Despite the addition of West Fraser Chambord and re-start of LP Peace Valley, North American structural panel production was down y/y due to continued supply chain challenges across the industry. OSB and plywood pricing has surged recently due to both production (COVID-19 and labor) and transportation issues (winter weather). Although the winter weather has also started to slow demand in some regions, so far the impact has been more on the supply side. We expect that pricing will remain elevated through 2022 given the strong demand, limited supply, and lack of new capacity coming online. 2022 will see the re-start of West Fraser Allendale (+760 mmsf) partially offset by the conversion of LP Sagola to SmartSide (-420 mmsf). 

Highlights from APA Q4/21 North American Structural Panel report:

North American panel production decreased 0.2% y/y during Q4 – Structural panel production statistics showed a modest 20 mmsf y/y decline in structural panel production, with total production also falling 0.8% q/q. OSB production was up 1.9% y/y (+111 mmsf), as production increased in Canada (+91 mmsf) and in the United States (+20 mmsf). Production of OSB for sheathing applications, flooring, and siding increased 1.8% y/y, 3.6% y/y and 2.1% y/y respectively, which was partially offset by a 0.6% decrease of Other OSB production. In plywood, North American production was down 3.2% y/y, with a significant decline in Canadian production (-14.1% y/y) and a modest decline in US production (-0.5% y/y). We expect that the decline in Canadian production was attributable to flooding in the BC Interior, which resulted in curtailments from West Fraser (and likely some competitors). Increased production of sanded plywood and siding was more than offset by declines in the flooring and sheathing categories.

Implied structural panel consumption increased 0.3% y/y and fell 2.6% q/q – Implied OSB consumption increased 6.0% y/y, led by strong US consumption (+7.6% y/y) but was partially offset by decreased Canadian consumption (-10.9% y/y). Implied plywood consumption fell 9.9% y/y due to a 16.1% y/y decline in Canadian consumption and an 8.7% y/y decline in US consumption. Although lower q/q, OSB and plywood consumption remains relatively strong. OSB market share is up to 68.2%, the highest on record and well above the 66.2% recorded in 2020.

Offshore plywood imports decreased 28.4% q/q while offshore OSB imports increased by 14.8% q/q – Although offshore imports increased materially in Q2/Q3, total structural panel imports fell 17.4% q/q during Q4. Offshore plywood imports decreased 190 mmsf q/q to 479 mmsf which was partially offset by increased offshore OSB imports (+34 mmsf q/q to 263 mmsf) to the highest level recorded since at least 1997. We expect that shipping challenges continue to play a significant role in the import of offshore structural panel products.

EWP production was mostly strong y/y as producers attempt to keep up with elevated demand – According to the APA, I-joist production was up 1.2% y/y to 205 million liner feet as producers are still stretching to meet strong demand from homebuilders as total production for the year was up 11.6% compared to 2020. LVL production was down 8.5% y/y