August27

September 2013 – Market Update

Although August lumber sales were relatively flat for the industry, pricing held fast as supplies were thin at the mill and reload levels. As mills came back on-line and once again began producing, pricing relaxed a bit (but only after orders were filled, enabling a build-up of surplus stock). As people within the industry get back from their summer breaks and focus on Fall business, sales are expected to increase and potentially prop up pricing. If business doesn’t materialize as expected, pricing will likely soften but it could be short-lived: since Spring, there have been numerous reports from all areas of the industry that quoting for Fall business was very strong. If quoted jobs come to fruition, this Fall may be very busy indeed. However, in the meantime, order files are out 2-3 weeks and pricing is in check with the yearly average.

From all perspectives in the building industry, these are still tough times to make a profit. If obtaining quality wood comes with exorbitantly high prices, dealers will look for ways to shave their expenses in order to remain competitive. One method is to turn to alternative products that are similar in make-up, but of a lower quality (a tactic that we avoid). As anyone with the unfortunate experience of knowing can tell you, “lo barato sale caro”, which is a Spanish saying for “the cheap comes out expensive”. When it comes to maintaining our standards with lumber (or any building material, for that matter), we strive for consistency and frequently rely upon the feedback of our receivers, order pickers, drivers and, most especially, you our customer. Although no news can be good news, bad news comes with its benefits as well:  we take the issues that come up very seriously and address them immediately, with the hopes of stemming a future occurrence of the same.  As a result, we have come to purchase our lumber according to the favored grades and species from respected and reputable mills and buy only SPF (Spruce-Pine-Fir), #2 & Better stock as it is the benchmark in quality for our region. Our stock is kiln-dried (KD) and not green (KD products are much more stable and not prone to mildew or insect activity) and we will not buy grades that are less than #2 and Better, such as #3 and Utility. We also avoid the lesser quality aspects of the species of White Fir and Hem-Fir, which have a propensity for splitting, checking, warping and are prone to mold growth. When lumber supplies tighten and prices escalate, these lesser grade alternatives to SPF have a tendency to become more common as they can be more readily available at a significant price concession, which is entirely reflective of the grade and specie. Although the lower pricing can be attractive, the waste factor is the largest detriment as what you save on the front-end will be easily lost on the back-end in terms of cull.

We can ensure that we stand behind our products and work to the best of our ability to provide you with a quality product at a competitive price. As the market responds to demand, we anticipate that we will be able to fulfill your needs with the quality products you’ve come to expect from us. As Fall draws near, we can anticipate pricing to hold fast and potentially climb as demand increases, but know that we have strategically bought and positioned ourselves from wild market swings, which should ensure pricing stability to you, our customer. Thank you for your business and, as always, please contact your Shepley sales person should have any questions or concerns.

 

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