According to an Ontario SPF manufacturer “as far as business is concerned, new business is relatively quiet. Prices are declining somewhat of course. Current SPF prices are down a bit, but you are still seeing some elevated numbers, like the case of the Toronto market, where 2×4 and 2×6 are in the $1,000-1,100 range. We as sawmills are competing heavily against secondary and European wood when we deal with the Americans. It’s not that their mills have a lot to sell for prop, there could be some odds here and there, 2×4 primarily, which are still available from most facilities.” Said a Quebec producer, “most of us have an order file. So the buyers are saying there is a weakness in the market and they are going to wait to the very last minute to buy.”
An Ontario wholesaler said, “I believe demand is still good, and I believe the take away from dealers to the job site is excellent.” His Quebec counterpart reported, “There is not a lot of wood in the system but until there is a complete lack of lumber at different points in the pipeline, the big buyers, the dealers and the distributors, are going to wait until the end to jump in. Rail service has been terrible. They have had their COVID issues, as a lot of us have had, and service has been reduced across the line. Rail employees on extended layoff are causing problems moving lumber in to U.S. markets.” It was noted by an Ontario wholesaler, “Exports overall from Canada to U.S. are down, year over year, as a result of the supply constraints and fewer mills operating.”
“It is possible there will be a little bit more downturn trend in pricing, but nothing terrible,” according to an Ontario manufacturer. “We anticipate at least one or two more good rallies before the holidays. I see business being good until Christmas. In terms of grades, 2×6 is selling the best, and there are plenty of 2×4 and 2×10 on the market now.” Natural Resources Canada current lumber prices at the end of September showed a slight drop for 2×4 eastern SPF over the past week, along with a 4 –week average at $1,263. To highlight the recent hot market, the 52-week average is $662 (Source: Random Lengths). One industry expert mused, “in this time of extreme volatility, the last thing I want to do is commit to what will happen in the future. However, pricing analysts generally agree that the peak has likely passed and things should hopefully settle down.”
On the Pine side one Quebec wholesaler reported, “It is always a case where everything is based on supply and demand. Demand has tapered off a bit but there isn’t much supply out there, so the market is holding.” An Ontario producer noted, “We put in a price increase recently, as others did too, in part because supply is not there. An increase was overdue, our costs are going up and at some point, it’s time to do that.” A Quebec producer announced, “We are shipping a good diversification of grades. We are not in the spruce/construction business – that is a whole different animal, especially right now. For our market, specialty Red and White Pine, it seems for the most part that all grades are moving reasonably well.” According to an Ontario wholesaler, “The lack of supply stems from the interruption we had last winter, which caused a bit of a hiccup. It is quite hard for anybody to plan out there right now, as you wonder where the market might go and what is going to happen. Most people don’t want to stick their necks out too far, so people are being cautious.” An Ontario producer noted, “As long as there is no interruption with COVID over the winter and that is a pretty big concern, coming in to the spring we should still see a bit of shortage to some degree. Echoed a colleague, “If there is no further interruption going in to next spring, we should be okay and prices will stay firm. U.S. demand is still moving along quite well. Their supply is down because some mills had to close, and this will affect the Canadian market to some degree as well. Shipping seems to be okay and there are no real issues there at the moment.”
There was lots of talk about just what we have seen so far in 2020. An Ontario manufacturer said, “It hasn’t been an easy time, and it was pretty scary for a while. Remember in mid-to-late March, order sheets at sawmills collapsed as orders got cancelled. Mills cut back and let their inventories go down when the virus arrived. In our facilities we wondered about lots of things, like could we still operate, will the border remain open, could our people stay healthy? Mills went down, at least temporarily and the lumber prices in mid-April were down over earlier in the year. Later, as we eventually needed workers back, we were concerned about could we compete with the income assistance available during the pandemic and would people stay away from work because they were worried about their health?”
A Quebec wholesaler talked about the end customers, noting “certainly the summer has been a challenge for those businesses and individuals that have been looking for product. Lumber followed toilet paper and Lysol as a product in shortage. I heard people who have been in the building/contracting business for 20-25 years say they have not seen prices where they are or the lack of supply where it has been. Stores had empty shelves with no 2×6 or 2×8 and pressure treated lumber has been almost impossible to find.”
According to an Ontario wholesaler, “Supply issues have now been going on for months and contractors say there was potentially a great deal of work out there and they couldn’t get it. It was like the perfect storm in a tight market. People were spending more time at home looking at what they need to fix or want to change, and some had money that they were not spending in other ways. Our home building industry saw the work curtailments from provincial governments eased and so residential construction ramped up. Nationally, housing starts also rose over the summer. Essentially, strong lumber and building product demand from all these key users further made the supply scarce. This boom meant the cost of lumber went up big time.”
