Lumber prices off slightly despite a rash of Chinese purchases

Keta Kosman
1 Comment|December 13, 2013

After a two-week minor lull in buying, with requisite weaker prices, a flurry of sales mid-week slowed the usual seasonal price drop of North American lumber and panel prices, writes Keta Kosman in Madison’s Lumber Reporter http://madisonsreport.com
 
Traders reported good sales volumes even as they adjusted their lists down slightly. It seems reluctant customers found themselves with seriously depleted inventories this week. The normal game of ordering just enough to get through the year, without holding 2013 wood in January, is currently afoot.
 
In some very unusual symmetry, benchmark dimension lumber commodity Western Spruce-Pine-Fir KD 2x4 #2&Btr ended the week at the exact same level as one year ago. That commodity is now selling at US$362 mfbm, an $8, or 2.1 per cent, drop from last week and a $22, or 5.7 per cent, decrease from one month ago.
 
US customers looked only to fill holes in their inventory, while sales within Canada dropped significantly as freezing winter weather hit large parts of the continent. Most players were pleasantly surprised with a rash of ordering out of China in advance of the massive Spring Festival holiday at the end of January in that country.
 
Overall, trading was brisk enough to keep prices relatively stable. The slight drops experienced this week were simply a correction downward after especially good solid wood sales through autumn.
 
At this time last year, prices were on an inexorable rise which did not abate until the end of February. That strength proved unsustainable, as prices lost a lot of ground into late summer. Now that buying volumes are stabilizing, industry players hope for less extreme price volatility going forward.

 

That said, lumber futures popped Friday in possible indication of how this year will end of sawmills. Futures closed up between $8.30 and almost $10 on all four upcoming contracts (Jan, March, May, July), albeit on rather small volumes.
 
Transportation issues caused conniptions with producers, who spent inordinate amounts of time on the phone with Canadian Pacific Railway Ltd. (TSX: T.CP, Stock Forum) and Canadian National Railway (TSX: T.CNR, Stock Forum) desperately trying to locate their missing rail cars. The usual excuses of extreme weather were slightly more acceptable this week as freezing temperatures actually did cause problems for rail carriers.
 
An absolutely unacceptable number of log truck accidents, seven in total, were reported this week on North American roads. Three log truck crashes were reported in central BC, while there were four in various parts of the US. Two of those involved fatalities. About half these accidents were not caused by the log truck driver, however the other half seem to indicate overloaded -- or improperly loaded -- trucks, or equipment failures. Operators are reminded that even in a recovering marketplace there is no excuse for sacrificing safety in view of increased revenue or efficiency.
 
The endlessly complicated situation with British Columbia's labour discussions continued this week.

United Steelworkers member overwhelmingly rejected the tentative agreement reach with Canfor Corp.'s (TSX: T.CFP, Stock Forum) in that province's northern interior. Word of continued negotiations later in the week provided some hope that labour issues may eventually get settled without any kind of interruption at BC sawmills.
 
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Keta Kosman
Publisher
Madison's Lumber Reporter
604 984-6838
www.madisonsreport.com
 

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IndustryNewby
Again the overseas market playing a huge rule in commodity pricing
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December 16, 2013
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