Quebec Business Trends

Nov Issue

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As summer wound down, kiln-dried lumber available had increased, primarily due to seasonally faster kiln turnover. Wholesalers, end users and the export markets are absorbing the volumes for most items. Contacts commented that Ash, Hickory, Hard and Soft Maple, Walnut, Basswood and White Oak kiln-dried items are selling well. The Chinese market was quiet at the time of this writing, and Vietnam was struggling with COVID-19, and so more effort is needed to find outlets for Cherry, Red and White Oak and Poplar for the upper grades for these species. Demand for these species in North American markets are mitigating the impact of the overseas slowdown. Sales of low grade and industrial lumber noted contacts continue to do well. Pallet cants and lumber, crossties, and Number 2A and 3A Red and White Oak were moving well. Framestock sales were brisk.

Ash supplies are not enough to meet buyers’ needs. This is due to the devastation caused by the Emerald Ash Borer killing off millions of trees, which can’t be salvaged for grade lumber. There is decent demand for green stocks but Ash logs are only trickling in. These circumstances have brought significant price rises in the past few months. Domestic and export markets are absorbing kiln-dried Ash. 

Sawmills cut less Basswood over the summer due to rising demand and prices for several other species. However, demand increased, and so markets are undersupplied. 

Cherry production has been kept low due to its lack of demand from consumers globally. Even though production is kept low and that it is not overwhelming markets, supplies are more than adequate to meet kiln-dried Cherry demand, including to China. Prices vary according to regions contacted. 

Residential flooring manufacturers are interested in green 4/4 Hickory, with volumes going to concentration yards, and business is brisk for the U.S. and Mexico.

The regionally important species, Hard Maple, is doing well on key markets including cabinet, flooring and furniture sectors. Sawmills have been producing Hard Maple ahead of other species due to its high demand and pricing, and to avoid stain in logs and green lumber. Those who need it appreciate the extra production, and advise inventories are approaching their target levels. 

Soft Maple demand is also strong as it is sold to many cabinet and wood furniture manufacturers. Most grades and thicknesses are attracting interest, noted contacts, and prices were reported as higher for most grades and thicknesses. Kiln-dried supplies are limited and keeping prices firm.

Solid Hardwood flooring is in demand, as it is for truck trailer flooring. Manufacturers have been struggling to get more lumber all year. There were inventory gains over the last two to three months, but many still need more lumber to support sales and production objectives. 

Chinese demand for Red Oak is slow, and buyers in Vietnam are not ordering as much of this species due to the COVID lockdowns. North American markets are better outlets for this species as demand from flooring plants is strong. Exports are brisk to Europe, the Middle East, and North Africa. 

Demand for green White Oak is robust. Prices stabilized somewhat in late August and early September, but were rising again. Kiln-dried White Oak is moving well.

The upper grades of Poplar are moving very well, with Green FAS & 1F prices advancing. Kiln-dried prices have plateaued, noted contacts. Vietnam exports have cooled for Number 1 Common and Number 2A Poplar. Domestic end users are keeping Number 1 Common and Number 2A highly saleable.

Business is steady for Walnut, with orders for green Number 2A and Better. Prices have been reduced for certain thick stock items, noted buyers. Contacts noted that demand in Canada and the U.S. is good for kiln-dried supplies, and to several other overseas markets, which is offsetting slow sales to Vietnam and China. 

According to the latest August statistics (the most current data available at presstime) from the Canadian Real Estate Association (CREA), national home sales were little changed between July and August 2021. National home sales edged back 0.5 percent on a month-over-month basis in August as transactions appear to be stabilizing at more sustainable but still historically active levels. Actual activity was down 14 percent on a year-over-year basis. That said, it was still the second-best month of August in history. The number of newly listed properties ticked up 1.2 percent from July to August. The MLS HPI (Multiple Listing Service Home Price Index) rose 0.9 percent month-over-month and was up 21.3 percent year-over-year. The actual national average sale price posted a 13.3 percent year-over-year gain in August.

According to CREA Chair, ideas on how to fix the housing market took center stage in the election of September 20th, with many long-simmering issues having a big spotlight shone on them over the last year-and-a-half by COVID. It provided the evidence many already knew that the housing crisis will not go away on its own. It was encouraging to see all the major parties looking at longer-term solutions to an issue that’s been around for a while. It also highlights there are no quick fixes, so the market will remain challenging for those who choose or have to engage in it. There are many other barriers to building, and is definitely easier said than done, he added.

CREA Senior Economist stated that Canadian housing markets appeared to be stabilizing somewhere between pre- and peak-pandemic levels – which is to say, still extremely unbalanced. With each political campaign promising to build more homes, he noted that at least the right conversation was finally happening. As anyone who tried to get even a small project done in the last year, availability of materials and skilled labor were not dials that could just be turned up to 11 whenever it was decided an individual needed them.

There were 2.2 months of inventory on a national basis at the end of August 2021, down from 2.3 months in July, which is extremely low, and indicative of a strong seller’s market at the national level and in most local markets. The long-term average for this measure is more than twice where it stands today. It was also the first time since March that this measure of market balance tightened up.

Ontario saw year-over-year price growth still over 20 percent in August, however, as with B.C. big, medium and smaller city trends, gains are notably lower in the GTA, around the provincial average in Oakville-Milton, Hamilton-Burlington and Ottawa, and considerably higher in most smaller markets in the province. The opposite is true in Quebec, where Greater Montreal’s year-over-year price growth, at a little over 20 percent, is almost double that of Quebec City. 

The actual national average home price was $663,500 in August 2021, up 13.3 percent from the same month last year. The national average price is heavily influenced by sales in Greater Vancouver and the GTA, two of Canada’s most active and expensive housing markets. Excluding these two markets from the calculation in August 2021 cuts over $130,000 from the national average price. 

The price of homes is still high, and many who would like to buy cannot afford these prices even though mortgage rates are relatively low at this time due to COVID-19 pandemic persisting. Those who own homes and would like to buy another home are often opting on spending for renovating the one they have, which is helping improve business for the Hardwood industry.

By Miller Wood Trade Publications

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

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