December21

January 2018 – Lumber Update

by Paul Rogers,

The lumber market calmed down in December but, despite the retreat in sales, prices remained relatively firm. The pervasive cycle that went on in recent months of urgent demand/slow delivery had finally broken and, consequently, holes in inventories at the wholesale and retail levels had finally been filled. However, as buying for 2017 ceased, ordering stock for arrival in early 2018 kept prices firm. As what has become an annual occurrence, retailers curbed buying unless it was absolutely necessary, in an effort to pare down their own inventory for end-of-year tax purposes. This strategy set the stage for keeping prices firm as, immediately after the New Year, stock is usually in high demand to replenish thinned inventories. Compounding the situation is that mills typically shut down for a week or two to celebrate the holidays and retool, and the lack of production further bolsters pricing. Another factor is the nagging Canadian duty issue, which got the final vote of approval by the International Trade Commission on December 7th. The countervailing duty (CVD), which had gone on hiatus in October until this final ruling by the ITC, is now effective again on all shipments at a 14.19% rate.  The anti-dumping duty (AD), which did not go on hiatus, is levied at a 6.04% rate. Collectively, the duties are set at a 20.23% rate, but it’s a little toothless as lumber mills have been collecting on it all along, well in advance of any final rulings and as a method of preparing for payment of these penalties. The Canadians are appealing the duties to NAFTA and the World Trade Organization panels, but the litigation will likely go on for many months (and some say years). Looking at the closer term, trade professionals are clinging to the premise that the market will remain “volatile”, but pricing will be predicated upon actual demand for the next few months: potential winter weather interruptions and current on-hand supplies will dictate market pricing. For January, we are not anticipating any significant price fluctuations, and expect a flat (albeit inflated) market.

From gym memberships to mattresses, it can be really difficult to discern what you are actually buying. Industry lingo, appearances and questionable upsells can easily dupe a consumer, so much relies upon your own research, your trust of the sales person and word of mouth. Although we don’t sell gym memberships or mattresses, we do sell some complicated products that require careful explanation (and you can easily trust the advice of our sales people). In terms of lumber and plywood, we can rely upon governing agencies to keep mills accountable for their products. One of the guidelines that is used in our industry to define the product is a grade stamp, which should be present on every piece of lumber and plywood that we purchase and sell. Grade stamps indicate important information about the product (such as the grade, wood specie and type of treatment), all of which are critical factors that are taken into account when ensuring that every piece is appropriate for its end use. The grade stamp will incorporate the following: the grading association (such as the National Lumber Grade Authority Rule (NLGA) or the Western Wood Products Association (WWPA)), the species of lumber (most commonly, S-P-F for spruce-pine-fir), the mill identification name or number, the grade itself (such as No. 1 or No.2) and the treatment, such as KD (kiln dried) and/or HT (heat treated) or GRN (green). Other stamps that may be present could be “premium” (which isn’t an actual grade, but a product that is selected for a better appearance), S-Dry (“surface dry”, less than 19% moisture content), S-Grn (“surface green”, greater than 19% moisture content) or the mill’s own logo. Lumber is bought in covered units that typically have the mill’s logos on them but, once the cover is removed, we have to rely upon the grade stamp. If you have any comments (pro or con) or concerns with the product, be sure to take a photo of the grade stamp and send it to us: we’ll gladly trace it back to the mill of origin (based upon the information that is supplied with the grade stamp) and follow up with you on the matter. 

With the first month of the New Year upon us, we are very excited at the opportunities we have in front of us for 2018. We are always working very hard behind the scenes to strengthen and improve our systems, and have grown quite a lot in the past year. Please know that we are diligently working to best prepare ourselves for incoming business, and are anxious to do whatever we can to help you with your project. As always, please keep in close contact with your lumber sales person should you have any questions or concerns. Thank you for your business!

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