July 2015 – Market Update

By Paul Rogers,
June brought a welcome resurgence to the lumber market, quickly alleviating the gloomy tone that had gripped the industry for months. Although pricing was not greatly affected, the outtake was brisk and, alarmingly, some supplies of common dimensions (such as 2×10) were wiped out on the East Coast for a period of time. In addition, filling mixed tallies from mills and distributors proved to be a challenge as spot outages were prevalent. Timing played a major role into these situations: because of the extended period of flagging sales (and prior to this pop in business), several high-profile mills (Fraser Papers, Canfor, Tolko, and Interfor) employed curtailments and/or complete shut downs of their operating mills. In general, mills had been holding back production for some time, in an effort to prop up pricing by choking supply. This was a necessary strategy, as the flagging market and bulging inventories were setting up these operations to run at a loss. This spur in business also woke buyers up to the fact that normal summer mill shut downs were only weeks away and that their efforts to run their inventory thin could be putting them in a poor situation for both their inventory levels and price points. The trucking shortage (as has been the situation for several years now), was still a major hindrance in getting any loads fast, so a little over-buying and filling in from distribution could be attributed to “insurance stock”. Overall, the general consensus is that the current pace of business isn’t likely to sustain for long and that the market will not be sliding in the near future again as this latest round of buying has brought supply and demand back into equilibrium. With mill shut downs on the way, we can anticipate a modest climb in pricing over the next 30-45 days, but nothing too significant as demand is expected to taper off.

In wrapping up the first half of 2015, lumber suppliers will unanimously agree that it has not been a great year for sales. In addition, most will also likely agree that the predictions seen for the first half of 2015 were far off from the mark, and that even the “lumber sages” didn’t get this one right. To their defense, weather was the biggest negative factor to the market this year, and we can rarely get an accurate daily forecast. Nonetheless, predictions go on and the “forecast du jour” for the rest of the year is that it will be a polar opposite in pricing and supply to the first half, in that lost ground will be made up and supply will be very thin, bolstering prices back up and beyond where they were at the start of the year. Others are feeling much less optimistic, in that there will be little opportunity to regain lost ground and it will be a “status quo” market, being flat and with little drama. The fact remains that there are many variables that tie into the housing market, and any one of them (weather, economic growth, interest rates, supply and consumer confidence, amongst others), has enough of an impact to change the predicted outcome. The key, in a good or bad market, is to employ a modicum of restraint and try not to outsmart a market that cannot be predicted with certainty.

The “buy what you need” strategy is what we practice, and it helps us to turn our inventory more frequently, allowing a competitive average cost so that we are never over or under the market to any extreme. Conversely, we also do seize opportunities when we are confident that it’s to our best interest. Of course, what we “need” is an interpretive factor, but our lines of communication are very clear between our departments and we work collectively and closely to anticipate your needs, so that we can better determine our needs. Looking ahead through the rest of our summer, we aren’t likely to experience any dramatic swings in either sales or pricing but are currently well poised to provide competitive, quality lumber for whatever needs you may have. In addition, we are optimistic about the rest of the year and feel that, whatever the market does, we are up to the challenge to be your #1 building materials supplier.

Thank you for your business!

Shepformation... The Shepley Newletter

  • Civic Rent: Beer for a Good Cause

    Where to Buy Civic Rent is a limited edition lager

    Read More
  • Virtual Andersen Seminars 2021

    Our Andersen dinner seminars are going virtual! Jo

    Read More
  • Getting Ready for ShepPay

    By Andrea Van Inwegen Are you ready to view and pa

    Read More

Newsletter Sign Up

Central Location:

Hyannis Office

216 Thornton Drive, Hyannis, MA 02601
Phone: 508-862-6200
Toll-free: 800-227-7969
Facsimile: 508-862-6012

Shepley Showcase

75 Ben Franklin Way, Hyannis, MA 02601
Phone: 508-862-6228
Toll-free: 877-909-7227
Facsimile: 508-862-6047

Nantucket Office

6 Lovers Lane, Nantucket, MA 02554
Phone: 508-325-0400
Facsimile: 508-325-0359

Wellfleet Office

2238 Route 6, Wellfleet, MA 02667
Phone: 508-349-2280
Facsimile: 508-349-3078