March22

Lumber Update – April 2018

by Paul Rogers,

Once again, another month of gains were realized as the lumber market continued along its marathon run. With new precedents having being set for high prices and lead times, a general malaise has overcome buyers and traders who have been constantly dealing with wince-worthy replacement costs, late shipments and outages that can’t be promptly filled.  Stronger than anticipated demand kept mills’ order files full (commonly extending production out three or more weeks), but shipment was the real problem: rail car and trucking problems were so severe, that it was common for deliveries to be several weeks late. For most, being able to accommodate 6 weeks for an order to arrive that used to take only 2 to 3 weeks was not an option, so inventories were commonly depleted both at the retail and wholesale levels and substitutions were frequently sought. This reactive buying cycle exacerbates the price and supply situation as it doesn’t provide the market an opportunity to cool down. As of print, there are signs that the market is levelling off as production and shipments are finally catching up. However, any optimism that there will be a retraction has been dashed at least for the near future, as it is “building season” and demand remains strong: we anticipate prices to remain firm through April and in to May.

We bring it up often, but it bears repeating as it’s become more prevalent due to current market conditions: when interruption to supply occurs, the market always reacts in kind by inflating pricing and/or by offering cheaper alternatives. For instance, in other parts of the country, Southern Yellow Pine framing is surging as the availability and price of their preferred species has become problematic. Closer to home, we often see off-Cape dealers quoting species of framing that are rarely well-received on this side of the canal; Cape Cod contractors, as a whole, demand higher-quality products than many off-Cape contractors do. For example, we are a high-quality SPF (Spruce-Pine-Fir) market whereas lesser-quality alternatives such as HF (Hemlock-Fir, which is commonly used off-Cape), will not sell well here. Alternatives such as HF usually come with price concessions, but you get what you pay for: SPF is much easier to work with than HF, as it is not nearly as prone to checking, cupping, twisting and splitting. As with any product, it’s critical to be certain that you are quoting apples to apples, as apples to oranges cannot possibly allow you to make the educated decision that you need to make for your purchase. The best deals don’t forfeit quality, so don’t be led by the price tag but rather by the item itself: a poor quality product will seldom make up for a bargain price. To regulate the quality of the lumber we sell, we only buy from SPF mills that do not pull out their finest pieces (known as “Premium”). These “NPS” mills (No Prior Select) will leave their Premium pieces in as part of their #2&BTR production so units will not, essentially, be cherry-picked. In addition, we buy 100% Premium products from the mills that will pull it, as we know that it gains the best yield. In every case, we shop and buy better quality products because we recognize the value beyond just the price. Furthermore, despite all of the issues currently surrounding production and transportation, we strategize our purchasing so that we are not reactionary but have the quality material you need when you need it.

Much like the military, our industry thrives on acronyms (which can be very hard to interpret if you lack the familiarity of what they represent). Wood species, in particular, can be a world of difference apart in price, appearance and grade with just the slightest change, addition or omission of an acronym. Be wary when you see multiple acronyms on one line item, as you may be quoted an apple or an orange, to be decided at your supplier’s discretion. Finally, please don’t forget that our professional sales staff is at your disposal to help you with your project, so don’t hesitate to solicit them when needed. Thank you for your business! 

 

 

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