricing is going up.

We gutted our basement last month and are rebuilding it. Significant design changes- moved the bathroom so had to break the floor, new studs on the walls even, etc. Its about the worst time to ever do this, but it was past time.

A couple weeks ago we had to buy 2 boards that are 1x12x12 and it cost over $140 total with tax. It took 3 calls to find a store with stock- HD was out, a lumber yard was out, and Lowes had it. We then had the opportunity to sort thru a couple dozen boards to find 2 that werent total trash.

 

[sscjr1]

Doesn't help with OSB or plywood, but we hire a portable mill and saw our own lumber

 

[Jeffreauxdawg]

Is your builder really going to honor that? Not many would.

It's a contract. There is no clause for material price escalation. This is not a GC building at cost plus. It's a semi custom builder building 80+ homes a year. In reality, the vast majority of homes across the country are built this way.

Production builders take a beating on the way up in a market like this as they keep raising prices on new construction, but make it up when material prices go down as housing prices typically stay elevated.

 

[$altyDawg]

I'm not going to say what I paid last February because it would make ya'll that are building houses and remodeling now physically sick. I'm thankful to God each day that we were able to get ours built when we did, and I feel bad for you guys that are having to put them off because of this spike.
I'm getting ready to clear a spot off to build metal building for a shop, but bad news is, metal is way up now too. Not the best of times, but hang in there. It has to get better sooner or later.

 

[turkish]

It's a contract. There is no clause for material price escalation. This is not a GC building at cost plus. It's a semi custom builder building 80+ homes a year. In reality, the vast majority of homes across the country are built this way.

Production builders take a beating on the way up in a market like this as they keep raising prices on new construction, but make it up when material prices go down as housing prices typically stay elevated.

I would think some builders in that situation would be attempting to declare force majeure.

 

[johnson86-1]

It's a contract. There is no clause for material price escalation. This is not a GC building at cost plus. It's a semi custom builder building 80+ homes a year. In reality, the vast majority of homes across the country are built this way..

They are, but most don't have the balance sheet to lose money on 80 homes, or even just break even on 80 homes. And they'd have a pretty solid force majeure claim if they wanted to push it. Yours may be different than the type of tract home builders we have, who all push for 200 to 300 homes per year. If they are only doing 80, they may be a higher quality company.

Another thing that may be different is the contract you have. You'd be amazed at the contracts that tract home builders down here can get away with. They have basically no specs, just a layout. So there are a lot of opportunities to cut corners if they need to claw back some of the costs. But that only helps the ones that are not already taking the lowest possible price without regard to quality.

Production builders take a beating on the way up in a market like this as they keep raising prices on new construction, but make it up when material prices go down as housing prices typically stay elevated.

That's true for normal swings. I just don't know that prices are coming down in the next 18 months, and I'm not sure how many of them are positioned to ride something like that out.

 

[Dawgsnsaints]

My company is in SYP Plywood/Lumber manufacturing and it's going to get worse before it gets better. We got word yesterday that a large national producer of OSB and pine plywood has cut off allocation of all Office Wholesale accounts as well as a large national Distributor. The reason given was lack of production due to resin shortages.

 

[Dawgsnsaints]

Plywood is just as tight for the most part and the mills are just as opportunistic. Plywood will always be priced higher than OSB... Now Lowes and HD could get caught with weird price descrepencies at times, but it would be temporary.

As an FYI, I was in Lowe's 2 weeks ago and they switched to digital price placards on commodity lumber, OSB, and plywood so they can change pricing real time from a central location. That's how fast pricing is going up.

JLS is correct

 

[johnson86-1]

The crash will be epicer.

It seems inevitable that there will be a pullback. You can't have price increases outpace wages by that much and it be sustainable, but supposedly underwriting standards are still reasonably strict (at least compared to leading up to the 08/09 crash) and you don't have people buying up multiple investment properties with virtually no money down. So you will see a drawback when interest rates rise, but you supposedly won't have people walking away and creating the positive reinforcement of foreclosures causing more foreclosures.

We'll see. The only demand I can see that seems like it might evaporate is that at least some portion of demand is driven by people buying second homes to get out of cities. Not sure what's going to happen when some of the government in large cities stops being so crazy and allow people to live their life again. But that's obviously not a huge demand, but I guess with something as relatively inelastic as the housing supply, some small marginal changes can have outsized impacts.

 

[dorndawg]

I would think some builders in that situation would be attempting to declare force majeure.

I guess they could try but invoking foirce majeure on supply & demand is gonna be tricky, and in the meantime they're gonna struggle to build houses without wood.

 

[dorndawg]

Home Depot has 1/2 inch 4x8 OSB for $39. Buy 70 or more at $35. What am I missing? Granted you can only buy 90 at a time and they only have 121 in stock.

https://www.homedepot.com/p/1-2-4-ft-x-8-ft-Oriented-Strand-Board-660663/100072564

Edited to add: what am I missing besides the ability to reply correctly?

You and a buddy should go buy all 121 if they have them for $35.

 

[Jeffreauxdawg]

My company is in SYP Plywood/Lumber manufacturing and it's going to get worse before it gets better. We got word yesterday that a large national producer of OSB and pine plywood has cut off allocation of all Office Wholesale accounts as well as a large national Distributor. The reason given was lack of production due to resin shortages.

It's crazy. LP is firing up an OSB mill in Canada that they were forced to close in 2019 because of low prices. It won't be online until Q3 though. This year and next will be a rollercoaster.

 

[johnson86-1]

I guess they could try but invoking foirce majeure on supply & demand is gonna be tricky, and in the meantime they're gonna struggle to build houses without wood.

Invoking force majeure on supply and demand is tricky, but it's not really hard to invoke it on supply chain disruptions. If they include a force majeure clause in the contract, it probably specifically lists supply chain disruptions. Difficult line to draw when material is available but at insane prices, but with pandemic induced closures up and down the supply chain, I'd probably rather be the one claiming force majeure if I had to just pick who was most likely to win.

Probably the biggest thing is like you say, they probably can't afford to stop building either. They need to keep building, but at a higher price, and if you say "force majeure, but I will complete the contract if you pay me an extra 15%", you are hurting your position.

I have talked to two people who made a deposit with a builder and the builder is just sitting on it and keeps telling them they are about to start, but it's been going on months now with no work being done. So they are stuck in rentals and the builder is holding a good chunk of money that they could use as a down payment on a house. I'm guessing that's not an uncommon tactic either, but I suspect they started it thinking they just had to wait out a month or two, and now there is no end in site, so delaying may not help them.