Northwestern EXPO

“Tune in!” shouted Mike Foley, Certified Speaking Professional and founder of Clarity Central, keynote speaker yesterday at the Northwestern Building Products EXPO in Bloomington, Minnesota. That’s how Mike suggests we differentiate ourselves in a world where everyone is distracted, overwhelmed, overworked – and no one is present. “Tune in to your kid, your boss, your partner, your customer,” said Mike, while noting the attention span of a millennial (8 seconds) is shorter than the attention span of a goldfish (9 seconds).

In his breakfast presentation, Mike expanded on his four keys to “letting go” and “losing the junk in our trunk”: grow your comfort zone, find your balance, manage your mind, lighten your load. It was a fast-paced workshop. One memorable round table exercise quickly revealed how growth can only occur outside the comfort zone, in “the stress zone”. How to manage your mind? “Become a fine connoisseur of the present moment! Where do you live? In the past, present, or future? How does this affect your life? How would it change if you lived moment to moment?” His segment on the importance of credibility and balance – “responding skillfully” – was perhaps most relevant to many attendees engaged in lumber trading.

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Market Minute

While Dakeryn has been an associate member of the Northwestern Lumber Association for a number of years, this was our first time attending and exhibiting at the Northwestern Building Products EXPO. Held at the DoubleTree by Hilton Hotel in Bloomington, MN, the show was tight and upbeat. Virtually every key US distributor in the region was represented. Most retail dealers in attendance acknowledged that business was ticking along – unseasonably steady for January. While the show’s slogan was A World of Opportunities, the majority of Midwest lumber dealers we spoke with openly expressed apprehension over looming cross-border trade constraints. Most-asked question: “What’s going to happen?”

Lumber Super Bowl

This year, Dakeryn has decided against buying TV ad time for the Super Bowl. The decision is based on analysis of how to most effectively nurture the relationships with our valued customers and supplying mills. It could be that the $5 million-plus cost for a 30-second ad played into the decision as well. But that hasn’t deterred 84 Lumber. According to this report at Adweek, 84 Lumber will make its Super Bowl advertising debut just before halftime of this year’s event – the only brand to purchase more than a minute of airtime for a single spot.

We’re told the purpose of the ad is to launch a year-long campaign focused on recruitment, targeting men aged 20 to 29. According to the report, 84 Lumber includes some 250 locations across 30 states and made Forbes’ 2016 list of “Largest Private Companies in America.” It is also one of the biggest such businesses run by a woman; Hardy Magerko was chosen by her father at the age of 27 to lead the company he founded in 1956.

Our industry is going through a period of extreme disruption. And I’ve always preferred to be the one doing the disrupting, rather than the one being disrupted. But to do that, we need to hire and train people differently. We need to cast a wider net, and to let the world know that 84 Lumber is a place for people who don’t always fit nicely into a box.
– Maggie Magerko

Softwood Talk, or not.

According to weekend reports, the US International Trade Commission determined Friday there is indication of injury from imports of softwood lumber products from Canada. Perhaps the market is sensing that a resolution will ultimately be found in a negotiated, managed trade agreement, but probably not before duties are in place. By May? In the face of the looming threat of retroactive duties, cross-border shipments continue largely unabated as mills and distributors weigh decisions impacting trading activity into February.

Meanwhile, Random Lengths reports word of “sizable inventories in US reloads”. No doubt we’ll soon find out if this is the case. If history is any guide, building mountains of inventory in advance of duties/export taxes/quota is anything but a speculative “no-brainer”. We’ve all seen the movie. Still, dealer demand for lumber in the United States, albeit hand-to-mouth – has been surprisingly buoyant so far this winter. Certainly some items are in abundant supply – on both sides of the border. But in this uncertain environment, over time, it seems any items in tight supply today would become even scarcer when Canadian shipments are eventually constrained.

Meanwhile, the US Department of Commerce investigations continue; the countervailing duty determination is expected February 20, while the preliminary antidumping duty determination is expected May 4.

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Memorial South Park, Vancouver – New Year’s Day

 

~Musical Refreshment~

17 Questions for 2017

Here are 17 questions that Harderblog will be watching in 2017, in search of answers:

  1. (See Question #1 from last year)
  2. Will Trump really build a wall and have Mexico pay for it?
  3. Will the softwood lumber dispute have found a satisfactory resolution?
  4. Will anticipated countervailing duties on Canadian softwood lumber shipments to the US be applied retroactively?
  5. Will Trump really pull the US out of the Paris Climate Change Agreement?
  6. In the face of “Fake News” and misinformation that poses distraction to sound decision formulation on many fronts, will lumber dealers lean more heavily than ever on trusted wholesale relationships to interpret market changes?
  7. Will Trump really pull the US out of the Iran Nuclear Deal?
  8. Will there be 100 million consumers shopping in augmented reality (AR) by the end of 2017?
  9. Will a measure of sanity return to the Vancouver housing market?
  10. Will the record number of homeless people identified in the City of Vancouver’s 2016 Homeless Count be broken again in 2017?
  11. Will tensions with China escalate over trade and Taiwan?
  12. In light of increased hacking of connected products, will questions surrounding cyber security have become a make-or-break issue by the end of 2017?
  13. Is there any indication that by the end of 2017 a future of driverless transport trucks could promise enhanced just-in-time lumber deliveries?
  14. Will anybody care if the Vancouver Canucks fail to make the Stanley Cup Playoffs?
  15. Will BC Premier Christy Clark’s Liberal Party secure a fifth term in May?
  16. Will the global crises surrounding issues of displaced peoples/refugees have eased anywhere?
  17. Will general predictions forecasting a “bumpy ride” for 2017 come to fruition?

