May21

Lumber Update – June 2018

by Paul Rogers, 

If there were any reservations a month ago as to whether or not it was a good time to buy lumber, all doubt was quickly dispelled as the market exploded, extending lead times and bringing prices up to yet another unprecedented level. The spike in business didn’t really come as a surprise, but the general thought was that supply and transportation (both of which had been extremely troublesome in recent months), would be alleviated as the weather improved and that pricing would be firm but likely flat. However, the increase in demand just further exacerbated a still-recovering supply chain and led us to yet another rally. Many veteran traders confessed that they had not lived through such a resilient or bullish market and were dumb-founded as to where the market could possibly go from here, but fell back upon the adage that what goes up, must come down. In the meantime, dealers couldn’t get their wood fast enough and so all efforts turned to filling and expediting orders, and there was little (if any) opportunity for haggling as simply obtaining wood became a hardship. As we transition into late spring/early summer, there is enough momentum in the market to keep prices at record levels, and with little relief in sight. This is a critical time for our industry, as demand has currently outstripped supply and truck shortages have caused extreme delays. Please consult your Shepley sales team for advice on your project, as the volatility that we are currently experiencing with supply and pricing can have a profound effect on your project if not monitored closely.

There is no doubt that we are all feeling the pain of the rising costs of building materials and no one can recall a time when the negative effects of political, environmental, logistical and economic factors, all occurring in quick succession, have had such a negative impact on lumber. The impact that the Softwood Lumber Act duties, forest fires, hurricanes, trucking and rail shortages (and more) have had on lumber availability are profound, and all at the very same time that home-building is booming. This seems to be a cruel joke for those of us who have waited since the Great Recession for the return of the “good old days”, but we are clearly in a new normal. The high demand and subsequent shortages of raw goods and labor is pushing the limits on all of our budgets. However, if there is one thing that we can’t lose sight of, it is that what goes up, must come down: this business is cyclical, and there is no argument that we are riding on a high. The obvious concern would be the tipping point in which we start seeing a plateau and/or a decline as, at some point, buyers will have to step to the sidelines due to affordability. As no one in this industry wants to see that happen, it is all of our responsibilities to mitigate costs and to focus our attention on what we can control. One of the best ways that we can work together in controlling expenses is by improving our communication, as by knowing what you need and when you need it can help ensure that we are getting you the best prices and materials in time for your job. Another thing to consider is to utilize our Sales and Estimating Department’s expertise in budget take-offs. They can ensure that you are getting all that you need for your job so that you don’t run short (and therefore over-budget), but can also help to minimize waste. In addition, they are experts at guiding you to the best product for the application. Their thoroughness will save you time and money, and help keep you on budget.

Although the market is cyclical, our service and commitment to you, our customer, is not: you have our promise that we will never waiver from providing you with the best service and quality products available. We are extremely grateful for your business hope to earn it each and every day. Know that we are in an excellent position to service you with all that you have come to expect from being a Shepley customer. Thank you for your business!

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