With the second wave of the COVID-19 pandemic hitting in several provinces across the country heading into fall, it is causing concerns for everyone in the Hardwood industry. Maintaining staff and keeping products on hand are a challenge, as the possibility of forced shutdowns loom should cases continue to rise. With the Throne Speech of September delivered, there is cautious optimism that business will continue to improve as the year end approaches.
The late summer and early fall wet weather hindered logging activity for certain areas contacted. There was a push to harvest and process softwoods as demand from the housing sectors in both Canada and the U.S. rose over the summer months. This has affected the Hardwood logging capacity in certain areas in Eastern Canada. Sawmills produced less Hardwoods, therefore resulting in a reduced abundance of Hardwoods for manufacturers and secondary manufacturers. Some expressed concern of shortages of supplies over late fall and winter. On the housing front, it was noted that home sales had increased in Ontario, with prices rocketing up in many areas, causing a sellers’ market. Prices were also noted as rising in Montreal.
Contacts say that Birch is still a strong contender on Hardwood markets even though it competes against many domestic and imported species. Sawmillers advise demand is keeping pace with developing production. Some indicate that there is more interest in No. 1 Common than for FAS, while others state the opposite. Red Oak sales were reported as weak since the start of the pandemic through August, but production for the species had increased during that time. They add that for some grades, supplies can’t respond to buyers’ needs, thus prices are increasing. Sales for lower grades of Red Oak are not as good as for the higher grades, they add. Sales for White Oak on domestic and international markets are reported as good. With a short supply and a solid demand, it is driving prices up. There is also interest in kilndried 4/4 No. 1 Common, with higher prices reported.
The regionally important species, Hard Maple, is seeing good activity with sales to the cabinet, wood components and flooring producers. Sales of this species increased, which contacts say is due in part to sales of cabinets, and as many people spent money on remodeling or on improved home building projects rather than take a vacation. Flooring producers have stocked up and have ample supplies on hand. Prices are reported as advancing for this species.
Sawmillers said there was no difficulty in selling Soft Maple for developing green production. Some are selling to cabinet and moulding manufacturers, while others say they are selling to furniture and components manufacturers.
On the domestic market, demand for Red Oak is steady. Green Red Oak production is starting to edge up, but there is a demand for even more volume of this species. Domestic markets for kiln-dried No. 1 Common and Better Red Oak are also performing well, although interest has not picked up as much for kiln-dried No. 2A as for green Nos. 2A and 3A Red Oak.
Sawmills and manufacturers are receiving orders for Walnut. Most grades and thicknesses are selling well. Some sawmillers said they were struggling to get enough Walnut logs, so supplies for some are not as adequate as they’d like them to be. This solid demand is pressuring prices.
Canada Mortgage and Housing Corporation (CMHC) announced that the national trend in housing starts increased for a third consecutive month in August, which was the most recent data available at press time. Higher multi-family starts in Ontario, including Toronto, drove the national increase. CMHC expects national starts to trend lower by the end of 2020 as a result of the negative impact of COVID-19 on economic and housing indicators.
The standalone monthly SAAR (Seasonally Adjusted Annual Rate) of housing starts for all areas in Canada was 262,396 units in August, an increase of 6.9 percent from 245,425 units in July. The SAAR of urban starts increased by 7.1 percent in August to 248,154 units. Multiple urban starts increased by 9.1 percent to 201,214 units in August while single-detached urban starts decreased by 1 percent to 46,940 units. As home building, renovation and remodeling projects all contribute to boost sales for the Hardwood industry, it was welcome news for businesses. It is cause for hope for an improved business environment for all in the short term, and hopefully in the longer term, as we continue moving through the coronavirus pandemic and hopefully soon see an end to this virus.
