The Time to Buy Lumber Is Now

While prices have increased for plywood in the past weeks, producers are urged to buy supplies now since prices are projected to increase significantly in the immediate future. The Department of Commerce is currently investigating birch plywood imports from Vietnam to discover if they are evading existing duties on Chinese plywood imports. Additionally, the effects of the coronavirus have caused a shock to the global supply for plywood, as plywood has become scarcer and less affected countries have increased their prices. This has contributed to a higher market price. The decrease in available plywood has contributed to projections that the housing market is expected to fall short by around 4 million homes. The aging millennial population, which has emerged from the housing crisis in a good position to rent and buy homes, has fueled increased demand for start-up homes.

In February, the Coalition for Fair Trade of Hardwood Plywood filed a request with the Department of Commerce to place Hardwood import Tarifs on plywood products from China that are assembled in Vietnam. They are asserting that Chinese hardwood producers are finishing their products in Vietnam to circumvent US duties. If these products are found to be within the scope of merchandise covered under countervailing and antidumping duties, they will face duties of over 200%. Therefore, it is imperative that producers that obtain their plywood supplies from Vietnam make their purchases before these duties can be enforced in mid-April.

The effects of the coronavirus will also likely affect the global market for birch plywood, given that production from China has not fully recovered from the halt in production. Government restrictions resulting from the outbreak have also impacted logistics, resulting in container ships being kept in port. This has exacerbated pressure on corporate supply chains. Prices for birch plywood in parts of the world which are less impacted such as South America and Russia have increased significantly as the good becomes scarcer.

Taking these factors into consideration, American producers especially in the housing construction industry are urged to make purchases of plywood that will provide enough inventory for 90 days. A failure to do so will result in significant losses, as prices are predicted to significantly increase. Although prices have risen as a result of supply shocks and requests for additional Hardwood import Tarifs, the price trend will continue in the future. Therefore, producers must make future inventory decisions anticipating further price increases. Without the needed supply of plywood, the housing market will be adversely affected.