What is going on with wood prices right now

[Spectric]

If everything goes mad then inflation will rise and eventually it will all come down like a stack of cards, savers will then gain whilst the rest just pay higher mortgages. It is the cycle of our economy, boom and bust.

 

[Phil Pascoe]

That's been abolished.

 

[sometimewoodworker]

I don’t agree ,putting up prices overnight by a minimum of 38% on stock all ready held & quoted on is by definition profiteering.
The only excuse given this time is “the industry“ want to kill demand so for every £100,000 held in stock my supplier is at least £38,000 richer for doing nothing more, yes he will pay more for new stock but that has nothing to do with the old stock.

Whether you agree or not, if you like it or not is irrelevant. It is the way the system functions and the way it has to function.

The seller has to sell at a price that will enable him to make a business profit and replace the items that have been sold. The price he paid for the existing stock has virtually no need to influence the prices he needs to charge. If he can’t replace stock to a level that meets demand he will go out of business.
In your opinion that makes him a profiteer.
My opinion of your ability to understand the way business works or think through when it is explained is impolite to say the least.

scenario an item wholesales for 50 and retails for 100, shop keeps 10 in stock. There is a sudden shortage and the wholesale jumps to 800 so retail would be around 1,400~1,600.
By your logic the dealer should sell existing stock at 100 (a 1,300~1,500 loss) he would then have to borrow about 7,000 just to replace stock as there is existing demand.
Then should the supply return to previous levels how is he going to sell any items at a normal profit when he paid 800 but they are back to selling at 100.

the answer is he can’t and makes a huge loss. Goes out of business

However if his prices follow the market when the prices are rising he makes a “paper” profit. & when they fall he makes a “paper” loss. Staying in business.

 

[Doug B]

Whether you agree or not, if you like it or not is irrelevant. It is the way the system functions and the way it has to function.

The seller has to sell at a price that will enable him to make a business profit and replace the items that have been sold. The price he paid for the existing stock has virtually no need to influence the prices he needs to charge. If he can’t replace stock to a level that meets demand he will go out of business.
In your opinion that makes him a profiteer.
My opinion of your ability to understand the way business works or think through when it is explained is impolite to say the least.

scenario an item wholesales for 50 and retails for 100, shop keeps 10 in stock. There is a sudden shortage and the wholesale jumps to 800 so retail would be around 1,400~1,600.
By your logic the dealer should sell existing stock at 100 (a 1,300~1,500 loss) he would then have to borrow about 7,000 just to replace stock as there is existing demand.
Then should the supply return to previous levels how is he going to sell any items at a normal profit when he paid 800 but they are back to selling at 100.

the answer is he can’t and makes a huge loss. Goes out of business

However if his prices follow the market when the prices are rising he makes a “paper” profit. & when they fall he makes a “paper” loss. Staying in business.

#77

 

[Phil Pascoe]

The seller has to sell at a price that will enable him to make a business profit and replace the items that have been sold. The price he paid for the existing stock has virtually no need to influence the prices he needs to charge. If he can’t replace stock to a level that meets demand he will go out of business.
In your opinion that makes him a profiteer.

https://www.ukworkshop.co.uk/threads/what-is-going-on-with-wood-prices-right-now.129761/post-1488133

 

[stuart little]

The same with road fuel, every time a price increase was announced it went on the pumps almost immediately.

 

[RobinBHM]

Whether you agree or not, if you like it or not is irrelevant. It is the way the system functions and the way it has to function.

The seller has to sell at a price that will enable him to make a business profit and replace the items that have been sold. The price he paid for the existing stock has virtually no need to influence the prices he needs to charge. If he can’t replace stock to a level that meets demand he will go out of business.
In your opinion that makes him a profiteer.
My opinion of your ability to understand the way business works or think through when it is explained is impolite to say the least.

scenario an item wholesales for 50 and retails for 100, shop keeps 10 in stock. There is a sudden shortage and the wholesale jumps to 800 so retail would be around 1,400~1,600.
By your logic the dealer should sell existing stock at 100 (a 1,300~1,500 loss) he would then have to borrow about 7,000 just to replace stock as there is existing demand.
Then should the supply return to previous levels how is he going to sell any items at a normal profit when he paid 800 but they are back to selling at 100.

the answer is he can’t and makes a huge loss. Goes out of business

However if his prices follow the market when the prices are rising he makes a “paper” profit. & when they fall he makes a “paper” loss. Staying in business.

It also isn't just cost per item.

If there is a shortage of supplies that means suppliers can't sell the same volume and they have to recover overheads from lower sales.

 

[sometimewoodworker]

#77

Learning from information that is new demonstrates intelligence and flexibility.

You are demonstrating that neither of these apply probably the opposite of them is true.

Of course it could be that you have an active desire to be argumentative.

 

[Jameshow]

Someone is making excessive profits and I doubt it's the woodyard. More likely the wood harvesters, shipping companies, speculators and middle men......

Also if the price of wood is going up, surely it's hurting the biomass power stations like drax??

Cheers James

 

[Doug B]

Learning from information that is new demonstrates intelligence and flexibility.

You are demonstrating that neither of these apply probably the opposite of them is true.

Of course it could be that you have an active desire to be argumentative.

I have no desire at all to be argumentative, I simply voiced my belief about these massive price rises, if anything you appear to argumentative in that you are being personally insulting because I don’t agree with you.

