Ontario/Quebec Business Trends
Ontario And Quebec Maintain Positivity During Summer Months
By Richard Lipman
Guest Writer
The annual Quebec construction holiday wrapped up in early August. It is a two-week mandatory vacation for all construction workers in the province to ensure they have a significant break during the summer. It is also a very quiet time for the lumber industry normally. However, there were many big picture developments impacting the Canadian softwood lumber industry, in eastern Canada and throughout the country, during the last two months.
According to an Ontario producer, “SPF markets are quite volatile right now. There are inquiries here and there and we have seen some sales, which were appreciated, but it is still quite slow in the U.S. as the duties went up.”
An Ontario wholesaler remarked, “In the Canadian domestic market, we saw a bit of activity, some mills were willing to sell at modest discounts, but it is still slow. 2x4s are solid right now and we have seen some sales on 2×6, but that is still slow.”
A Quebec producer noted, “We are still positive looking ahead.”
A Quebec wholesaler noted, “We have seen a bit of momentum in the U.S. market, which makes us think there is still some hope, despite all the current challenges.” Average 2×4 eastern SPF prices are listed at $680 Cdn. by Natural Resources Canada and the average price has hovered in this area for the last four weeks. The 52-week average price is listed as $638 Cdn.
“It is kind of chaotic out there, you can still not plan with any certainty,” remarked an Ontario producer. “There is no policy south of the border and things flip-flop regularly. It is kind of frustrating, as we have always been good and reliable suppliers and the U.S. needs our species. You see the National Association of Home Builders in the U.S. continues to support Canadian lumber, coming out against the extra levies on us, and its impact on the cost of homebuilding and the negative impact on the affordability of housing. They are saying the tariffs are really a tax on American builders, home buyers and consumers, which we totally agree with.”
In the Pine business, people are saying the heat this summer has been overwhelming. One Ontario producer said, “We have seen the far heavier demand for the upper grades with No. 2 and Better moving well, Selects too are moving well as is the No. 1 Common. Overall, demand is down a little bit but there is still some pretty good business out there.”
This was echoed by a Quebec producer who noted, “Business is a little on the softer side, but there is business out there no doubt. Industrial products are much harder to move, in part because of the overall economic slowdown and with the issues between the two borders, demand is just down.”
One Ontario wholesaler suggested, “There are likely lots of mills that are saturated with the low-end product and that is going to be a problem for a while. We need more demand from home building and for the low-end product and I don’t see that in the near future. There will probably need to be some more curtailments across the lumber industry to deal with this. You can’t stockpile low-end inventory forever. On the lower end, there is just no demand, it is not a question of price.”
There was news that a Quebec sawmill must suspend all activities until October due to U.S. tariffs. The Scierie St.-Michel will stop its sawmill and forestry operations due to the increase in countervailing duties and anti-dumping duties to over 34.45 percent by the U.S. government and threats of additional taxes in the future. The mill also indicated that forestry management in the province must be modernized as the industry has been unstable. It pointed to the controversial Bill 97, which critics say would lead to major environmental and social setbacks. Indigenous activists have protested the bill and accuse the government of giving the forestry industry carte blanche to exploit the resource. The company CEO is urging the government to work with the First Nations to pass the bill and create “a favorable business environment for our industry through modernization.” He noted that certainty regarding a settlement on U.S. countervailing and anti-dumping duties and the modernization of the forestry regime will be needed or the shutdown could last longer.
SPF and Pine maintain sales in Canada
An Ontario producer mentioned that “for the first time this summer, we moved some of our production people out of the mill to work in the yard to process material. First, it is too hot in the mill by mid-day, but also, it helps because we need help processing in the yard and this means we are also not over-producing too much. If only 35 percent of the material is moving well and 65 percent is not, slowing production a little bit is helpful.”
A Quebec producer reported that “Pine log supplies are good, and we will have material for next winter. Truck availability is much better than a year ago.”
Recently, the U.S. Department of Commerce announced the final anti-dumping duty rate of 20.56 percent in the sixth annual anti-dumping review of Canadian softwood lumber imports into the United States. The review covers lumber imported in calendar year 2023. If the Department’s forthcoming determination in the countervailing duty review is consistent with the preliminary results, the combined rate will be well over 30 percent.
Canadian Prime Minister Mark Carney recently announced a major support package for Canada’s forest sector, as part of the federal government’s new industrial strategy. The announcement includes $1.25 billion in direct investment and a set of procurement and trade measures designed to help the sector remain competitive amid rising global trade uncertainty and U.S. softwood lumber duties. These included up to $700 million in loan guarantees, to provide financing and credit support for softwood lumber companies as they restructure and modernize operations.
The announcement also included $500 million for product and market diversification, including investments in domestic processing, value-added manufacturing, and Indigenous-led forestry business development. Also noted, was a new federal procurement approach, prioritizing Canadian lumber in infrastructure and housing construction projects.
The Build Canada Homes program, launching in the Fall, will support private sector builders who use Canadian materials, like softwood lumber and mass timber. The program will support export market diversification programming such as Canada Wood to expand Canada’s reach in fast-growing international markets and promote Canadian lumber as a sustainable, affordable building solution, and supporting the development of updated building codes internationally. Producers have talked often in eastern Canada about labor challenges, and the announcement also includes $50 million for worker upskilling, reskilling, and income supports, delivered through Labour Market Development Agreements.
A prominent Canadian wood trade association executive responded to the Prime Minister’s announcement by saying that they are encouraging the federal government to get the best trade deal for Canada with our U.S. neighbors, which continues to be the most important wish of the sector and forestry communities across Canada. He noted that, “As those deliberations continue, today’s measures (announced by the Prime Minister) are helpful as we try to stabilize the industry for the months ahead and at the same time achieve our shared goals of building more homes, improving competitiveness and increasing production and investment in Canadian operations and growing new markets for the long-term. The industry remains committed to working with the Government of Canada, provincial governments and our labor and community-based partners so we can strengthen prospects for the industry’s 200,000 employees and the over 300 communities they call home.”
The Canadian Interagency Forest Fire Centre reports Canada is looking at its second worst forest fire season ever. The east has had it relatively tame, while Manitoba and Saskatchewan have been scorched. While there have been lots of air quality alerts in Southern Quebec, the smoke this time is not coming from the province. July saw the lowest number of fires recorded over the last 10 years. There have been 170 wildfires so far this year, which is more than 200 fewer than the 10-year average. In 2023, there were over 4.5 million hectares burned in Quebec, compared to 3,000 hectares so far this year. The number of fires in the province of Ontario, which has also had a quieter summer, is increasing as some areas that have not seen appreciable rain in over six weeks. Recent rain has helped the situation and reduced the fire danger in NW Ontario.