 

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Ringing the Bells

The ringing of bells at this time of year signals news on different fronts – as in heralding the Advent Season – or, marking the close of another trading day. Both bring news and welcome respite.

In recent months we’ve probably all felt like midwives to an age that’s giving birth to the post-industrial society. In experiencing the tightening grip of hands, there is a sense that someone should be calling for a doctor in the house.

We are mindful that in reporting on this atmosphere we are helping to shape it. Although acknowledging risks peculiar to the time, there is a sense of opportunity and responsibility to share in a vision for the future. It includes looking beyond early vibrations of the historic free trade agreement with the US. That picture anticipates greater stability in the 90’s – where some economic units will learn to survive without growth at the same time as others seek economies of scale cost advantages through consolidation. It suggests our function will expand to interpreting forces beyond supply and demand. Attitudes will reflect sensitivity to shaping quality of life for future generations. Already a new awareness of the fragile nature of international interdependence is evident amid the unpredictability of financial markets and lumber markets globally.

Into this reality the essence of Christmas comes with timeliness this year. It seeks the good in humanity while promising hope and restoration for the soul. It celebrates childhood joys and speaks of innocence that would believe in “Peace on earth and Goodwill to all”.

– Ernie Harder, Dec. 1987

 

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Vancouver (Dec. 9, 2016)

Q&A – Final Five for 2016

Answers to the five remaining questions from the Harderblog Top Ten Questions for 2016:

6. Is oil in the $20’s an inevitable reality?
No. In early January, crude prices had plunged to $34 in the face of oversupply, a level not seen since the early 2000s. But that would turn out to be the low for the year. Most recently, a curtailment deal between OPEC and rival producers was expected to further tighten supply in midst of growing demand.

7. How low can the loonie go?
The low of the year was January 20, when one Canadian Dollar was worth 0.6854 US Dollar.

8. Where will Conifex stock be priced in 12 months?
See TSE:CFF. Conifex Timber Inc. has risen over 30% since December 31, 2015.

9. Is this the year 3-D printers stationed in Fraser Lake begin mass production of 2×10-14’s and 16’s?
While there is little evidence of 3-D printers mass producing 2×10-14’s & 16’s at Fraser Lake this year, there is evidence that technological developments in production of new wood products are making a profound impact on many fronts. The opportunity to spend an afternoon touring the 18-storey mass timber hybrid structure pictured below at UBC was one of the highlights of the year. See High on Wood.

10. Will the Chicago Mercantile Exchange implement circuit-breakers to tame volatility in the lumber futures market?
According to reports that regularly publish updates on lumber futures activity, it’s generally acknowledged that what happens in the lumber market is a microcosm for the entire commodities asset class. However the factors behind volatile changes are felt much more acutely in lumber, than, say, crude oil, because the market/volume is so small. This week we posed Question #10 to Stinson Dean, Broker & Risk Manager at Tall Tree Lumber Company, who confirms volume/open interest is especially low in lumber right now. “Below 4,000 open contracts is very low. Lumber used to have 10,000 in open interest back in 2012-13. When there are limited participants, there are limited sell orders and buy orders. When bullish news is announced, there aren’t enough sellers in the market to absorb an influx of buyers and we get locked limit-up. Buyers are forced to go higher and higher to find sellers.” He adds, “Random Lengths noted that 2014 was one of the least volatile years on record. That’s been followed by two very volatile years. The difference between 2014 and the two most recent years is non-commercial speculator participation. 2014 was a trendless year, 2015 was a bear trend, and 2016 was a bull trend. Funds, in particular, love trends. ‘The trend is your friend’. So, when that group recognizes a trend, they start to pile on. And that starts a chain reaction.” According to Stinson, the funds are out of the market right now; it’s anticipated they will step back in long in the new year.

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Q&A – 2016 Edition

Of the Top Ten Questions for 2016 posed at Harderblog one year ago, the first five have been satisfactorily answered for us:

1. Will the Trump presidential campaign have staying power beyond March?
See November election results.

2. Will the US make history by electing a woman as president for the first time?
No.

3. Will BC softwood log exports to Mainland China eclipse BC softwood lumber exports?
For the answer to this question, we turned to Russ Taylor, President, WOOD MARKETS. “Interesting question, but lumber export volumes to China have always been much higher than logs. The gap is narrowing, but lumber export volumes are still much higher.” Russ confirms BC softwood exports to China through October as follows: Logs = 3.0 million m3 vs 2.43 million m3 in 2015 (+23%); Lumber = 5.0 million m3 vs 5.49 million m3 in 2015 (-9%). Of course, log exports even south of the border continue to be a contentious issue.

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4. Will a new Softwood Lumber Agreement be reached between Canada and the United States before the standstill period ends October 13?
No. By early October, we were told talks had entered the days of magical thinking. And while the US Lumber Coalition’s submission of their petition to the US Department of Commerce was predictable, the November 25 timing caught markets by surprise. At least one forest analyst suggested “it put a whole new spin on Black Friday.”

5. Is this the year virtual reality goes mainstream?
As the cost of development falls, we’re told virtual reality is in fact beginning to move into the mainstream. However, it’s reported that most console headsets are still “device-exclusive”. And flaws in these controllers actually tempered demand in 2016, leading Tech Digest to ask will virtual reality finally become mainstream in 2017?