Heading into 2022, contacts are optimistic business will continue normally despite the Omicron variant spreading quickly across the country, and as new provincial restrictions are put in place to fight this 4th wave of COVID-19.
Several contacts noted in some areas green Red Oak production had increased, but supplies were not exactly flooding the market. As is habit, whitewood output replaced some of the Oak production going from fall to winter. Kiln-dried inventories are meeting demand. Pricing is softer for many grades and thicknesses.
It was noted that White Oak production had increased in the second half of 2021. While developing green lumber supplies were not excessive, additional volume had helped to stabilize prices for most grades and thicknesses.
Domestic markets for Ash are performing well, and also in the U.S. border states. There is demand from the recreational vehicle sector for this species as that industry is reportedly booming, which is offsetting export sales that are down.
Basswood supplies are not sufficient to meet demand due to end users’ demand and mills prioritizing higher valued species in their cutting schedules.
The regionally important species, Hard Maple, is seeing solid demand, especially for Nos. 1 and 2 White and No. 1 Common and Better. Supplies are only marginally adequate as sawmills are struggling with log shortages.
Soft Maple market demand has been building and is strong. Wood component manufacturers and cabinet producers are actively purchasing this species to shore up their supplies. Demand is also good from furniture manufacturers and wholesalers.
According to comments, the furniture and cabinet sectors expect a strong 2022, even though they caution of ongoing challenges like the pandemic, disruptions to supply chains and securing skilled labor, which will continue to have a major impact. The cabinet sector notes they have order files booked into April, and there does not appear to be a sign of slowing down for consumers wanting to renovate or buy new homes. Of concern are the increased supply costs affecting projects already in production and the added cost of materials for the new projects. It will be a struggle to cover new orders, which could push longtime customers to look to competitive products just to get jobs off the floor and to their customers. Better availability of inventory is expected to be gradual, most likely by summer or fall. It is also expected that commercial project interest that had slowed in the early months of COVID will rise and compete with the renovation and remodeling sectors for raw materials that will remain difficult to secure in 2022.
Some trends seen are: the aging living in place, where people do not want to live in a seniors residence; the multi-generational living and creating spaces that suit different ages, and micro-living, as the cost of real estate continues to drive this area, along with the demand for affordable housing, which all drive more business. The labor shortage and employee retention being felt across the country in all industry sectors is a big issue that will not be resolved quickly. Attracting youth to the trades is a challenge as the cabinet sector is not a well-known trade to youth, and often one they do not consider. The challenge requires a concerted effort to fix.
Other concerns seen are hikes in costs of manufacturing, insurance, labor rates, and health and safety, which all make it difficult to offer competitive pricing, and that are also competing with cheap imported products. These challenges continue to test the resilience of the sector who employ a great number of citizens and contribute to the economy. It is important to support the “Buy Canadian” message.
It is predicted that the housing market will remain strong and see only slight movement in interest rates, thus keeping residential and commercial projects seeking materials to keep projects moving.
