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Transportation issues continue to dog lumber sector

Keta Kosman
0 Comments|April 21, 2014

Producers and customers of North American lumber and panels products flailed in confusion this week as the market struggled to find stability following massive transportation disruptions for most of 2014, writes Keta Kosman in Madison’s Lumber Reporter
Prices ticked down further over last’s weeks drops as solid wood inventories in the field and sawmill production remained stable over March levels.
It was mostly sentiment which lowered prices. Baseless rumours of a supposed potential spike in Canadian lumber exports to the US had buyers in that country cautious of building inventories. Inquiry to sawmills was brisk, if downbeat.

Sellers reported frequent calls but little commitment until the end of each day as customers hoped prices would push down even further. Booking actual orders was akin to pulling teeth, said some traders.
A boost in both contract and spot orders from China this week at  WSPF mills in Canada had lumber manufacturers there wondering where this supposed “wall of wood” could possibly come from.

For lumber suppliers in Canada, managing ongoing rail car supply problems alone will be enough to mitigate the claimed potential glut in volume.
Southern Yellow Pine 2x4 R/L #2&Btr prices lost $5 on the east side and $10 in the west over last week, to both settle at US$365 mfbm. Benchmark dimension lumber price, Western Spruce-Pine-Fir 2x4 R/L #2&Btr, meanwhile, sunk another $9 after last week’s $12 drop, to end the week at US$335 mfbm. This is a $33, or 9 per cent, loss over that price one month ago of $368, and a $73 drop, or 18 per cent, over last year’s $408.
For its part, benchmark panel product Oriented Strand Board 7/16” Ontario gained C$15 to return to month-ago levels of C$270. Panel product price movement often leads that of dimension lumber when heading into increased buying, as in this spring.
A waffling lumber futures board did little to provide confidence in near-term lumber price increases, closing the week Thursday at a $7 discount to one week ago on the May contract. A mid-week pop in trading, mostly short-covering, boosted prices on the Chicago Mercantile Exchange.
In company news this week, there is Canadian National Railway Co. (TSX: T.CNR, Stock Forum), out of Montreal, QC, this week in an interview with Bloomberg saying it’s alleviating a shortage of rail capacity for lumber shipments in British Columbia. The largest Canadian railroad’s ability to move wood products is gradually catching up with demand following extreme winter conditions in North America this year, Emily Hamer, a Vancouver-based CN spokesperson, said Thursday.
Elsewhere, Standard & Poor's Ratings Services said Thursday it revised its rating outlook on Boise, ID-based Boise Cascade Co. (NYSE: BCC, Stock Forum) to positive from stable and affirmed its 'B+' corporate credit rating on the company.
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Keta Kosman
Madison's Lumber Reporter
604 984-6838

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