October 2015 – Market Update

by Paul Rogers

“Over-produced” was the theme of the lumber market for September, as pricing continued to soften as mills and traders struggled to find customers willing to take lumber off of their hands. This, plus a financial market correction, had its effect on pricing although the pace of sales was seemingly curbed due to a lack of qualified labor, not a lack of jobs. Citing declining exports to the Asian market (which, in turn, made for ample supply for the domestic market) and a less-than-realized U.S. outtake, pricing sagged to the extent that some mills chose to curtail production or to shut down entirely, an action not seen since the recessionary years.  As of print, the market is flat and most in the supply chain are trying to move their inventory at the same time that they are curbing their purchasing. We can anticipate this pattern to continue for the upcoming weeks or, at least, until an equilibrium is realized between supply and demand that will spark more buying.

As we have seen in the past, this very cyclical market will likely respond with a snap, as there is good strength in the construction market and it will only be a matter of (presumably short) time that supply tightens and demand rebounds. The strategy is to “buy what you need” and, with the historical patterns that we have seen for Fall, there will likely be plenty of “need” in coming weeks that will prop pricing back up again. Juxtaposing the lumber market is the Western Red Cedar market, which is currently in a state of turmoil. The extensive wild fires in recent months that the poor people on the West Coast have had to endure has created a significant interruption in supply, to an industry that was already struggling to obtain raw material. Currently, shortages are being seen on all Western Red Cedar products that we sell (shingles, boards and siding). Although the glut in the lumber market is softening prices, we have been experiencing just the opposite in red cedar and dealers have been kept quite busy trying to cover their needs and turn to alternatives, where they can. Talk is that we won’t see much relief on Western Red Cedar for a while, at least not until the mills can get back into the forests and harvest what can be salvaged or what was spared. There are many moving parts involved in obtaining the products that we buy and sell, what with many of them coming from areas of the world that are affected by far greater crises than we can hope (and pray) we would ever encounter here. Be it Ipe from South America, Bodyguard Treated Pine trim boards from New Zealand, Euro Spruce from Russia or Western Red Cedar from Vancouver, B.C., the factors that affect price and availability are numerous. In the end, however, it is the relationships that we develop with our suppliers that help us remain a successful supplier who, ultimately, fights for the fine, competitively priced products that we commit to supplying to you. On the whole, our relationships keep us flush with inventory and the strategies we implement in the face of potential shortages better enable us to service you. In the spirit of this, we can assure you that we do all that we can to protect your interests by protecting ours, to keep us out in the forefront of quality, service and price.

We have been blessed with an excellent customer base that we are proud to service, and are often taken aback at the portfolios of the work performed by such talented, creative and professional tradespeople. The luxury of living and working in such a beautiful place such as Cape Cod and the Islands is that we are able to enjoy the fine work alongside our customers, and we thank you for allowing us to be part of your project experience. As always, please consult your Shepley sales person should you have any questions or concerns, and thank you for your business!

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