January 2016 – Market Update

by Paul Rogers,

Retail sales were strong in December, keeping the wholesale level active. Dealers and distributors alike worked feverishly and carefully to replenish stock that most had purposely run down, as year-end inventory counts, a potential tax penalty (the IRS’s Uniform Capitalization Rules, Sec. 263, based upon year-end inventory values) and a fear of winter’s slap were enough motivation for most to buy hand-to-mouth. Further adding to many buyers’ tensions was the concern of the mills’ annual scheduled shut downs (which normally occur for two weeks over the holidays), which can quickly curb available stock. Nonetheless, the fair weather was advantageous for building and many contractors worked double time to get their projects weather tight, before the real winter weather settled in. The outtake wasn’t great enough to put a huge demand on the market, so deals and offers were common (most with caveats attached, such as 2015 delivery or straight tallies), and the under-bought market set its sights on taking delivery into the early part of January. Those who bought in December for January delivery should enjoy favorable pricing, but the first part of the New Year typically sees a pop in pricing due to the influx of everyone wanting to replenish at full tilt, so those who waited will pay the price (literally and figuratively). To what extent that occurs will be dependent upon how well the weather cooperates, but we can anticipate a moderate bump up in pricing followed by a flattening toward the end of the month.

In consideration of the start of the New Year, there have been reports in trade publications of what to anticipate for sales in 2016. On the whole, they’ve been quite favorable as the general consensus is that 2016 will be a good year, with moderate growth over 2015. Slow and steady growth is the best news that we could anticipate, as we all know that extremes have a tendency to bring about unfavorable consequences. On that topic, we can be grateful that lumber pricing (and the market in general) has, of late, remained stable. As compared to so many other products in our industry, lumber hasn’t experienced any great, permanent increases in pricing or shortages in recent years and remains a relatively stable category. Of course, many events can (and have had) quick and significant impacts on lumber pricing but it’s key to know that Shepley, as your partner in business, is dedicated to protecting your interests and we work quickly and diligently to prevent anything that may conclude with an unfavorable outcome.

We are excited for the opportunities we stand to face in 2016, and hope that we have earned your business by qualifying ourselves as the best material supply partner in our territory. We appreciate you being a customer of ours and look forward to being a part of your success this year. As always, please feel free to consult your Shepley sales person for any needs you may have. On behalf of all of us at Shepley, we wish you a Happy, Healthy and Blessed New Year, and sincerely thank you for your business.

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