The continuing lack of available products from the mills overshadowed activity in the market yesterday, keeping orders to the mills lite. Traders were more dependent on any leftover owned positions or the reloads to solicit new business. Strong demand kept buyers on the prowl for any viable product in the market, often finding little of value. Traders did have some success selling items from the mills that were for extended shipments. Clients were more receptive for these options knowing they could lock in reasonably priced material and not get it until early November.
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Sounds like supply is steadily decreasing. Meanwhile, the consensus at the Building Component Manufacturers Conference is that business is booming!
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The rollercoaster ride of prices and supply/demand dynamics is classic system dynamics response when a stable system is subject to sudden change. It takes a long time for the system to come back into equilibrium. We are seeing it now in coal and natural gas prices as well.
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Scarcity creates value and degrades demand for superior quality grading standards switching people from a “picky” to a “grab whatever is available” mentality. I hope this does not influence builder’s choices a and judgement calls in construction down the line.
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We saw this in the last market run-up when builders were forces to use lower grade products. It will be interesting to see if it happens again…