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Louisiana-Pacific Corp. Message Board

  • rrainman9999 rrainman9999 Sep 21, 2005 5:59 PM Flag

    Prices jump for building supplies

    By Keith Lawrence

    When Hurricane Katrina roared ashore three weeks ago, Bob Johnson, general manager of Thriftway Home Center in Owensboro, saw the price of half-inch oriented strand board roof sheathing jump 30 percent to 40 percent.

    "It was selling for $11 before," Johnson said last week. "And it's gone to $16 in three weeks."
    Jamie Curry secures a floor joist with a pneumatic framing nailer Thursday afternoon in a storage loft at AAA Kentucky Automobile Club's new office under construction at Griffith Avenue and Frederica Street. Curry is a laborer with the general contractor Rusher Construction Co. Inc. With Hurricane Katrina's mass devastation, some analysts are expecting prices to rise in building supplies as the Gulf Coast rebuilds.
    Hurricanes always affect the price of roofing supplies, he said, because roofs sustain the most damage in storms.

    But this time, it was a lot more than roofs.
    The American Red Cross said last week that nearly 500,000 houses in three states were damaged or destroyed -- 240,000 in Louisiana, 240,000 in Mississippi and 1,700 in Alabama.
    And the damage, the report said, extends 150 miles inland from the Gulf of Mexico.
    "They're going to be rebuilding thousands of houses, and it's going to be an across-the-board problem," Johnson said. "Insulation, drywall, studs. Studs are up 30 percent. Drywall and insulation haven't gone up yet. But when they start rebuilding, those prices will go through the roof."
    The Wall Street Journal reported last week that steel prices could jump as much as 20 percent.
    And reported that Dave Seiders, chief economist for the National Association of Home Builders, said he fears that price increases for lumber and other building materials could add $10,000 or more to the price of a new home.
    But analysts say that depends on how much of the construction takes place at the same time.
    Reuters news service reported last week that lumber prices appeared to be cooling, after a sudden hike in the wake of the storm.
    That's because, the news service said, "it will take years to rebuild the homes and businesses damaged by the storm."
    And, the story said, the hurricane "may put additional wood on the market, because pine trees toppled by the storm will have to be processed quickly to prevent spoilage."
    "Drywall and roofing materials are the first things that go up," said Richard Stallings, executive officer of the Home Builders Association of Owensboro. "Cement was already in short supply for the past couple of years. And petroleum costs impact everything. But short-term price increases are speculative. They may not last."
    'Great demand for housing'
    Still, he said, "there's obviously going to be a great demand for housing. A lot of builders are buying whole-house packages that include everything needed for the house instead of just ordering each item as needed. That helps ward off short-term spikes."
    None of the builders he's talked with has seen a shortage of materials, Stallings said.
    "You don't want people to pull out of the housing market over a perceived problem," he said. "And it's not a problem yet."
    Jennifer Smith, Lowe's national spokeswoman, said: "There has been an inflation of more than 10 percent for OSB and plywood. But the prices are still less than they were this time last year. Prices fluctuate and vary from market to market. But we've had no problem getting plywood, lumber and OSB."
    Officials with Habitat for Humanity and Kight Home Center said they have seen few problems so far.

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    • A Home Depot spokesman could not be reached for comment.
      With half a million houses needing to be rebuilt or repaired, Stallings said more than building materials will be affected.
      Textiles, home furnishings, carpeting and appliances will be needed for those homes, he said.
      "This could be five times worse than anything we've seen in recent years," Stallings said."
      The Red Cross said Hurricane Andrew in 1992 was previously the nation's most costly storm. After that hurricane, 125,000 houses had to be rebuilt or repaired, it said.
      The NAHB says 28,000 of those homes had to be completely rebuilt.
      That organization expects more than 200,000 houses to be razed this time.
      "The storm will have impacts on the supply of materials as well as demand," the NAHB said in a report. "The areas affected by the storm have a significant number of wood product facilities that may have been damaged or destroyed."
      But the Engineered Wood Association says "most mills in the three states were unaffected or were only temporarily affected."
      It said Louisiana, Mississippi and Alabama have 25 plywood and OSB mills, which last year produced about 6.5 billion square feet of wood panels -- about 22 percent of the nation's output.
      "From July 1992 to September 1992, largely as a consequence of Hurricane Andrew, the average price for plywood increased from about $222 per 1,000 square feet to $321, and the price of Southern pine framing lumber rose from $264 per 1,000 board feet to $308," the NAHB said.
      This fall, it said, "with production already running at full capacity for wood panels, further increases for those products, as well as for roofing, are likely."
      But the NAHB said past hurricanes did not see a "massive surge" in home building.
      "Replacing units destroyed by the storm will not begin for many months and will take place slowly, over a number of years," it said.
      The Associated Press reported Monday that the Bush administration is considering "adjusting high tariffs imposed on such items as lumber from Canada and cement from Mexico if building needs from Hurricane Katrina cause prices to spike."
      Soft-wood lumber imports from Canada face a penalty tariff that averages 27 percent, the story said. And imports of Mexican cement see a penalty tariff of nearly 55 percent.
      However, the Commerce Department last month recommended cutting the cement tariff to 40.54 percent, starting in December, AP said.

      • 1 Reply to rrainman9999
      • I spoke with someone in the indusrty that buys large amounts of wood, he said prices are up 30% and expects another 20-30% soon, he also stated that the mills were directed to send a bunch of plywood to katrina so the rest of the country will be bidding for the remainder. He prdecited an ez double of august prices which were pretty low

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