With the U.S. Thanksgiving holiday, hunting season, and the Christmas Season behind us, businesses are cautiously optimistic 2023 will be a better year than the last. The ongoing COVID-19 pandemic, supply chain issues and declining demand, along with the shortage of qualified workers, all continue to challenge the industry, as are the concerns of global markets and issues around the world.
It was noted that some sawmills were focusing more on Ash and Oak rather than Maple during the November-December period. Competition for orders of kiln-dried products has pushed pricing lower for most grades.
Some primary Basswood manufacturers reported reduced log decks and reduced production of this species. With the decline in green lumber output for Basswood, it eased price pressures in the last two months of 2022. It was also noted that kiln-dried Basswood markets had softened in the last few months, some saying it was their worst selling item, with prices having dropped.
Most secondary manufacturers advised they had ample Hard Maple inventories and were experiencing a slowdown in new orders for finished goods. It was difficult for sawmills and wholesalers to get more orders for kiln-dried Hard Maple as prices had fallen significantly. It is challenging for buyers to keep up with the disparity and constant price changes, making it difficult to know what to pay for green stocks in this downturn. Some sawmills switched to other species and industrial products as they had difficulty finding outlets for Hard Maple. Therefore, supply is outpacing demand for this species with prices continuing to contract.
Demand for Hardwood finished goods as experienced at the beginning of 2022 was high, and production couldn’t keep up with demand. Mills did increase their output for Soft Maple, but then demand for finished products dropped. This is the situation now, with ample supply and low demand, with pricing steadily going down.
As secondary manufacturers, like furniture and cabinet makers, rely on strong housing markets, they are now facing slower sales as well. Birch is highly sought for Hardwood finished goods, but with the decline in goods demand, this species has also been impacted and transactions point to lower pricing for green No. 2A and Better, and No. 1 Common, and No. 2A grades.
Some contacts reported supplies were ample for the rate of demand for Red Oak, with slight decreases in prices for green lumber for certain grades and thicknesses. Kiln-dried markets are very competitive both to the U.S. and to international markets.
White Oak production and demand are not very high at this time in most regions that were contacted. There is indecision about purchasing this species at this time, or to temporarily suspend it altogether.
Canadians experienced supply chain challenges and their impacts, like the rising cost of everyday products. Existing supply chain issues were exacerbated by extreme climate events, changes in trade patterns, and Russia’s invasion of Ukraine. The Government of Canada took concrete action to strengthen the supply chain and continued to build an economy that works for everyone.
Canada’s annual inflation rate held steady at 6.9 percent last month. After declining for several months, Statistics Canada said the rate of inflation was unchanged in October 2022 from September as gas prices went up.
In its latest Consumer Price Index report released on November 16, the agency said higher mortgage interest costs also put upward pressure on inflation. However, offsetting higher gas prices and rising interest rates was a slowdown in price growth for groceries and natural gas.
The cost of living is a top concern in the Canadian economy as inflation erodes purchasing power and pushes the Bank of Canada to raise interest rates rapidly. However, the gap between inflation and growth in wages is narrowing as inflation slows and wages continue to rise.
In October, wages were up 5.6 percent compared with a year ago. The Bank of Canada has raised interest rates six consecutive times since March to clamp down on high inflation. After slashing rates to near-zero during the pandemic, the central bank has moved quickly this year to raise the cost of borrowing for Canadians and businesses.
Higher interest rates are expected to bring about an economic slowdown that the central bank hopes will bring inflation down. The Bank of Canada will be paying close attention to the latest Consumer Price Index report as it prepares for its next interest rate decision slated for December at the time of this writing.
This could mean the Hardwood industry will feel the pinch of rising costs as consumers rein in their spending on Hardwoods and finished goods, and also may put off their renovation or building projects until the economy improves.
Despite the conditions we are all living under at this time, we wish you the best for a happy and healthy New Year!