Market participants in the North American wood products market are once again cautiously optimistic as they look to 2017. This caution continues to pervade the wood products markets as uncertainty from the ongoing softwood lumber trade negotiations between the USA and Canada, the uneven U.S. housing recovery and the potential for further OSB restarts stifle optimism.
Market participants seem to be gearing up for what they believe will be yet another year of modest demand growth with ample supply availability. This will likely result in cautious inventory buying behavior early in the year. However, 2017 could easily surpass these cautious expectations, which could result in an insufficient inventory buffer as demand powers higher both cyclically and seasonally in late spring and throughout the summer.
Buyers adopted a conservative inventory strategy in 2016 in response to recent market performance and restrained expectations. Unmet price expectations in the North American OSB market in 2013 and more recently in the softwood lumber market in 2015 translated into debilitating inventory losses.
Fresh memories of inventory losses combined with guarded optimism about housing (traders fully in the show-me mode), the OSB industry still acclimating to the startup of over 4.5 BSF of OSB capacity, and the uncertainty surrounding the outcome of the softwood lumber trade negotiations between the USA and Canada drained enthusiasm for building inventories in 2016.
From Building-Products.com: https://www.building-products.com/January-2017/2017-Good-Signs-in-Wood-Products/