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While the cost of 2×4 lumber has nearly returned to pre-pandemic levels, plywood prices remain stubbornly high, nearly double what they were before 2020. In a recent video, a woodworking expert dives deep into the factors driving this disparity, offering insights into why structural panels, such as OSB, MDF, and hardwood plywood, continue to carry hefty price tags. For those wondering whether plywood prices will fall or continue to impact project budgets, this breakdown provides a clearer picture.
Key Takeaways:
- The Complexity of Production: Manufacturing plywood is more resource-intensive than producing dimensional lumber. It requires raw materials, specialized machinery, adhesives, and skilled labor—all of which have become more expensive in recent years.
- Economies of Scale: Plywood mills are costly to set up and operate. Unlike lumber mills that can cut costs by reducing hours or output, plywood mills often maintain production levels despite lower demand, leading to higher per-unit costs.
- Market Control by Major Players: A handful of companies dominate the plywood market, including Georgia-Pacific, Weyerhaeuser, Boise Cascade, and PotlatchDeltic. Limited competition gives these companies significant pricing power.
- Barriers to Entry: Unlike 2×4 production, which can be undertaken by smaller operators, plywood manufacturing requires massive capital investment, making it difficult for new competitors to enter the market.
- Future Trends: While lumber prices are expected to rise in the upcoming building season, plywood prices may stabilize or even decrease as mills increase efficiency and capacity.
Understanding the Pricing Disparity Plywood’s appeal lies in its stability, strength, and efficiency. However, these same attributes are tied to a manufacturing process that demands significant investment in materials, technology, and labor. During the pandemic, these costs skyrocketed, and while some have normalized, the slow pace of change in the plywood industry keeps prices elevated.
Additionally, with only a few major players dominating the market, competition is limited. While there is no evidence of collusion, this concentration naturally leads to less price flexibility compared to 2×4 lumber, which is produced by a broader range of suppliers.
What’s Next for Plywood Prices? Despite current prices, there is some optimism. Unlike lumber mills that have faced closures and curtailments, plywood mills are expanding and investing in greater efficiency. This increased capacity could lead to lower costs per sheet, potentially bringing prices down. For now, builders and DIY enthusiasts may want to plan projects carefully or seek alternatives to offset higher costs.
If plywood prices have you rethinking your projects, you’re not alone. Share your thoughts in the comments—will you hold off until prices drop, or adapt and move forward with your builds? Be sure to subscribe for more updates on lumber and construction trends.