Selective Cuttings

OSB production patterns in Canada

November 7, 2013

OSB (Oriented Strand Board) production in Canada has grown rapidly, driven by a cost advantage over plywood and acceptance in residential construction and remodeling markets for any structural panel use.  The U.S. housing boom pushed production to new highs, but then crippled production when the bust came, with a 61% production drop between 2006 and 2009 (Figure 1).  Since then production has recovered some losses, and will likely closely track the fortunes of the U.S. residential construction sector.

Structural panel production in Canada

 The graph shows the annual quantity of Canadian plywood and OSB production from 1984 through 2012, including projected annual quantities for 2013 and 2014.  While Canadian plywood production has remained relatively flat, Canadian OSB production grew significantly from the early 1990s until the early 2000s before collapsing from 2006 through 2009.  Since then OSB production has recovered some losses and will likely continue to do so in 2013 and 2014.

Sources: APA-Engineered Wood Association, Forest Economic Advisors

OSB’s cost advantage over plywood has widened over the years, due to costs rising faster for plywood than OSB (Table 1).  This is mostly due to more flexible fibre requirements for OSB versus the type of logs required to make plywood.

The average variable costs of plywood and OSB in U.S. dollars for the U.S. and Canada for four time periods: 1984-1991, 1992-2005, 2006-2009, and 2010-2012
  (US$ per thousand square feet, 3/8 inch bases)
1984-1991 1992-2005 2006-2009 2010-2012
OSB - Canada 91 92 136 137
OSB - US 84 108 133 142
Plywood - Canada 143 193 249 264
Plywood - US 134 211 230 238

Source: RISI, Forest Economic Advisors

Experts suggest future OSB production growth will continue to be driven by OSB’s cost advantage over plywood and the U.S. housing market recovery.  OSB production will likely grow by 7% (2013) and 17% (2014) while plywood production stays flat (Figure 1).