August20

Lumber Update – September 2018

By Paul Rogers

After an almost ten-week downward slide, the market caught in August as the pace of business was strong and buyers were looking to cover their needs for September. Although there was much consternation as to when the market would turn (as there seemed to be ample inventory throughout the supply chain), news of prospective business and potential supply interruptions instigated buyers to open their order books as, collectively, it was felt that a bottom had been reached.  The growing threat of wildfires in British Columbia ratcheted up when the B.C. government announced a 14 day state of emergency on August 15th. In addition, threats of lumber mill strikes at several big Canadian producers added confidence that prices were not likely to fall any longer. As of print, the correction of previous weeks had officially ended, alleviating some of the bleeding for those who were still burning off the stock they had ordered at the peak of pricing. Universally, the industry is of the opinion that it will be a highly active fall and, with threats of wildfires, strikes and the never-ceasing trucking shortage, prices are expected to be buoyed by a strong demand and supply interruptions. The actual outtake remains to be seen, but we anticipate that prices will be firm for September and modestly rebound as we move closer to October.

For many lumber traders and buyers who have been in this industry since before the Great Recession, the climate of the market over the past few years has been very hard to deal with: historical data seems useless, as the landscape of the industry as a whole has changed traditional methods of prediction. From the technology side, the introduction of sophisticated software and high-speed production equipment that utilize optimizers has given mills the opportunity to become much more nimble in terms of their yield and production levels. From the logistical side, it’s safe to say that no one really appreciated how bad it would become to find drivers and rigs, or how limited their time on the road would become due to DOT regulations. Factor in a burgeoning housing market and extreme labor shortage, it’s no wonder that the old crystal ball is no longer crystal-clear. In today’s world of globalization and instant communication, the market can turn on a dime and it often does. With such great volatility, the best service that a supplier can offer is to stabilize, to the best of their ability, the quality, availability and prices of the stock that they sell. With the extreme double-digit price spikes and deflations that we have seen this year, it becomes even more important to align yourself with a lumber supplier who works hard to protect your budget by clipping the extreme peaks out of pricing, without compromising quality or supply. We know that you have budgets that you are committed to, which is why we won’t shorten the expiration dates on our quotes during periods of high volatility. What we are able to do is to communicate very clearly throughout our company regarding current and upcoming business, as this gives us the best strategy towards protecting your needs, in terms of purchasing and securing stock. In addition, we establish very solid, trusting relationships with our suppliers who know how passionate we are in providing the best service we can to our customers. Oftentimes, they help us out with cost and supply burdens, which we think is only fair: we rely upon each other for our livelihoods, and must work together to quell the pain in times of turmoil. In the end, our goal is for our problems not to become yours: although we are living in a “new normal” where market conditions change almost daily, our commitment to you, our customer, is to protect you against adverse conditions.

The lumber business has long been stated to be a “relationship” business and it’s very true: we know that we need to earn your business and intend to do so by establishing trust; and that trust is earned through mutual respect, caring and concern. We care about your business and respect your profession: you can count on us to help you move toward achieving success. Please remember to reach out to your Shepley Sales Team for any help with your past, present or future projects. On behalf of all of us, thank you for your business!

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