Prices Reach New Levels for Lumber : Construction: Investors speculate on the billions to be spent repairing the 85,000 homes damaged by Hurricane Andrew. But costs may already be peaking.

SEATTLE — Hurricane Andrew has spiked cash lumber prices to record levels and sent futures soaring as investors speculate on the billions of dollars that will be spent to repair an estimated 85,000 homes in Florida and Louisiana.

But analysts and market watchers see signs that the unseasonal price rise may already be peaking.

“Certainly there are plenty of people out there in the market that are already guessing as to where the downside will be seen after this spike up,” said John Anderson, publisher of Random Lengths newsletter in Eugene, Ore.

Within days of the hurricane, the weekly random lengths plywood composite index soared to $345 per 1,000 board feet on Aug. 28, compared to $298 the week before.

Oriented strand board, a plywood substitute known as OSB, rose to $270 from $241 over the same week.

But prices for the basic structural panels used in building had already climbed sharply earlier in the summer in anticipation of better construction business after several years of a slump for home builders and building suppliers.

OSB prices had surged 24% to $241 per thousand board feet in the weeks prior to Aug. 21, two days before Andrew hit.

And even before Andrew, plywood was 29% above a year ago.

Anderson said both indexes have hit their highest levels ever, as plywood jumped above the prior record of $308 after Hurricane Hugo hit South Carolina in 1989.

“We reported record prices, particularly in plywood,” Anderson said.

Unlike Hugo, Andrew hit as prices were rising and “the market was going along at a brisk pace,” he said.

“Something like Andrew affects plywood immediately because even before the hurricane hit, but while it’s developing out in the ocean and people are predicting where it’s going to hit, people begin boarding up windows and so forth,” he said.

But by Tuesday, lumber futures prices appeared to have hit their peak. September lumber futures, which had risen their daily limit of $5 to $244.20 per thousand board feet on the Chicago Mercantile Exchange on Monday, skidded $1.80 in Wednesday trading to $243.60 after a modest rise on Tuesday.

The contract had risen by 17%, or $36, since the storm devastated parts of southern Florida and Louisiana.

As occurred with Hurricane Hugo, some industry analysts predict that prices will drift lower in coming weeks as the usual winter seasonal weakness in construction approaches. However, prices are likely to remain higher than a year ago, analysts said.

“This is a temporary spike due to Andrew,” said Larry Katz, an industry analyst at Pacific Crest Securities Corp. “I think the price of all the products will start to drop.”