China casts shadow of uncertainty
“What’s going on with China?” is a typical question among North American lumber buyers as they try to calculate the next move in their markets, especially in spruce-fir-pine. Wholesalers ask the question because, unlike those times when their customers are obviously looking to replenish stocks, there is no “feel” for when Asian customers will enter the market to purchase additional volumes. It just happens. Subsequently, lumber availability can dry up in a matter of minutes, and prices can leap when they appear most vulnerable.
“It is the biggest unknown in the marketplace,” remarked an SPF trader, regarding China. That “unknown” could play a much different role in markets if western mills, and in particular those in British Columbia, did not sell significant volumes to China on a program basis. Those steady flows of program lumber limit the potential for large, open market buys, thus reducing the likelihood of market volatility. So, while it might be easier for wholesalers to keep tabs on a marketplace in which all lumber exports to China flowed consistently, it would also likely eliminate some of the market volatility that is so vital to their profit margins.
Recently, North American SPF buyers stayed out of the market in significant numbers. Many wondered what the next market move might be. The price of western SPF 2×4 #2&Btr has now risen or held for 16 consecutive weeks, yet is still $50 below its 2013 high. It is also October, and the potential for snow is increasing, yet secondaries have reported steady takeaways from their yards as of late. And then there is China. When considering that part of the equation, and whether that country will again leave a bigger footprint in the market in the coming weeks, it is important to remember that China typically imports some of its greatest volumes from North America in the last quarter.
This article was provided by Crow’s Market and Price Service/RISI. For a free trial of this service, visit RISI.com/crowsfree.
An industry marches toward smarter homes
The home automation industry is expanding rapidly. It’s projected to be worth more than $5.5 billion in 2016, according to Companies & Markets — and it’s not just the early adopters who are recognizing the appeal of the technology.
According to a 2011 Home Security Source study, interest in home automation went up 8% and 11% in 2009 and 2010, with buzz around home automation expanding an impressive 300% in 2011. Today, a Consumer Electronics Association (CEA) study found that 47% of online households in the United States are equipped with a programmable (42%) and/or smart (12%) thermostat.
As Winston Ledet, COO of Premium Retail Sales, put it, “Staples is going into home automation — I think it shows you just how hot-topic it is.”
If it’s any indication, Lowe’s and Home Depot have been attempting to set standards for the burgeoning market with an extensive product selection for the DIY market, with Amazon chiming in on the e-commerce side. In addition to providing educational videos and buying guides for consumers, its Home Automation Store features more than 1,000 smart home products, including lighting, security, temperature control, energy management, entertainment and general home monitoring.
Thanks to “the launch of several new, innovative products that solve consumer pain points and simplify the way people use home automation technology,” said Mike Strauch, director of Amazon Tools & Home Improvement, “every major retailer is now offering home automation products, as they are becoming easier to use and more practical.”
None of this is to say that it hasn’t been a long time coming, but it’s possible that the ball may really be rolling now.
“It’s been the next big thing for the last 20 years,” said Ledet. “The predictions have outpaced the actual outcome, but the time has certainly come. What has plagued the industry has been a lack of interoperability and a lack of standards.”
What Ledet is referring to is the extent to which home automation systems are designed to work with other products. Positioning oneself to be the standard-bearer in the industry is certainly more lucrative, but there’s always the risk of alienating potential customers who are already “locked in” with another suite of products.
Then again, Ledet doesn’t seem to think these trials will last. “You have early adopters — the enthusiasts — who are willing to overlook a lot of flaws. The enthusiast will spend the weekend figuring out how to make it work. The mass market wants to plug it in and have it work. Same rings true on safety — [most people] don’t want the next door neighbor’s baby monitor to come across their music streaming. I think there are products out there that are relatively high-security, and the serious guys are most likely working on that.”
Tunnel Vision Technology found that security is overwhelmingly the motivating factor for homeowners interested in home automation systems — with 62%. In comparison, 20% were interested in the energy savings, and 14% desired the convenience factor.
It may be growing in fits and starts, but it’s certainly ballooning. If Ledet’s guesses are accurate, we’ll see triple the growth for the foreseeable five to six years.