The North American OSB industry achieved record economic results during 2021.

Industry revenue and profitability greatly exceeded the previous best in 2020. OSB market prices were at or near historic highs for all of the second year of the pandemic and the three publicly traded OSB producers reported a record mean sales return of US$712/m3. Incredibly, their EBITDA margins were in the 60-70% territory.

The prices have been so high that theft of OSB has even been a problem on building sites.

After a decade of low housing construction activity after the 2008 so-called ‘Great Recession’, US demand for new housing in 2021 finally returned to the “normal” level of about 1.6 million units and Canadian housing starts were higher than at any time for at least 40 years.

Given that most OSB in North America is used in residential construction, unanticipated demand and fixed supply caused high prices.

OSB remained in short supply in the first two months of 2022 and prices have again approached all-time highs. Industry observers expect revenue and profitability of OSB producers to remain strong in 2022.

During 2021, established producers announced plans to invest in three new OSB mills. An unknown is whether investors will use ongoing windfall profits to add even more capacity.

Perhaps by the end of 2023, OSB supply will better match demand as new sources of OSB become available and higher mortgage interest rates cause residential construction activity to decrease.


Almost all OSB within North America is used for construction purposes such as subflooring, subroofing, siding, and I-joist webbing (in contrast as industrial raw materials). Since OSB became accepted about 40 years ago, the fortunes of OSB producers have been highly correlated with residential construction.

US residential construction had bottomed out during the Great Recession of 2008/2009 at about 550,000 units per year. Housing starts remained low for a decade even as the US population continued to grow, and the US government mortgage lender Freddie Mac estimates a deficit of 3.8 million housing units accumulated over the 10 years.

US housing starts finally recovered to the post-Second World War average of approximately 1.6 million units during 2021.

While less volatile than US trends because of tighter mortgage regulations, the Canadian housing market responds to parallel economic forces. In 2021, Canadian housing starts of 271,000 were higher than in at least 40 years, after bottoming at 150,000 units in 2009.

Unexpectedly robust construction and remodelling activity during 2021 stimulated demand for OSB and other building materials. However, North American OSB production remains below levels of the mid- 2000s housing boom.

A human factor that periodically prevents OSB makers from maximising production is temporary worker absences due to occasional Covid-19 surges.

The low unemployment rate also complicates hiring production personnel.

Initially, government stimulus payments and unemployment insurance bonus payments sapped worker interest in taking any job. Now family-wage jobs are readily available outside of dirty, noisy wood factories and many workers prefer nonindustrial jobs.

The constrained supply of OSB relative to increased pandemic demand caused prices to climb to unprecedented heights and then to remain high.

OSB prices during every week of 2021 exceeded the highest market price recorded between the 2008-2009 Great Recession and the March 2020 start of the pandemic.

After reaching unprecedented highs in the second half of 2020, OSB prices broke new records in 2021. The June 2021 price of US$1,125/m3 for benchmark 7/16in (approximately 11mm) OSB in the southeastern US greatly exceeded the prior October 2020 record of US$650/m3.

While prices were high during all of 2021, prices varied over the year. The maximum June price was about 300% higher than the minimum September, 2020 price of US$370/ m3. The 2021 minimum still was almost double the typical pre-pandemic price of about US$215/m3.

North American OSB production typically equals North American OSB usage, with Canada a net supplier to the US.

However, eastern European producers (including from Belarus, Latvia, Romania, and Russia) took advantage of record North American prices and the continued strong US dollar by exporting meaningful volumes to the US during the summer of 2021.


US inflation has reached its highest level since the early Reagan administration of 40 years ago. The Consumer Price Index increased 7.5% over the 12 months ending January 2022 and was heading higher as we entered the spring.

The Lumber & Wood Products Producer Price Index grew 47.2% in the two years from January 2020 to January 2022, while OSB prices increased more than 300%.

Construction material price inflation has caused builders to increase prices to absorb the higher costs.

The National Association of Home Builders reported in April 2021 that “soaring lumber [includes lumber, plywood, OSB, I-joists and other wood products] prices that have tripled over the past 12 months have caused the price of an average new single-family home to increase by US$35,872”.

“This lumber price hike has also added nearly US$13,000 to the market value of an average new multi-family home, which translates into households paying US$119 a month more to rent a new apartment. Further adding to housing affordability woes, other building material prices have been steadily rising since 2020 and, like lumber, are in short supply as well.”

However, builders are able to pass on the price increases to home buyers.

Jeffrey Mezger, the CEO of KB Home (one of the largest US homebuilders with 13,472 single-family residences delivered in 2021) stated that while lumber prices have gone up, the company has been able to pass it on to the consumer with higher prices for homes. “And there is still far more demand than there is supply,” he said.

