Ontario Business Trends – March 2023

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As we move forward in the new year, the forest industry continues to struggle with the pandemic, a shortage of trained workers, inflation, and supply chain issues. The housing sector has cooled somewhat due to the increased mortgage rates, and people have reigned in their spending on home remodeling projects, thus reducing demand for Hardwood finished goods. Prices of lumber are still continuing their downward trend. With decreased sawmill output, it has eased the oversupply issues of some species, grades and thicknesses.

Contacts noted that prices for Ash have dropped in the past several months due to reduced demand on international and domestic markets. Some say supplies are high compared to demand, but are being worked down. Demand is better for upper grades than for No. 1 Common and No. 2A.

As prices have fallen, Aspen demand has been impacted, even though it is used frequently as an alternative to the higher priced species. Contacts commented, however, business is regular and consistent for this species. Some prices were reported as weaker. Sawmills and wholesalers were shipping green Aspen.

Hard Maple demand is still seeing a slowdown for finished goods. This is caused by the weak housing market and reduced consumer spending. Therefore, end users are purchasing less lumber. Grade lumber production has declined and is moving closer to a balance with the market’s needs. In certain areas, supplies for some grades and thicknesses are still outpacing demand, it was noted.

Soft Maple production was reduced in the last few months of 2022 and has not increased so far this year. Most manufacturers, secondary manufacturers and wholesalers are controlling their purchase of this species. Some balance has been achieved in supply and demand, but this is not the case for all grades and thicknesses. Kiln-dried inventories have not contracted as quickly as the green, and so on hand supplies are high compared to buyers’ needs. Prices have thus gone down.

Basswood logs to sawmills have improved. Some operators are sawing more Basswood to avoid Maple output. Basswood supplies are adequate to meet buyers’ needs. Some contacts noted that markets are competitive when it comes to the upper grades of this species, while interest in No. 1 Common is lukewarm.

Industry contacts noted that Birch is one of the better selling species. Kiln-dried inventories are ample but manageable. Green output has contracted for Birch.

Some contacts advised Red Oak sales had improved the last two months of 2022, working down some of their kiln-dried inventories. They noted that prices for the No. 1 Common and Better were firming for this species. Sawmills are increasing their production of green Red Oak, particularly for the upper grades.

White Oak markets continue to be challenging. Domestic business is fair, but overseas customers have been buying less White Oak. European and Japanese markets are down at this time. Prices for this species continue to fall. Some contacts stated the common grades sales are soft as well as for green stocks.

As 2022 saw rapidly rising interest rates and falling home prices, 2023 should see more balanced conditions return to most housing markets across the country, according to Re/Max Canada forecasts. The real estate company forecast national prices will fall by 3.3 percent in 2023 compared to 2022. However, according to its 2023 housing market outlook, certain regions are expected to see sharper declines than others.

Overall, roughly 60 percent of Canada’s various housing markets should see a return to balanced conditions this year. The trend is already starting to materialize in many regions because of current economic conditions, the study noted.

Re/Max Canada president Christopher Alexander said it was good to see the majority of markets moving toward more balanced conditions, which was typically defined by 45 to 90 days on the market. It was a much-needed adjustment from the unsustainable price increases and demand seen early in 2022.

In the Greater Toronto Area, the average price of a home rose 11 percent to $1.2 million in the January-October period. Those gains are set to be erased in 2023 with an expected 11.8 percent decline in prices by the end of 2023, Re/Max said.

In Vancouver, prices climbed 8 percent to $1.3 million during the same period in 2022, which is expected to be followed by a 5 percent decline in 2023. Elsewhere in Canada, Re/Max is forecasting an 8.5 percent year-over-year decline in prices in Winnipeg, a 5 percent decline in Montreal, and a 5 percent decline in Saint John, N.B., compared to 2022.

By contrast, home prices in some regions could stage a rebound. Of the 21 Ontario regions listed in the Re/Max report, over half were expected to see price increases in 2023—from as low as 2 percent in Oakville to 8 percent in Muskoka.

By Miller Wood Trade Publications

The premier online information source for the forest products industry since 1927.

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