As we head into 2022, contacts are cautiously optimistic for a better year than 2021 in the Hardwood industry. The year was filled with many challenges of the ongoing COVID-19 pandemic, but with businesses re-opening and a sense of returning to a more normal life, it is hoped the economic recovery will continue to strengthen. With the holiday season behind us, the expected slowdown of the period should pick up heading through winter and planning for early spring. It is hoped that the labor shortage being felt in most areas will improve as the economic recovery takes hold. Demand for Hard and Soft Maple, as well as Oak, are the leading species, as has been the case for some time.
Red Oak sales are doing well due to the demand in the remodeling sector, flooring and stair components. Oak flooring is a favored consumer product. Production is sufficient to meet current demands, although at this time it is seasonally slower with prices noted as stable.
Interest in upper grade material for White Oak is best, even though production is not high, which is putting a strain on some grades and pushing prices higher. The same is noted for kiln-dried stocks. However, prices are steady for the Common grades.
Demand for green White Oak is mixed. Interest in upper grade material is best. At the same time, production is not very high, which is straining FAS and Select supplies and pressuring prices higher.
Pallet and lumber cants were in great demand in 2020 and 2021, where it grew for wooden pallets and raw materials faster than the supply could provide. Production has since edged up bringing supply and demand to a more balanced level.
Ash sales saw an increase on domestic markets over the past year and to the U.S. Shipments are also noted as good to the Middle East and to Europe. Basswood sales have been favorable for sawmillers and wholesalers. Demand increased in 2021 due to new home construction and the renovation markets both in Canada and the U.S. Basswood was in tight supply, due to sawmills producing the higher-priced species.
Exports of Cherry to China were good, which sustained this species as domestic and U.S. markets were weaker. Supply is still ahead of demand, with prices reduced slightly for this species.
Production of the regionally important species Hard Maple remained high over the past year, with inventories having increased over late fall and early winter. There is a balance, note contacts, between supply and demand at this time. Wholesalers and secondary manufacturers are ramping up their supplies but, depending on areas contacted, supply is lagging demand.
Soft Maple is noted as the strongest selling species in North America. Sales are vibrant with longtime customers, and with end users seeking it as a replacement for Hard Maple which is much more expensive at this time than its equivalent Soft Maple. Components and cabinet manufacturers are buying more Soft Maple. Kiln-dried prices are still advancing.
Flooring manufacturers in many regions had difficulty finding supplies of Oak to manufacture their products. Competition was rather stiff, and prices rose to levels not seen before. The situation has improved in the last three to four months. They were concerned with hunting season in late fall, the holidays and winter weather conditions impeding availability.
According to Statistics Canada, the economy added 31,200 jobs in October 2021 (the most current data available), versus expectations for a gain of 41,600, according to the median estimate of economists surveyed by Bloomberg. This figure suggests the recovery from the COVID-19 recession could be slowing to a more sustainable pace. Bay Street economists had predicted the economy would add about 50,000 jobs for that month after creating more than 157,000 in September, as COVID-19 restrictions loosened and vaccination rates continued to rise.
The general public as well as financial markets shifted their attention to inflation, which has accelerated in many big economies over the second half of 2021. Slower growth could ease inflation worries, although most of the pressure is coming from supply constraints related to the pandemic and climate change.
Canada’s unemployment rate decreased to 6.7 percent from 6.9 percent, the fifth consecutive monthly decline. Employment in retail increased by some 77,000 positions, a large gain that pushed jobs in the industry back above pre-pandemic levels for the first time since March 2021, just before another wave of COVID-19 forced provinces to tighten social-distancing rules.
According to Canada Mortgage and Housing Corporation (CMHC), the trend in housing starts was 264,264 units in October, down from 270,661 in September, a seasonally adjusted annual rates (SAAR) of housing starts.
“The six-month trend in housing starts declined from September to October, as the retreat in total starts from their earlier 2021 levels continued,” said Bob Dugan, CMHC’s chief economist. “For SAAR housing starts in Canada’s urban areas, a slight increase in single-detached starts didn’t offset a larger decrease in multi-family starts in October and led to a decline in overall starts for the month. On a trend and monthly SAAR basis, however, the level of housing starts activity in Canada remains high in historical terms.
“Among Vancouver, Toronto and Montreal, Vancouver was the only market to register growth in total SAAR starts in October, due to a rebound from the prior month in the multi-family segment.”
Despite the slight downturn, home renovations and home sales have been strong and have contributed to a strong Hardwood sector. It is predicted that the housing and renovation sectors will continue to be strong throughout 2022 and into 2023.
We wish everyone a healthy and prosperous New Year!