Ontario continues to be hammered by the Omicron virus, with cases rising in mid-January, affecting businesses across the province. It is hoped that this new wave of the variant will be short lived, and that life and business will move on to a more normal way of life. The housing demand in the U.S. and Canada continues its positive effect on Hardwoods. Exports of U.S. Hardwood lumber figures showed that year to date through November 2021 had risen 9 percent, with strong shipments to Canada being included in the increase. According to statistics, U.S. exports of Hardwood lumber to Canada shot up 49 percent in 2021 over 2020.
Contacts noted that exports to China continue to be challenging, while Vietnam business is seeing an improvement. Sawmill production over December had improved due to milder winter conditions, but saw sharp cold weather conditions in mid-January, which slightly slowed logging activity. Labor issues are still of concern as are supply chain issues caused by the coronavirus pandemic. Demand for Red Oak and Hard Maple is strong. Reports for industrial markets are mixed, tie supplies are in demand, and wooden pallet and container manufacturers reported they are busy, needing more volumes of cants and pallet lumber.
As supplies of live Ash trees is low, due to decimation of the Emerald Ash Borer over the past several years in North America, production has been limited. Sawmill contacts stated that Ash log decks were thin, with green production limited. Sales companies stated kiln dried inventories were low, and tight supplies for both green and kiln dried stocks have pushed prices up. Prices are more stable for No. 2A and Better.
Basswood production was limited over the past year, especially the last six months of the year due to the push for Hard Maple and its greater demand, along with other species seen as having a greater value than Basswood. However, demand increased for Basswood, causing prices to rise as competition also increased due to limited availability. Basswood kiln dried markets were equally reported as strong, with inventories thin for many grades and thicknesses.
Supplies of Birch have been strained, caused by strong housing markets on both sides of the border, with low sawmill production. Wholesalers advised kiln dried Birch demand exceeds availability. Green Birch markets are reported as solid. Due to the Holiday Season, production was down, and some sawmills were cutting Soft and Hard Maple ahead of Birch.
Hard Maple is still the best selling species with strong demand coming from the furniture, flooring, cabinet, moulding, millwork and interior fittings sectors due to strong housing markets. Production is not quite meeting demand for grades and thicknesses, and varies according to areas contacted for kiln dried Hard Maple. Late fall production last year was directed to Hard Maple, which provided adequate kiln dried supplies to end users earlier this year. It was noted that some secondary manufacturers were buying more Soft Maple instead of Hard Maple, resulting in a slight softening of prices at that time.
Soft Maple markets improved due to strong residential construction. Also, comparatively lower prices than Hard Maple attracted businesses to this species. End users are buying all they can at this time, and competition is pushing prices higher for developing supplies. Some contacts noted production of kiln dried Soft Maple are sold before they even exit their kilns, resulting in low inventories.
Domestic markets for Red Oak vary. Sales slowed at the end of 2021 and did not gain ground as the new year kicked in, but contacts reported that business is decent, with supplies being manageable and having also risen. They add that green stock interest is good. Sawmills are focusing on whitewoods where possible.
Secondary manufacturers and wholesalers are buying White Oak green lumber production. Demand for kiln dried supplies are mixed depending on areas contacted.
The pallet and container manufacturers reported they were busy, having added to material inventories over the end of last year and into this year. Availability seems to have stabilized, which eased pricing issues for most items.
The Consumer Price Index (CPI) rose to a 30-year high of 4.8 percent in December 2021 (the most recent data available), due to higher prices for food led to the cost of living going up at its fastest rate since 1991. Grocery prices increased by 5.7 percent, said a Statistics Canada economist, adding that the price gain was caused by unfavorable weather conditions in growing regions and supply chain disruptions.
The current bout of inflation, continued the economist, is driven by supply chain disruptions, pent-up demand and inflation expectations. While pent-up demand is expected to ease as pandemic spending winds down, supply chain and inflation expectations remain paramount challenges.
Prices could increase even more in the year because of the new rules forbidding unvaccinated truckers from entering the country, noted some economists. The issue of unvaccinated U.S. truckers crossing over the border into Canada could pose a risk of transmitting COVID-19 to the general public, according to some infectious diseases doctors, while others felt skeptical about whether the new federal vaccine mandate is needed, questioning how much these drivers could contribute overall to the potential spread of the virus. As of January 15, a federal mandate requires that Canadian truckers must be vaccinated if they want to avoid quarantine and molecular tests. Unvaccinated American big-riggers will be turned back at the border.
Trade associations on both sides of the border said the restriction will put additional strain on supply chains amid the latest COVID-19 surge and severe worker shortages. About 10 percent of the 120,000 Canadian truckers who cross the border may not be able to work those routes because they haven’t been vaccinated, according to the Canadian Trucking Alliance.
Shelter costs have risen by 5.4 percent in the past year, faster than the overall inflation rate. And this is another consumer factor that could affect Hardwood sales, as they cut back on spending due to high cost of foods and other necessities, and as they wind down on their renovation spending brought on by COVID-19 and travelling due to current restrictions.