If you don’t believe these price rises are excessive & are completely justified with no one making big profits you are more than welcome to that point of view it just doesn’t happen to be mine.

 

[sometimewoodworker]

If you don’t believe these price rises are excessive & are completely justified with no one making big profits you are more than welcome to that point of view it just doesn’t happen to be mine.

If the price rises are as excessive as you think, there will be suppliers who will undercut to make sales, there is no cartel.

If the price rises are as excessive as you think, there will be no buyers, if there are no buyers the companies will go out of business as they need cash flow to stay in business.

If the price rises are as excessive as you think, there could be companies who may close down and then they could realise the paper profits and make them real.

if you don’t appreciate that the selling price today is based on the replacement cost of products not the buying cost of the stock, then if you were in business today your business life would be rather short.

That businesses may be selling at a higher buying to selling margin is not surprising (it happens in all markets when prices are rising)
That businesses are making a normal to slightly higher selling to replacement differential would also not be surprising as wholesale prices are still going up and they knowledge has to be built into the selling prices.

Short term companies may make bigger than usual profits, long term probably not as the profits of today have to pay for the inevitable losses when the prices start falling.
TTFN

 

[Doug B]

The price rises are excessive, it’s not just me saying it it’s also what my supplier has said it was also he who worked out that there had been a 120% increase in the last 18 months on some sheet materials & also he who said that the latest hike is an industry wide increase, so while I’m not suggesting there is a cartel it is questionable as to why, especially when you have said there has been no price rise for ply in your part of the world.

As for not lasting long in business this my 24th year running my own business but no doubt I’m just lucky.

 

[sometimewoodworker]

so while I’m not suggesting there is a cartel it is questionable as to why, especially when you have said there has been no price rise for ply in your part of the world.

The reason is almost certainly that there is no, or little, problem with supply here. The round trip times to China were only briefly inerupted and local delivery hasn’t been a problem since until very recently Covid-19 was completely controlled.

If shipping were normal then product for the local market would have to compete with product destined for the USA & U.K. but since the container traffic is so badly screwed up the market is local not global and wood is not a main building material here.

 

[Doug B]

The reason is almost certainly that there is no, or little, problem with supply here. The round trip times to China were only briefly inerupted and local delivery hasn’t been a problem since until very recently Covid-19 was completely controlled.

If shipping were normal then product for the local market would have to compete with product destined for the USA & U.K. but since the container traffic is so badly screwed up the market is local not global and wood is not a main building material here.

Rest assured I understand what you are saying but let me relate a to why I don’t believe these price increases in he UK are totally justifiable.
19 months ago I fitted an Oak internal door for a customer on a long term ongoing job, 3 months ago she asked me to fit another so I placed the order for a door but due to delays with supply & shipping as they are made in the Far East it only came in last week.
Now bearing in mind this is new stock & the massive increases on timber & sheet materials we have seen I was dreading asking the price, turned out it was no different to the one I bought 19 months ago.
I can’t believe the companies involved n making & supplying the door have swallowed the costs associated with the reasons given over the last 18 months for the ongoing price increases so quite clearly something doesn’t add up & why personally I think we are being taken for a ride.

 

[LeeAkeroyd]

I don’t agree ,putting up prices overnight by a minimum of 38% on stock all ready held & quoted on is by definition profiteering.
The only excuse given this time is “the industry“ want to kill demand so for every £100,000 held in stock my supplier is at least £38,000 richer for doing nothing more, yes he will pay more for new stock but that has nothing to do with the old stock.

Times are difficult and the price increases we've seen in the timber industry are unprecedented and caused by numerous factors.

Whilst it appears abhorrent that companies are charging more for stock they've clearly bought pre increase please bear in mind that the material your supplier has now will have to be renewed. At the point of this renewal your supplier has to pay significantly more, if they haven't worked on the replacement cost then the finance won't be there to pay for the same volume of material at the new price level.

Ultimately this will lead to your supplier buying less volume, having to eat through any cash reserves or having to finance/borrow (at a cost to the business) money to pay for material.

 

[Doug B]

I do realise this @LeeAkeroyd my supplier was good enough to inform me prior to the latest hike to give me time to stock up & I now have a considerable sum of money, I’d prefer not to have, tied up in timber.
It doesn’t explain how a sheet of veneered chipboard or plywood can have gone up so much yet a door more than likely made from chipboard & veneer hasn’t. Over the last 18 months these gradual increases have added to a massive % increase & been blamed on lack of stock, shipping problems, Brexit, covid etc etc but clearly oak internal doors are immune from this

 

[Phil Pascoe]

I do realise this @LeeAkeroyd my supplier was good enough to inform me prior to the latest hike to give me time to stock up & I now have a considerable sum of money, I’d prefer not to have, tied up in timber.

I assume you're you're going to charge out this stock at the old prices? You'll be robbing people if not.

 

[doctor Bob]

Just carry on, we in the woodwork industry are in a boom, make the most of it.

 

[Doug B]

I assume you're you're going to charge out this stock at the old prices? You'll be robbing people if not.

It’s all earmarked for work I’ve agreed to do so no I won’t be robbing my customers, more fool me aye

 

[Droogs]

Are you guys aware that apparently, a cargo ship with 300 containers of wood was diverted 24 hours out from Felixstowe to the US by the owners last week, after they got a much better off from importers there. The original destination for the timber was here. An importer friend of mine was telling me the other day