Wood products manufacturers are asking what’s ahead for raw materials prices.

“The prices of all panel products have been impacted by this market,” Timber Products Co.’s Roger Rutan told CabinetMaker+FDM recently. “We’re really in uncharted waters with so much volatility in the marketplace. Currently, real demand is soft, and raw material is in short supply. What’s going on is a multi-faceted correction from historically low demand and low prices. It’s happening across the wood products industry, not just panel products such as particleboard and MDF."

Earlier, Rutan wrote that MDF manufacturers were seeing significant cost increases, especially higher resin and raw material costs. The recession has reduced available volume of raw materials while driving up prices. The earthquake in Chile has also affected major MDF producers that export to North America.

In a message to Quickscrews International Corp. customers, Rick Gentry wrote that steel wire prices are rising, with inventories at an all-time low. Gentry said that Quickscrews had more than 15 containers in transit to meet customer needs through the summer. “My suggestion is now is a good time to stock up,” he wrote. “Quickscrews will do everything in our power to hold prices, but at some point we will need to ask our customers to share the burden.”

In early June, Mohawk announced a 6 percent increase on solid hardwood flooring and accessories, and cited the recession that caused many sawmills to reduce capacity or close down entirely, according to a report on www.floordaily.net recently.

Limit down for lumber

Meanwhile, lumber prices on the Chicago Mercantile Exchange closed down sharply in late May, according to reports on www.reuters.com. In fact, the futures were down for the $10 per thousand board feet limit for two consecutive days. Part of this is due to an expiration of a duty on lumber imported from Canada, according to the Reuters report. Lumber futures fell more than 30 percent from late April until late May. What’s worrisome is that this is an indication that new home sales will slow in the second half of 2010.

Separately, I’ve heard that the opening of a planned wood composite structural mill in Mississippi is on hold, until prices are higher. Earlier increases in lumber prices could lead to closed lumber mills reopening – and this in turn could depress prices.

What’s next? “If you really step back and look at the market, you’ll see volatility by geographic region,” Timber Products’ Rutan says. “There’s really no timetable for predicting how pricing will react. The primary component is uncertainty. Most people are cautiously optimistic about a recovery but where prices go from here will be determined more by true marketplace demand and less by supply issues. Raw material suppliers have had time to respond to the uptick in demand.”

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