July 2014-Market Update

By Paul Rogers,

The anticipation of a steady order stream, brought on with the onset of fair weather, may have gotten the better part of the lumber market as the rush experienced in late Spring surprisingly petered out. In response, mills and distributors scrambled to find buyers for their stock, before it depreciated in any significant way. Wary of a price collapse due to a spate of now-available wood (caused by the final release of railcar inventory and mill over-production), the less-than-realized volume of business drove wholesalers to aggressively push their inventory at a discount and, in some cases, offer terms as an added incentive. Despite it being the time of the year when the market typically winds down for the summer months (what those in the trade call the “June Swoon”), it was expected that this year would be hopping right through July and into August as the long-deferred and much anticipated Spring rush never seemed to arrive. Instead, the forecasted 1.1 million housing starts predicted by analysts for 2014 has been trimmed back and the industry now has seemingly come to terms with the disappointment and is setting its sights on Fall business. Dealers have also become steadfast in buying only for their immediate needs, although speculation from wholesalers maintains that they are under-stocked and it’s at a great risk, what with trucking being a never-ending headache. Even though lumber pricing has come off in recent weeks (and may drop a little more), it is expected to flatten and firm in July: the mill’s annual shutdowns will aid in paring down lumber reserves and the general sentiment is that dealers are under-bought and will need wood to stretch them through the summer months as there is still moderate building activity going on.

Last Fall, a survey of lumber dealers indicated that 2014 would be a year of moderate growth and it appears that we are on track. Although Mother Nature was made the scapegoat for months of inactivity, economic woes (unemployment levels, student loan debt, and the rising cost of living) are evidently more to blame for hampering the building and remodeling trades. Despite these detriments, we have been in a growth pattern and, for that, we can certainly be grateful. We can also be grateful for the opportunity to have the ways and means to take pause, reflect on where we are in this new economy, and make adjustments to become more efficient cogs of the building machine. With this in mind, we can say that we are not the same company we were six months ago: we are better. We’ve added intelligent, ambitious and hardworking employees who are eager to be a contributing part of our team. We are also undergoing a revamping of our Hyannis lumber yard to make us more efficient and to provide better storage for our products (including a leading-edge storage warehouse system which has got to been seen to be appreciated). Ultimately, these changes will allow faster pick-up and order picking as our products will be neatly organized and clearly labeled. In addition, they will have greater protection from the elements. These are just two examples of many improvements that we have recently made, but they stand out in particular as they are proof that we are serious about our business and our service level to you, our customer. With this in mind, we thank you for your business for the first half of 2014, and hope that we can exceed your expectations for not only the rest of 2014, but always!


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