Review of the Canadian structural panel market août 24, 2006
The Canadian market for structural panels amounted to 4.42 billion ft2 (3/8” basis) in 2005. By product category, this was fairly evenly split between plywood (2.23 billion ft2) and OSB (2.16 billion ft2). In the first quarter of this year (year-over-year basis), OSB consumption continued
to increase moderately in spite of a sagging housing market. On the other hand, plywood consumption fell by an estimated 7% and prices retreated. North American OSB prices also weakened from their almost record-high levels in 2005, but the market still offers good returns to
OSB producers.
Panel imports account for 10% of Canadian demand
Imports accounted for less than 10% of Canada’s structural panel demand in 2005 and continued to decline in 2006. Canada imported 176 million ft2 of OSB and 210 million ft2 of plywood in 2005, for a total of 386 million ft2 of structural panels. Over 80% of Canadian OSB imports come from the USA and this share is increasing. The US share of Canadian plywood imports is about 70% of the total.
Canada claims one-third of N.A. production
Canada produces close to one-third of all North American (including Mexico) structural panels and over 40% of its OSB production. Canada’s total production amounted to 11.9 billion ft2 of OSB plus 2.62 billion ft2 of plywood in 2005, for a total of 14.52 billion ft2 of structural panels. In the first quarter of this year, OSB production surged 14% (year-over-year basis) while plywood production fell 3%.
Canada’s structural panel production, 2005 (% of 14.52
billion ft2)
USA is Canada’s largest OSB market
Overall structural panel exports amounted to 10.49
billion ft2 or 72% of the country’s production in 2005.
During the first quarter of 2006, Canadian exports of
structural panels grew 17%. Over 98% of Canadian
structural panel exports went to the USA in 2005 and
continue to grow in 2006.
Canada’s output of OSB exceeds its consumption by a
wide margin. Due to the huge production overhang,
Canadian OSB mills are very dependent on exports. Last
year, 83% of Canada’s OSB production (9.92 billion ft2)
was sold in foreign markets, mostly to the USA.
Canada’s exports of OSB are 56 times larger than USA’s
while those of plywood are 1.4 times higher, for an
average of 18 times larger for overall structural panels.
Canada loses market share in non-US markets
While the USA continues to absorb most of Canadian
OSB surplus, ocean freight costs and the growing influx
of European and South American OSB in offshore
markets remain strong disincentives for OSB overseas
sales. Canadian offshore exports fell 40 million ft2 in
2005, extending a five-year trend that has seen exports
contract at over 10% a year.
In contrast, Canada’s plywood production is mainly
consumed domestically. Canada exported 22% (573
million ft2, 3/8” basis) of its plywood production in 2005,
mostly to the USA. Nevertheless, Canadian producers
continue to face mounting competition from Brazil,
which shipped 1.6 billion ft2 to the USA in 2005 (more
than tree times the volume from Canada). Brazil, China
and other lower-cost producers have also marginalized
Canadian exports to Japan and Europe.
US imported sawnwood prices
*Dimension lumber; **Rough lumber; Quality variations may greatly influence monthly
average prices. Data is subject to frequent revisions.
US imported veneer prices
Quality variations may greatly influence monthly average prices. Data is subject to
frequent revisions.
US imported plywood prices
Quality variations may greatly influence monthly average prices. Data is subject to
frequent revisions.
