Guest Writer
“The market continues to be a struggle,” according to a Quebec SPF manufacturer, “with consumers dealing with high interest rates and an abundant supply of lumber, especially in eastern Canada. There is a lot of pressure on price. The best way to qualify what is successful is if you are able to achieve a certain level of pricing, that is not really relevant with the print price, but what is relevant with the customer per se, you get some business. There is a lot of lumber flowing in North America, but the printed price is becoming more distant right now, as there are deals being made that are often substantially under the numbers being published every week. It is going to remain so for the foreseeable future.”
Another Quebec producer lamented that “not much has changed. If something is in demand, if the guy needs it, he buys it, but the demand is not what it used to be. Customers are definitely not in speculation mode. They buy what they see in front of them and they will not buy beyond that.
This could go on for a while. Fundamentally you don’t have a lot working in the favor of the lumber market when you really think about it. I mean the yields are not in our favor, and of course affordability’s not in our favor either, so it’s tough out there. It’s one here, one there. You have to get out there, you have to find needs and you fill those needs. I think the price tells the whole story. We’re down 70 percent from the top, if not more. So I think that really tells the whole story.”
Noted an Ontario wholesaler, “From the mill’s point of view, budgets have been set for the year from last January, and it is too late to change things, so there are not going to be any substantial curtailments or anything that is going to affect production. What is going to be interesting to see is in January. How are the mills going to react for the 2024 budgets and whether there is going to be less lumber available to try and balance things out a little bit, which is what is missing in the industry at the moment, towards the customer rather than the mills.”
Reported a Quebec manufacturer, “2×4 offerings in either studs or No. 2 specific lengths like the 9-foot and 16s and a couple of other ones are very popular. 2×6 remains very difficult, which is really odd normally for this time of the year. It should be flowing a little bit better. We constantly need to discount it. 2×4 No. 2 studs are moving well and keeping the market going at this point in time.”
A Quebec wholesaler suggested that “we would have anticipated the big fire season to have affected the market, but so far it hasn’t. It is perhaps because the market is a little softer than expected, we haven’t really seen that coming through in the end products just yet, even in the two regions most impacted. We are being told that it will impact the production at some point and that impact will last till the spring, but we haven’t seen anything so far.”
Noted a Quebec producer, “It is hard to forecast right now. There are lots of contracts up for renewal at the beginning of the year and there are discussions with the big box stores in the U.S. to see what their expected takeaway is going to be for 2024 at that time. This is on top of mills’ internal issues in regard to cash costs at the mill and fiber supply. There is a new agreement in Quebec for the next five years for the mills to get a certain volume of fiber and we don’t know what that number is at this point in time.”
An Ontario producer mused that “interest rates coming down would be great, but frankly I don’t think anyone believes that that is going to happen real soon but that would have a huge impact on potential business for lumber mills for 2024.”
Another Ontario wholesaler said, “On some of the non-SPF and specialty items, we’re seeing the same thing as White Pine. Prices are holding. It’s not because it’s a real demand driven market.
Nobody’s buying any volume. It’s more of a lack of supply, I would say. But the demand is good enough to keep the supply that tight still. I think everybody’s kind of sitting on the fence to see what’s going to happen with interest rates. Is this going to push us into some sort of recessionary period or are we just going to kind of fly right through this? Nobody really knows.”
In White Pine, “mid- August to late September was pretty much a write off,” according to a Quebec lumber producer. “Not that pricing was bad, it was just demand was down. The market seems to be picking up a little bit better right now, but certainly not to the extent that it should be. The weather has been good and will continue for at least the next couple of weeks so that is positive.”
An Ontario producer reported that “prices on the upper grades are fine. The industrial grades are seeing a bit more pressure right now, only because they are tied in with manufacturing for crating, etc., and that activity and demand is down. Those that are trying to ship anything are probably having to negotiate price to some degree. There is a point out there where you cannot drop it anymore. Selects and No. 1 are selling better than common grades. If customers are going to stock it, they want the better product. The consumer is still fussy, but if they can’t get the better product, they want the next best. The 1 and 2 will go when supply is really tight, but when things have slowed down and supply is a bit more readily available, they will go for the upper grade, for appearance. It is not to say there is an over-abundance of White Pine out there; nobody is sitting on huge inventories. If this should persist for maybe another six months, then inventories would start to build. They really can’t curtail production anymore, as most mills are running one shift anyway. Trucking is a little better but we are not busy enough to have to pursue that that much.”
“We will be coming into hunting season in a month and that usually closes the province for two weeks,” according to a wholesaler from Ontario. “Higher interest rates are starting to take a foothold. Those with money will always spend on product, but right now the average person on a budget isn’t going ahead with things that they normally would. With interest rates up and mortgage renewals, they don’t have an extra few hundred dollars to spend.”
A Quebec wholesaler noted that “things will improve for the next few weeks, maybe up until the end of November, and then we will go into our typical slowdown that will last until at least March. A big factor as to whether we are going to have a decent spring or not will be the interest rates, whether they start to roll them down a little bit in the New Year.
“The fires did not have as big an impact in Pine in Ontario, although in Quebec there was some curtailment of production there. Fires had a greater impact in Spruce country; it was more in the north. It cut production back a little bit and that might help us to some degree in the industrial grades in the White Pine, if there is less material available in the Spruce at the low end. This could keep prices more stable.”
