December 2013 – Market Update

By Paul Rogers

On the heels of the end of the government shut down, the lumber market broke open last month, catching many suppliers off guard. Over the course of just a few weeks, inventory in the supply chain became either very tight or depleted entirely and, as a result, the rush that followed to get stock in and fast led to immediate extended lead times and a run up in pricing.  Further exacerbating the situation was the announcement of two major Western producers, Canfor and West Fraser, that they were each closing sawmills in Western Canada as a result of an on-going infestation of the Mountain Pine Beetle. This news had a profound effect on Eastern supplies as, with the already low inventories, demand became even greater. Desired tallies and delivery dates suffered, leading to a lot of fill-in buying from local reloads. The impending holiday shut downs, a worsening trucking availability (as Christmas trees fetch a premium over lumber deliveries), a harsh winter forecast and a general uncertainty of how much steam is truly behind the current housing market made for a motley of purchasing strategies. As of print, prices have strengthened and are expected to remain firm right through the end of the year. If order files are not cleared prior to winter shut downs, we may see levels climb higher (providing that weather conditions remain conducive for building).

The announcements by Canfor and West Fraser that they are closing their mills due to the influence of the Mountain Pine Beetle were greeted with much surprise: not because it was a happenstance event but rather because of disbelief that the day had finally come when thousands of acres of trees, completely killed off by this 5 millimeter pest, could not be harvested. Foresters have long been aware of the damages that this beetle has caused but, on our end, we have seen it present itself through the appearance and condition of some 2×10 and 2×12 SPF Western framing stock. Occasionally, we will get boards that present the blue stain (which does not affect the wood’s strength properties or harbor any ill health risks to humans) or will have excessive cracking that occurs when dead wood is kiln-dried along with the green wood (over-drying the wood). In the forest, the Mountain Pine beetle will lay its eggs underneath the tree bark, and subsequently introduce the blue stain fungus into the sapwood (which prevents the tree from repelling and killing the attacking beetles with pitch flow). The combination of the blue stain fungus and the boring of the beetle will eventually interrupt the nutrient transfer and the tree will die. Although the tree can retain its commercial value anywhere from eight to twelve years after it has perished, the effects of the devastation are great. A tipping point has been reached where the dead wood has expired, and this is the concern for future supplies: although attempted control of the infestation has been underway for years, the reality is that there will be less available as more dead wood expires, presenting new challenges for the lumber market. Conversely, there is talk of expansion from other mills that may help supplement production and there is room for growth in the North American industry as a whole.

There are seemingly endless issues that affect the price, quality and availability of today’s lumber, but we know that the key to being consistent is to align with suppliers who have a passion for their product and customer satisfaction and, perhaps more importantly, are there for you in the event that an issue arises. We strive to be that kind of supply-partner to you and want to ensure you that we are well-stocked with quality building materials that are competitively priced.

Should you have any questions or concerns regarding your upcoming projects, please be sure to contact your Shepley lumber sales person.

Finally, thank you for your past, present and future business, and have a healthy, safe and enjoyable holiday season!

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