November 2015 – Market Update

by Paul Rogers

A relatively lackluster market kept most buyers on the sidelines, covering for immediate needs and not taking any positions in a market that bumped along at a ho-hum pace. Traders maintained that these market conditions would be short-lived and strongly suggested to buy while the pricing was still low, for investment sake. To some extent, this was good advice as mills did throttle back production in an attempt to prop the market back up. However, a pattern of buying “this week’s special” to see it discounted the following week affected buyers’ confidence that their prudent strategy was effective, so much of the advice was relegated to hype. Further tying into the hesitation of buying was the expiration of the Softwood Lumber Agreement (SLA) on October 12th which eliminated a 15% tax to Canadians for the export of their wood to the U.S. The chief threat here was “a wall of wood from the North” that would flood the market, especially as some mills were reportedly holding back their inventory in order to capitalize on this opportunity. However, business was strong enough to keep any significant declines at bay and earlier curtailments by many mills kept a cap on production. Inevitably, the market will rebound to a more profitable level, as it has been operating at the break-even point for too long. For November, we can anticipate the market to be flat to up, as many are reporting that there is still plenty of work in the pipeline and inventories are drawing down.

It’s hard to believe that we are already down to the final two months of 2015 and that winter will soon be upon us. Especially for the upcoming months, protecting material from the elements is a very important step to the process of buying, selling and installing building materials, and one that we invest heavily upon. It doesn’t take much exposure to sun, moisture or snow to negatively affect the product which, in turn, can have a profound effect on the outcome of your project. We take special care here in our yard to mitigate that damage however, in the field, you have a much greater challenge. Our Shippers routinely package our products in lumber covers, shrink wrap or dunnage sheets to help make sure that the material you are receiving is well-protected from the elements, and it’s critical that this same care is taken on the job site as well. Keeping the products flat in a dry and protected area on the job site is ideal. Barring that, recovering open units and giving extra care to the handling will go a long way in keeping your material in good condition. With this in mind, please be cognizant of the intrinsic value of the protective material we supply you on your orders, and try to use it to your best advantage by keeping your products covered and protected in the field, especially if any of them may be set for return. An ounce of prevention is worth a pound of cure, especially when it comes to credit returns!

We are very grateful to have been blessed with a wonderful stretch of business, and have enjoyed being your supplier for the numerous projects that are going on across our region. Weather and market conditions aside, we do our best to provide you with quality products with exceptional service, and appreciate every opportunity to do so. Thank you for your business!

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