April 2014 – Market Update

Spring is here, but the woes brought to us by this past winter are having a lasting effect as the interruptions that the extreme cold and heavy snowfall have caused from forest to jobsite continue to plague us. Most are reporting that, once favorable weather conditions return, there will be plenty of business to be had. However, the chief concern is that pent up demand is likely to have a backlash that will spur a pop in business, leading to temporary price spikes and shortages. March business surged and paused along with the weather, so there is a strong anticipation that there will be a Spring rally in early April that will be a lively one. In the meantime, we are playing the wait and see game….

To meet Spring demand, the lumber industry will have some catching up to do as the snow and cold has caused an inability to access timber stands, created railcar backlogs and led to deeper-than-normal frost lines which have limited the ability to pour foundations in many regions. Logistics is grabbing the most attention as weather conditions have limited railcars in speed and length for an extended time now and, it’s rumored that they won’t be back to 100% capacity until May. As a result, transportation means were diverted to the already overtaxed trucking industry, causing even greater delays of goods for wholesalers and dealers. As mentioned in last month’s article, we normally see a price retraction this time of year, but that hasn’t really happened to any extent this year due to these circumstances. Despite the limited outtake from dealer and reload yards, supplies have been tightening and so prices have remained relatively stable (with the exception of a few cracks here and there) and the general attitude has been bullish. Without any significant reductions in price, few dealers or traders took positions against the market. Conversely (and from the mill perspective), the anticipation that once the weather breaks that there will be a higher dollar yield on timbers led several mills to hold on to their inventories (one large Eastern Quebec producer even pulled off the market entirely, in anticipation of this turn around).

In many respects, one can only prepare so much for a spike in business (especially knowing how cyclical the lumber industry is) and the best practice in an uncertain market is to practice moderation (as what goes up will undoubtedly come down). Our mission is to smooth out the market fluctuations so that you can rely upon our price quotes with confidence. We feel that we will be experiencing a busy Spring and have prepared our best for it by having a well-stocked yard with quality and price-competitive material. We are ready to service your needs, so please be sure to contact your Shepley sales person should you have any questions or concerns. Thank you for your business!

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