August25

September 2014 – Market Update

After several weeks of steady increases (brought about by mill closures and a busier-than-normal season), prices have flattened on most SPF products and are expected to remain “sideways” as mills work through their order files. Plywood, on the other hand, saw a spike in prices in August that was attributed to a major fire that destroyed the Swanson Group Mfg.’s plant in Springfield, OR. Swanson, a major producer of CDX plywood, lost equipment and inventory but, thankfully, no one was killed or injured. The initial effect that this had on the plywood market was a sudden spike in pricing ($50-80msq) as buyers scrambled to cover their needs for August and beyond. Availability was affected as well but, with the sudden increase, many territories diverted their business to OSB. As we head into October, we can anticipate that pricing on both framing and plywood will potentially increase, based upon the predictions of those in the trades that it will be a busy fall. In the meantime, framing has stabilized and plywood is seeking a supply-and-demand equilibrium.

If there is one thing that we can bank on in this industry, it’s that timing is everything. There are many causes (economic, natural disasters, regional growth, current trends, etc.) that will impact our supply (and, subsequently, pricing) but what typically further exacerbates the situation is the emotional over-buying that can occur when fear takes over the decision making. The latest event with the Swanson Plywood fire is a good example of a potential market collapse in the making, as the urgent message to buy up available plywood while it’s still available “and before the price spikes” inevitably spurs buyers to take on more than they really need, for fear that they’ll run out. What often happens is that this overbuying creates a glut at the retail level, so mills and reloads drop pricing because of the ebb in demand and dealers are caught with higher than market value material. Sometimes, the timing can work out if business draws enough of the material out of inventory to mitigate margin erosion, but that isn’t a common occurrence. Avoiding the knee-jerk reactions to market conditions will help to quell the excitement that can lead to a run-and-collapse and it is best done by gathering the facts, viewing the situation as a whole and proceeding with the decision making with emotions in check.

Our role in this is to protect you from the extreme peaks and valleys that can occur with the market. In cases where it makes sense to buy in to the market at length in order to protect pricing, we will do so, but we do it with factual information and controlled emotion. Our methods are proven: we rely heavily upon historical sales and communication between departments and it has been a successful practice for us. We are on good, solid ground with our inventory and pricing levels and are looking forward to a busy fall. Please be sure to consider us for your upcoming projects, and don’t hesitate to reach out to your Shepley sales person for any assistance that we may offer you with your jobs.

Thank you for your business!

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