OSB prices have taken a substantial stride forward since our previous report, rising as much as 8% according to feedback from sector contacts. One supplier into the UK market said that his company’s price increase of around 7%, effective from September 1, had met "no resistance at all".
Indeed, a leading producer figure predicted that further increases would be seen before the end of the year, especially as lengthening lead times were indicating a growing lack of availability, prompting some buyers "to cuddle up to manufacturers in a bid to guarantee supply". He added that OSB "has been undervalued for some time" and that manufacturers were "still not getting a satisfactory return on investment". Another increase in 2013 "wouldn’t be a surprise", agreed another OSB specialist.
Such bullishness with regard to prices is founded on several factors – not least the improvement in demand from the UK timber frame and general construction industries. In line with the findings of the recent Timber Trade Federation survey, several contacts argued that the EU Timber Regulation had had a marked impact since its introduction in March this year, converting a significant number of plywood buyers to OSB.
Other factors underpinning higher OSB prices include higher than anticipated summer energy costs for producers, as well as recent OSB price developments across the Atlantic. In its latest financial report, Norbord confirmed that OSB prices in North America had tumbled during the second quarter of 2013 but had subsequently mounted a recovery amid strong demand from, in particular, the new home construction sector.
"Year-to-date housing starts and permits are both 24% higher than last year," said president and CEO Barrie Shineton. "We are beginning to see early signs of a fundamental recovery in UK housing. Starts are up 30% so far this year and almost 50% in April and May. The improving housing trend we see coming should add to demand for our panel products."
