A run-up in prices of a widely used and once-cheap plywood substitute threatens to keep homebuilding costs elevated even as the lumber market retreats in North America.

Oriented strand board, or OSB, the bonded wood-chip sheets commonly used as sheathing for walls, floors and roofs in new-home construction, is at record highs, in part due to a winter storm in Texas that reduced supplies of resin needed to make the product.

Rebounding demand and rock-bottom borrowing rates surprised the wood industry last year, with construction surging early in the pandemic at a time when lumber and OSB inventories were low. While there are signs that lumber mills are catching up, the combination of a still-strong homebuilding market and tight supplies has lifted prices for some OSB products more than sevenfold in the past year, and is causing delivery delays.

In Western Canada, OSB that is seven-sixteenths of an inch thick is at $1,700 per 1,000 square feet this week, matching last week's all-time high, according to Fastmarkets Random Lengths, a closely watched trade magazine. That's up from $1,660 four weeks ago and the $240 the product fetched a year ago.

On top of this, builders are facing a two- to four-week delay on orders being shipped from mills.

In the Southeast U.S., mills are selling the same type of OSB at a record $1,160 per 1,000 square feet, a level first reached last week. That's up from $1,115 a month ago and a four-fold increase from $288 a year prior. Orders are taking about two weeks to be shipped from mills, Random Lengths data show.

The resilient rally comes after U.S. lumber futures peaked at $1,733.50 per 1,000 board feet in May, more than quadrupling in price within a year. They have since dropped at a steeper rate than they rose, tumbling roughly 50% over the past six weeks.

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