http://www.denverpost.com/Stories/0,...631284,00.html

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Article Published: Monday, September 15, 2003
Rising plywood costs hit builders


Home-construction prices may increase


By Kristi Arellano
Denver Post Business Writer
Strong demand, decreased production and bad weather have combined to cause the
price of wood structural panels to spike, which could force Colorado
homebuilders to raise their prices.
Nationwide, plywood prices climbed more than 27 percent between July and August
and are up more than 61 percent from a year ago, according to Random Lengths, a
Eugene, Ore.-based newsletter that tracks the wood-products industry.

The price for oriented strand board, or OSB, panels was up 12 percent between
July and August and more than 117 percent from a year ago, according to Random
Lengths, which tracks prices based on the cost per 1,000 square feet.

"Prices have smashed through the previous records," said Random Lengths editor
Shawn Church.

As of Friday, Random Lengths' plywood index - the cost of 1,000 square feet of
3-ply plywood from Midwestern mills - finished at $535; the OSB index was at
$445. Both were record highs.


Economists attribute the price gains to a combination of storms in the South
and fires in the West, which have led to a shortage of logs arriving in mills.
In addition, some mills had cut capacity in anticipation of slower home sales.

Home construction instead climbed to record highs nationwide, boosted by low
mortgage rates.

"The dealers let their inventory run too low because they thought demand would
fall," said Michael Carliner, an economist for the National Association of Home
Builders. "All of the sudden there wasn't enough supply, and it created a panic
buying situation."

Part of the panic was in response to a rumor that the U.S. government had been
buying up plywood to use for rebuilding efforts in Iraq. ... (cont)