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9/18/2003

Timing of order raises plywood cost

The Associated Press

BOZEMAN, Mont. — Prices for plywood and particle board have reached record highs in recent months, prompted in part by U.S. military demand for the products in Iraq, some industry analysts and suppliers say.

“The builders are screaming about it,” said Chris Ogle, at Kenyon Noble Lumber and Hardware in Bozeman. “The mills have been increasing their prices every week for 12 weeks. ... Coming off last year when the market was at record lows, it’s quite a shock.”

Plywood and particle board prices have more than doubled since last spring. Jake Rosenberry, manager at Zig’s Building Material in Bozeman, said a 4-by-8-foot sheet of particle board that sold for $8 to $9 retail six months ago is now nearly $20.

Shawn Church, who follows prices for Random Lengths, an Oregon-based lumber industry newsletter, said a Department of Defense order for the building products had an effect on prices “not because of its size, but because of its timing.”

The military, which uses plywood to build its camps, ordered about 24 million square feet, only about one month’s production at a decent-size plywood mill, Church said.

But the order came in late July or early August, when mills were already struggling to keep up with demand from a market that saw single-family housing starts at a 25-year-high in July, Church said.

“The real issue is we’re getting very strong demand from home builders,” he added.

It didn’t help that some mills had shut down production lines because of low prices a year ago, he added.

Ogle said demand for panels of plywood and particle board outstrips supplies at the moment.

“If I need a carload of (particle board) from the mill, it won’t even ship until Dec. 1,” he said.

The plywood market seemed to be settling down a few months ago, but then the military order “kind of screwed everything up,” Ogle said. “The plywood market went absolutely nuts.”