One side effect of increased wood products prices is that job sites are reporting higher levels of materials theft.

Project manager Jason Georgevich of Scenic City Development told a Chattanooga, Tennessee television station that thieves had made off with over US$4,000 worth of lumber at a construction project.

“In today’s climate, in the building industry, this stuff is like gold, so this thing hurts,” lamented Mr Georgevich.

Police in several states have warned contractors not to purchase wood building materials through Craigslist as it may be stolen.


Sales and profits in 2021 for three publicly-traded OSB producers (who collectively have 53% of North American production in 2021) easily exceeded the record set in 2020.

Pre-pandemic 2019 was a reasonably typical year with a weighted average sales return of US$231/m3 and mean EBITDA margin of 6%.

Average sales return in 2021 was more than three times higher at US$712/m3 and mean EBITDA margin was more than 10 times higher at 62%.

Cash costs per unit of production increased in 2021 after remaining flat in 2020 compared to 2019. Key costs have started to rise because of the price rise in crude oil derivatives for making adhesives, increasing competition for wood fibre and higher wages to attract production workers.

Transportation also remains expensive and scarce.

The unprecedented profitability in 2020 and 2021 allowed public wood products companies to pay out dividends, repurchase shares, make acquisitions, and invest in increasing production.

Louisiana Pacific repurchased US$1.30bn worth of shares, West Fraser repurchased US$527m plus C$1bn of shares and Weyerhaeuser intends to return 80% of cash flow to investors including through a “supplemental dividend” of US$1.45 per share.

The two consecutive years of record profitability and insatiable demand also saw producers announce a collective US$1bn worth of greenfield expansion projects.

West Fraser’s purchase of Norbord became final on February 1, 2021, with total acquisition consideration (equity value plus assumed debt) of about US$3.5bn.

West Fraser became the world’s largest volume OSB producer, with mills in the US, eastern Canada, Belgium and Scotland.

Two previously announced re-openings of closed OSB capacity took place during 2021 by the company.

During May, West Fraser reopened the closed Chambord, Quebec mill that Norbord had acquired from Louisiana Pacific in 2016.

During December, Louisiana Pacific reopened its Fort St John, British Columbia location. Both mills intend to ramp up to full capacity within 18-24 months of their openings.

Established OSB producers announced three additional mill openings during 2021. Huber will develop a greenfield facility in Cohasset, Minnesota; Roy O Martin is building a second greenfield mill in Corrigan, Texas; and West Fraser intends to reopen a factory (that was previously operated by Georgia-Pacific) in Allendale, South Carolina.

It is estimated that these mills likely will not begin production before the end of 2023.

Entrepreneurs also are exploring the potential of manufacturing OSB. One Sky Forest Products has received a timber allocation from the Saskatchewan provincial government and plans to build an OSB mill adjacent to an existing pulp mill in Prince Albert.

Godfrey Forest Products intends to build a mill around Flagstaff, Arizona if the US Forest Service proceeds with its Four Forest Restoration Initiative to reduce wildfire danger by thinning national forests.


While 2022 is off to a good start, 2023 and 2024 are more uncertain.

After 1.6 million housing starts for 2021, the APA – The Engineered Wood Association composite housing start forecast for the US is 1.62 million in 2022 and 1.58 million in 2023. APA also predicts Canadian housing starts of 270,000 in 2022 and 275,000 in 2023.

OSB prices will eventually fall as construction activity ebbs and wood panel supply builds, but this decline may occur after 2022.

OSB prices steadily rose through the first two months of 2022, with February 2022 prices almost equalling record June 2021 prices.

Construction activity remains high, in spite of winter weather across North America, and wood panel supply is constrained. Assuming continued high prices, 2022 also will be lucrative for OSB makers.

Reputable economists agree the historically low interest rates have ended, as the Federal Reserve central bank attempts to curb inflation by raising the benchmark Fed Funds interbank lending rate.

Wells Fargo currently forecasts a 1.25% raise in 2022 and Goldman Sachs a 1.75% increase.

Both institutions predict additional increases in 2023.

Freddie Mac reports that mortgage interest rates are already going up.

Higher mortgage payments will eventually lower housing affordability.

With the strong US dollar and vigorous construction activity, conditions remain ripe for OSB imports from Europe.

However, the US tightened economic sanctions on Belarus and Russia in February 2022. While forest products are not specifically prohibited, banking restrictions make it unlikely important OSB exporters in those countries can send product this year.

The pattern of the forest products industry has been a boom-and-bust cycle in which lack of capacity discipline eventually causes high prices to crash.

With reduced construction activity and more OSB supply from new sources, OSB prices will fall from current high levels. Even so, this inevitable price decline may not occur until 2023 or 2024.