Plywood prices have been growing due to a rebound in construction activity and rising lumber prices
Los Angeles, CA (PRWEB) November 27, 2014
Plywood has a buyer power score of 2.6 out of 5, which indicates somewhat unfavorable negotiating conditions for buyers. Buyer negotiation power has been declining the three years to 2014. Plywood price movements are dependent on residential and nonresidential construction expenditure levels. “Although prices fell during the recession due to sharp spending reductions from these sectors, they have shown subsequent strong growth as rising construction activity in the economy fueled demand for plywood,” according to IBISWorld business research analyst Jesse Chiang.
In addition, the economic recovery has led to greater demand for lumber, which is the major input in plywood production. This trend has generated large increases in input costs for suppliers, further stimulating price growth to the detriment of buyers both in the three years to 2014 and the three years to 2017. The rising input costs have also led to limited pricing flexibility for suppliers because the average vendor already operates with a low profit margin. As a result, minimal opportunities for major price discounts or cost savings have negatively affected buyer negotiating power.
High volatility in input costs and downstream industry expenditures have also negatively impacted buyer power. The economic recovery has led to significant spikes in construction activity. “As a result, plywood prices have been volatile, which makes inventory planning more difficult for buyers and harms their negotiating power,” Chiang says. Buyers are forced to engage in contracts to reduce the risk of drastically escalating costs.
Nonetheless, buyers gain some power because of significant market competition and the commoditization of market products. The wide availability of suppliers in a market with low specialization has forced operators to engage in significant competition, which has compelled suppliers to temper price growth to attract buyers. Some of the largest suppliers in the market include Weyerhaeuser Company, Georgia-Pacific Corporation and Louisiana-Pacific Corporation. In addition, the commoditized nature of plywood allows buyers to select from a wide array of suppliers capable of satisfying specific buyer requirements. As such, buyers can choose a supplier based on numerous other factors such as level of service. For more information, visit IBISWorld’s Plywood procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of plywood, which is a building product made from pressed layers of wood sheets laid with opposing grains. Plywood is commonly used in construction because of its strength and stability. It is typically purchased through lumberyards and wholesalers, but it can also be procured through retail outlets.
Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics
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