Lumber Update – January 2021 | Shepley Wood Products
News & Articles

Lumber Update – January 2021

Much to the dismay of everyone but the mills, the lumber market rallied back in December as a surge in business and a dearth of available material and trucks sent buyers back to the well, scrambling to cover both immediate and near-term needs. As the demand further crimped lead times, distributors were quickly cleaned out of their stock as dealers worked in earnest to pull together enough immediately available wood to cover growing holes in their inventories, as it was a rare occurrence for their mill-order directs to arrive on time. It’s the same old scenario (and with the usual tension that accompanies it), although this time around an old ghost came back on the scene, the Softwood Lumber Duties which, since January of 2018 (and well in advance of the formal rulings) had been imposed upon Canadian lumber mills and paid for through the cost of their goods. A two-part duty consisting of the Countervailing Duty (“CVD”, assessed at 14.19%) and Anti-Dumping Duty (“AD”, assessed at 6.04%), the collective percentage was dropped from 20.23% to 8.99% as of December 1st, 2021. This only occurred after many months of litigation as, in February of 2020, the U.S. Department of Commerce announced that they agreed with a North Atlantic Free Trade Agreement (NAFTA) ruling from September 2019 that stated that the U.S. had used flawed calculations in determining the 20.23% duty put upon the Canadian mills. In any event, one would hope and expect to see an immediate 11.24% reduction in the cost of lumber now that the Canadians had gotten a reprieve, but it was not to be as marketplace demand during this latest rally really muddied the waters. 2020 ended as one would have expected it to, in that an exhausting year gave us no relief right up to the end as prices once again escalated and, even worse, to the point that a well-deserved discount had little to no effect. Business is strong, and many speculate that jobs that were shelved during the last rally came back into play once the market corrected. Others surmise that the market was “under-bought” due to sliding prices and, with the impending end-of-year holidays, mill-shutdowns, lack of adequate trucking and growing lead times, retailers flooded the market with an “all-in” approach of ordering all they could get their hands on. And finally, blame has been set upon co-ops and distributors who, after seeing pricings flattening, did what the retailers did and consumed all available production so that they wouldn’t get caught empty-handed like they did last summer. It’s likely a factor of all of the above, and exacerbated by the inflammatory proclamations of those selling wood that “it’s only going to get worse”.

As we now put our focus on to a new month and a new year, optimism is very high that business will continue to be strong right on through the spring, especially with a pending Covid-19 vaccine. Weather seems to be the biggest wildcard, as interruptions to rail and trucking could have a major impact to the current market state which is, at this time, considered volatile and anticipated to remain that way through the rest of the month. Conversely, seasonal winter weather could also take the steam out of demand and cause a retraction. In the meantime, please consult your Shepley sales person for assistance with your upcoming jobs but know that we are well-positioned with competitively priced material and ready for business.

One year ago, if our industry had known with any certainty that an imminent pandemic and quarantine was coming in two months, one can only imagine what kind of fresh hell the reaction would have created. As it was, the response from most in the supply chain upon March 2020’s announcement of the Covid-19 outbreak was to reel in commitments, cancel orders, cut hours or furlough good help and hunker down for what appeared to be a dark and uncertain time that had no foreseeable end. And then, at the time that we were in quarantine mode and scrambling to buy our tissue paper, food reserves and disinfecting needs, who would have thought that in mere weeks the cost of lumber would skyrocket in response to a housing and home improvement boom that we never saw the likes of? We’re not out of the woods yet with the pandemic, so we must learn to anticipate and adapt to the current cycle of swift changes in order to achieve the outcomes we want. As this relates to lumber and building materials in general, we’ve had to deal with and overcome some unthinkable circumstances over the past year that ran the gamut with material costs, availability, and quality control, and certainly there is more to come. As of print, there are numerous supply issues with products, most notably cedar and asphalt shingles, sheetrock, insulation, and MDF products. Little can be done about procuring your immediate needs if there is a shortage and your order is just going in, so it’s best to plan as far ahead as you can by conveying your upcoming needs to your salesperson. For instance, with spring just a few short months away, it’s not too early to take a look at your decking and roofing needs and get the lists over to your salesperson. Even if the stock isn’t currently available, it’s best to get the order in and on the waiting list so that, by the time you do need it, you have a better chance of it being ready for you. The best outcomes that we’ve experienced have been from those who planned far ahead and communicated their needs to us, in anticipation of issues instead of in response to them. Benjamin Franklin said “by failing to prepare, you are preparing to fail” and we want none of that. Please turn to us and we promise that we’ll do all that we can to aid in your success.

Friedrich Nietzsche said, “that which does not kill us makes us stronger.” Most of us could agree that we are all stronger from the tough experiences we’ve had in 2020, as they have given us the opportunity find new ways in dealing with adversity and hopefully have taught us to change attitudes and behavior for the better. In addition, they help us appreciate the good times so much more. With that, let’s welcome 2021 with the knowledge that we’re all a little stronger this year and better prepared for what’s to come. Thank you for your business.