Universal Supply Co.
 General

April Market Update

Nov 12, 2013

It appears we have finally turned the corner and are actually having spring. Many areas are still dealing with wet ground and standing water, but it appears to be getting a little better every day. The bull market we have seen in the commodity market has shown signs of leveling off. It will be interesting to see how prices are affected by the warmer weather and the uptick in demand. As always, please continue to direct any questions to your WBS salesperson. As part of our spring kick-off we are pleased to announce our “Hit the Deck” promotion. You can earn a $150 Visa gift card by purchasing $2000 of TREX decking and railing May 1 through June 30. You can earn the gift card by a single purchase of product or by a series of smaller purchases. Please remember that only TREX product counts towards the $2000. Treated lumber, fasteners and hangers do not count. Please ask your WBS salesperson for details.

Great Recession Created Leaner Industry

Random Lengths’ annual compensation survey further illustrates that the historic market downturn of the past several years had a significant impact on the entire lumber industry. From mills to retail locations, everyone has had to do more with less sales and staff. In response to the recession’s reduced sales volumes—which were sometimes reduced as much as 50% compared to prior years—Internet transactions, leaner workforces, reduced benefits, more diversified product mixes and an increased focus on credit monitoring are now commonplace at mills, throughout the distribution channel and at retail outlets. In 2012 45% of transactions at mills were done over the Internet, up from slightly more than 25% in 2005.

While there is no question that the Great Recession has been a difficult period, there are upsides as well. As a whole, the industry has learned to live with less and is better prepared to manage costs as the market improves, suggesting a stronger and more nimble industry as we move forward.

Strong Structural Panel Output

In North America, first quarter structural panel production was at its highest level since the third quarter of 2008. According to the APA—the Engineered Wood Association—at 7.2 billion square feet, output was up 4.9% from the first quarter of 2012 and up 4.2% from the fourth quarter. Specifically, gains were greatest in OSB, which was up 8.5% from a year earlier with prices staying near double year-earlier levels. Plywood also increased 4.7% in this period.

APA Outlook for 2013: Steady Growth

Despite some lingering vulnerabilities to tax increases and government spending cuts, slow and steady growth is predicted for residential construction through 2013. Driven by improved employment numbers, increasing consumer confidence, pent up demand and firming home prices, the APA estimates housing starts to reach just short of 1 million units this year. This means the elevated demand for supplies that drove 2012 production increases will continue and in most cases accelerate in 2013. In fact, this month already, the cost of framing materials for a typical two-story home in May is up 24.14% over this month last year.