Plywood Mill fires are straining the supply chain
A couple of major mill fires this summer have caused some shortages in the plywood market. The first fire was in Mid July. A plywood mill in Springfield Oregon was totally destroyed in a fire that was probably caused by propane tank or glue tank explosions. It will cost more than $100 million and up to two years to rebuild that plant, and whether that’s done depends on the insurer’s settlement offer, yet to be made. The plant was owned by Swanson Group Mfg. LLC. This was a large plywood plant that supplied nearly 10% of the plywood for the western states and nearly 5% of the plywood used in the Midwest. Plywood prices immediately skyrocketed after the news as speculation and panic buying took over. Currently the price increases are working its way through the distributor network. Prices are said to still be increasing as the market is just starting to stabilize.
The second fire was a wood veneer plant located in Weed California that caused severe damage in a September 18th fire. The plant was owned by Roseburg Forest Products. The veneer was mainly used for plywood fabrication. The plant is expected to be back up and running around Thanksgiving. The Weed California plant being down has smaller impact than the Springfield Oregon plant, but it does put another small kink in plywood supply chain.
From a buyer’s standpoint, it is fortunate that new construction has been flat this summer, thus putting less demand pressure on plywood. Any major uptick in home construction could put some serious pressure on the supply chain.
Packnet uses plywood in some of its custom crating solutions. While Oriented Strand Board (OSB) is often a viable substitute, this product is also seeing some upward price pressure. Currently our wood wholesalers are indicating some fairly substantial price increases, but we are not sure how steep the increases are and what other companion wood products may be affected. Packnet is always working with its supply chain to minimize cost impacts as well as reviewing substitute materials in case of severe shortages.