Sandy Will Stretch Lumber Supply Chain

Sandy has brought about more destruction and havoc along the East Coast than perhaps any other storm in the past 100 years, and that is straining not only all levels of government to help those in need, but also the supply chains that provide the items necessary to do so. This article by Derrick Penner of the Vancouver Sun looks at how lumber companies could soon find their supply chains overburdened with new construction and repair orders. While orders for lumber typically slow down during the late fall/winter timeframe, the devastation of Hurricane Sandy has resulted in a marked upswing in new orders and requests for lumber. Rebuilding could mean both a boon and a test for lumber companies ““ those who are able to supply lumber the fastest will be the ones who see the most financial growth. Even so, the price of lumber has jumped as a direct result already: The price for lumber futures spiked $10 “” the maximum allowed in a single day “” and reached 19-month highs on the Chicago Mercantile Exchange. November prices hit $318 US per thousand board feet of spruce, pine or fir two-by-fours, an industry benchmark measure. The price on January futures reached $331. These higher profits are likely to stick around even as reconstruction is well under way, as the strain on supply chains for lumber will still exist, making it likely that getting lumber will remain a challenge, hence the price. Demand for lumber will remain high for several months at least, according to the article, and that could result in a shortage of logs for processing and shipment.

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