OSB Prices Up Nearly 20% Since September 2016

The price of OSB increased 4.4% in September and has risen 19% and 38% since September and January 2016, respectively. The surge was in contrast with moderate increases in prices paid for gypsum products (+0.3%) and ready-mix concrete (+0.2%). The price of softwood lumber fell 0.9% in September, according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics.

After declining by a total of 4.1% in June and July, the OSB price index has increased 7.5% over the past two months.

More recent data published by Random Lengths shows an even steeper increase over the past year in the price paid by end-consumers (e.g. builders and remodelers) for OSB.

Contrary to most builders’ experiences in September, the BLS report showed prices paid for softwood lumber declined over the month. Even so, the index is substantially higher than it was when litigation was initiated in the softwood lumber trade dispute in November 2016.

Two important factors drive the disparities between price changes builders have experienced and the PPI index changes:

  1. The producer price index tracks prices paid by wholesalers, distributers, and retailers rather than what those businesses charge customers.
  2. The index does not include prices paid for Canadian products as it does not include imports (just as the consumer price index does not reflect prices paid for exports).

The economy-wide PPI advanced 0.4% in September after a 0.2% increase in August. The increase was driven by 0.7% and 0.4% gains in prices paid for goods and services, respectively. Final demand prices for core goods (i.e. goods excluding food and energy) increased 0.3% and has increased in all but one of the last 11 months. Final demand prices less food, energy, and trade services rose 0.2% for the second consecutive month.

Over 60% of the increase in prices paid for services was due to a 0.8% advance in margins for final demand trade services (i.e. changes in margins received by wholesalers and retailers). In contrast, prices for residential real estate loans fell 2.6%.



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