Lumber Market Update - May 2021 | Shepley Wood Products
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Lumber Market Update - May 2021

The record rally continues, with lumber and plywood pricing climbing to new heights. Despite the soaring prices, demand continues to outpace supply and shortages in just about every building material category have created an abundance of delays for contractors. With the exception of a few brief pauses, prices have been slowly escalating into record territory for more than six months now, begging the question of when it will end. The answer is when demand tapers off, but no one sees an end coming any time soon. With prices that defy logic, one has to think that we’d already be at a breaking point, but the public demand for houses and home improvement continues to takes precedence over expense. In most cases, it’s become more important to get the material than how much it’s selling for. On the supply side, all in that channel are under an extreme strain of meeting the current demand and are systematically posting price increases that they state are in direct relation to their ever-increasing costs for labor, raw goods and transportation. Factor in a few freak events such as ice storms in Texas (that crippled chemical plants that produce products such as resin for panels or insulation) or a blocked Suez Canal (which stranded hundreds of ships with thousands of containers full of goods for over a week) and a bad situation becomes even worse. Not that the world has come to a halt (as products are still being produced across the board), but lead times have grown exponentially as producers scramble to fulfill orders. The abrupt changes to normal lead times has interrupted the plans of many of us who have become accustomed to getting what we want when we want it, and any lack of planning prior to this point may be met with a negative result. For May, we anticipate that pricing will remain propped up and likely climb as building demand continues to forge ahead. While it is this active, we have to consider the market very volatile, due to high demand and shortages. We urge you to consult your Shepley sales person if you have any questions or concerns about your current or upcoming jobs, as it is truly a critical time for planning.

As inconvenient and frustrating as it has been to have to deal with backorders and outages, the steady stream of price increases has brought many of us to rage about market conditions. Unfortunately, they have been coming much more frequently and at higher percentages, and it’s been commonplace to get long letters from heads of companies who are trying to explain and justify why they are going up. There is no doubt about it: we are in unprecedented times for the demand of building materials and it looks like, even if there is a retraction in the near future, it won’t bring us back to pre-Covid levels. The letters all touch upon the same content. The industry, as a whole, cannot currently meet demand, is sorely lacking in qualified labor, raw goods are scarce and/or hard to obtain, there is a major transportation deficit, and consequences of unforeseen disasters are driving costs (and lead times) up. The extreme demand is the pressure point for our pricing situation, and so much of it is caused by a lack of planning. This situation didn’t happen overnight, but it did catch many off guard as the initial stream of orders turned out to be a tsunami, and predicated upon old expectations of lead times. It’s also fluid, apt to change at any time but, until the buying stops, the prices will be what they are (but met with extreme resistance from us nonetheless) and adjustments will need to be made to account for the longer lead times. Although there may be limitations as to what can be done under these circumstances, there is one thing that can help alleviate the pain and that is to plan ahead and communicate your needs to your suppliers as soon as possible. Timing is critical, particularly with regard to upcoming price increases and growing lead times, so taking action to get your needs secured well in advance of when you need them is a surefire strategy for keeping your job going.

Although we, too, are at the mercy of market conditions, we do all that we can to stop or reduce price increases, maintain a 30 day quote window and ensure that you have the quality products at competitive prices that you need, when you need them. Communication is more important than ever, so please let us know how we can help you with your project. Thank you for your business!