Guest Writer
Big picture issues were top of mind over the last few months, including the possible impacts of proposed tariffs on all U.S. imports. While potential outcomes could be very negative, there remains an openness for optimism.
In the SPF market, one Quebec producer reported that “random mills are solid and stud mills are a bit more dicey, but our company is looking forward to 2025. A lot of customers want to increase their contract business, which is probably to do with the Canfor announcement. The 2×6’s still have a noticeable premium compared to the 2×4 in the random mills but other than that, nothing is really anything to write home about.” This sentiment was echoed by a Quebec wholesaler who indicated that “we believe 2025 will be better than 2024, but that is not a high bar to beat, to be fair.”
An Ontario wholesaler felt “the trend to better interest rates has to help. Whether we next get a big or small decrease, the fact that we are now getting lower rates will at some point help homebuyers and consumers in general.”
One Quebec producer was not overly concerned about possible tariffs, indicating, “I don’t even want to discuss the Trump tariff suggestion. He is posturing, he is doing the right thing for him, so for us to talk about it and to plan for something like that is like giving in. He is a good negotiator – and we should be good negotiators too.”
A Quebec producer indicated that “everyone is aware that recently a major forest products firm announced it is selling two sawmills and one remanufacturing plant in Quebec to another firm. Their announcement noted the impact of factors that restricted the availability of economic fiber, including the record 2023 forest fires in Quebec. There are many who think there are too many sawmills trying to run without enough trees. Someone said 25 percent of the land base has been burned. The Federal and Quebec governments are going to try to address the situation by increasing reforestation and planting more than 100 million trees in the province by 2031, including in areas that have been impacted by natural disasters. That is great, but it won’t help us in the short term.”
An Ontario wholesaler suggested, “There are mills that are already hurting – even a 10 percent tariff over and above the duties already imposed would make it worse. Some companies could be faced with making some hard decisions. There is talk the Canadian government is going to be exploring new markets. The federal and provincial governments are going to work together to highlight to the U.S. the importance of the forest sector and that the U.S. needs to import lumber to meet their housing needs. Increasing the price of wood products is going to hurt the American consumer and will affect inflation. They have a housing shortage, too, so perhaps that will play into keeping the tariffs down.”
On the Pine side, an Ontario producer noted, “Very little has changed recently. The pine markets are very quiet. It is not that there is no business, but there is not a lot of demand. Some areas have seen some significant snow recently, so the retail buying will be reduced somewhat in those regions, as they dig themselves out.”
A Quebec wholesaler noted that, “Customers seem to only be buying what they really need, what they know they can turn over. Consumers are just not spending money on wood products right now, like they were.”
Noted a Quebec producer, “The upper grades continue to hold on in terms of price, which is good. The lower grades are a challenge. You are fighting against Spruce all the time and there is a lot of Spruce out there right now.”
An Ontario producer reported, “There have been some curtailments in the Pine business, but at the same time there are others that are still overproducing for the demand that is out there. This could have an impact on pricing. At the same time, there has been some noticeable production curtailment on the Spruce out west, which should help the industrial grades of Pine at some point, with the reduction in available material. Manufacturing in general seems to have slowed down, and less activity is impacting the demand on pallets, crating and related items. It is almost like the perfect storm; we are coming off the sugar high of the pandemic and we are back to reality again, but you have to think that once the wheel gets turning again, if the U.S. gets going and housing starts are stronger and interest rates improve, things can come back quite quickly. There is a housing shortage in Canada that has to be dealt with and the lumber industry will be needed. However, until someone gets that momentum started, it is a tough one.”
The House of Commons Standing Committee on International Trade heard testimony from the President of Unifor in early December. It is Canada’s largest private sector union, with over 22,000 forestry sector members, 55 percent of whom are in Quebec and 22 percent in Ontario. They told the committee that “while the softwood lumber dispute poses a clear and present danger, Canada’s forest sector continues to experience a perfect storm of repeated and intersecting crises, and a combination of economic, environmental and global challenges that continue to destabilize the broader forestry sector. Volatile and flat prices are still making companies think twice about investments.”
They explained that with “the recent doubling of combined softwood lumber duty rates, and the looming threat of further upcoming increases, they are certain that we will see workplace closures as a result of these increases – and this is without contemplating the additional 25 percent across-the-board tariffs threatened by Donald Trump – which if imposed – will cripple the sector.”
Closing on a positive note, they felt Canada can “promote, support and invest in higher-level production, where we create value-added forest products and systems right here in Canada. Innovative products and systems like engineered wood products, mass timber frame construction, modular components and bio-fuels represent an incredible opportunity to grow the sector, create new forestry jobs, and increase economic development activity and productivity.”
