The plywood market is one of those industries majorly affected by the Covid-19. In only three years, from 2019 to 2021, plywood prices soared by $343. The current formwork plywood price has been recorded at $847. The plywood market has never gained a stable price fluctuation, and several factors contribute to this dilemma.
In this blog post, we will be looking at the factors that cause the abrupt change in formwork plywood prices in the market. We will also analyze the situations that can cause these prices to fall.
Significance of Formwork Plywood Price in Market
Changing formwork plywood price affects the construction industry, but it also has a domino effect on other sectors. Plywood is one of the most important commodities used in construction and furniture-making. It’s also termed one of the biggest driving wheels of the economy in some countries, such as 70% of plywood is exported by China!
Thus, a change in plywood market prices will directly influence the prices of construction materials and furniture. Aside from that, the plywood industry is also a significant employer in the United States. A stable plywood market means stable jobs and income for the workers involved in producing and distributing plywood.
Factors Affecting Formwork Plywood Price in Market
Prices of plywood vary depending on the thickness, grade, and type of plywood. The most common type of plywood used in construction is formwork plywood. Several other factors can affect the prices, such as:
1- Covid-19 Impact on Plywood Industry and Prices
The Covid-19 pandemic has been one of the primary reasons behind the sharp increase in formwork plywood prices. The lockdown restrictions and the decrease in construction activities have led to a reduction in the demand for plywood. Thus, plywood production has decreased, and plywood prices have increased.
2- Tariff on Imported Plywood
In 2020, the Trump administration increased the tariff on imported plywood from 10% to 20%. This has caused the prices of imported plywood to increase and has consequently affected the prices of domestic plywood.
3- Log Export Ban in China
The Chinese government has banned the export of logs since 2018. This has led to an increase in the price of raw materials for the plywood industry.
4- Low Mortgage Home Building in 2020-2021
The decrease in homebuilding activities has also contributed to the decline in the demand for plywood. This has further led to a decline in plywood production and an increase in its prices.
5- The Cost of Production and Limited Production Capacity
The cost of production has been increasing due to the increase in raw materials prices and the rise of labor costs.
At the same time, the plywood industry is facing a shortage of workers due to Covid-19. This has resulted in a decline in the production capacity of the plywood industry.
6- Taxes Imposed By the Government
The government has been increasing the taxes on the plywood industry to generate more revenue. This has caused the prices of plywood to increase even further.
7- The Demand and Supply in the Market
The demand and supply of plywood in the market also affect its prices. When the demand is higher than the supply, the prices will increase. And when the supply is higher than the demand, the prices will decrease. Several situations can lead to a decrease in formwork plywood prices in the market.
8- Enterprise Logging
The plywood industry is mainly composed of small and medium enterprises. However, a few large-scale enterprises can produce a significant amount of plywood.
When these large-scale enterprises experience difficulty obtaining logs due to the log export ban in China, they will release some of their stocks into the market, which will lead to a decrease in formwork plywood prices.
How Can The Prices of Formwork Plywood Decrease?
The formwork plywood price can decrease due to many reasons. The most common reason is the oversupply in the market. When there is an oversupply of plywood, the prices will go down. Other causes can include a decrease in the demand for plywood, a change in government policies, or a reduction in the cost of production.
Whatever the reason may be, a decrease in the prices of formwork plywood can benefit both buyers and sellers in the market. Buyers will be able to purchase plywood at a lower price, while sellers will sell their stocks at a higher price.
Expected Price Ranges in the year 2022-2023
It is difficult to say whether plywood prices will decrease in 2023. This will largely depend on the economic conditions at that time. If the global economy recovers from the Covid-19 pandemic, the demand for plywood will increase, and the prices will go up. On the other hand, if the pandemic continues to affect the global economy, plywood prices may decrease.
The current demand is lower than it has been in the previous decades. From 2020 to 2021, the current demand is average for years of exceptionally high need. The housing built during the last decade fell short of the standard set between 1960 and 2010. One of the primary reasons for this is population growth. This rise has a direct influence on the industry and market.
Final Thoughts on Formwork Plywood Price
As we have seen, the formwork plywood price in the market is greatly affected by many factors. The most crucial factor is the demand and supply in the market. You can expect that the prices will go down when there is an oversupply in the market.
In 2023, it is anticipated that the prices will decrease if the global economy does not recover from the Covid-19 pandemic. If you are planning to buy plywood in 2023, it would be good to wait for the prices to go down before making your purchase.
The rising demand will endure for at least one to one and a half years before returning to normal. According to the current scenario, high plywood prices will end by the end of 2023.
