Quebec Sees Consistent Sales
The summer construction break, and rainy weather over the June-July period, along with a slower economy, resulted in a decline in hardwood lumber production and the manufacture of finished goods. Some contacts report that sales to millwork and moulding customers and wholesalers are good, however. There is a reduction in demand from cabinet manufacturers, truck trailer flooring and wood components sectors. Others noted their sales are based on length (10 ft. and 12 ft.) for many items, and so suppliers are getting their prices for these items. Shorter lengths are more difficult to move.
Demand for the regionally important Hard Maple slowed over the summer compared to its sales volumes during spring. The slower sales and higher late spring/early summer production created a downward pressure on some prices for green stocks. It was noted that kiln-dried markets were weaker than green markets, particularly for thicker stocks. Contacts stated Soft Maple is selling well, however reduced activity was felt over the summer, which is normal for this time of year.
Ash conditions were hampered by poor logging conditions according to certain areas contacted. Some mills are avoiding sawing it due to lack of trees to cut and their mortality rate because of the Emerald Ash Borer.
Basswood production is also limited, however sawmills are finding buyers for their output. Transactions for this species show stable pricing for kiln-dried items.
Cherry production is low, keeping pace with demand from both domestic and international markets. Reports from contacts are similar for Hickory production and sales, which are reportedly lower than they were this time last year. Prices for this species are in a slightly downward slide.
Hardwood flooring manufacturers noted Red Oak is more readily available due to the lessened competition and demand from the truck trailer flooring manufacturers. Availability is meeting buyers’ needs and prices are stable. Red Oak sales, especially to China, appear to be on pause while trade deals are worked out. Order files are not robust for this species. Inventories are starting to grow, but are still manageable.
White Oak on the other hand appears to be moving well, and depending on areas contacted is a best seller. Demand is stronger for specific lengths, and some are seeing increased requests for shorter stock as well. Sawmills are producing less of this species so its availability is more in line with market demand. Prices for some kiln-dried items are stronger stated contacts.
Poplar demand and production is similar to White Oak, and sales made are more from distributors and the moulding and millwork manufacturers. Exports are also down.
Contacts noted that Walnut purchasing is down, but supply and demand are relatively balanced. The same is said for hardwood frame stock requirements, where demand is low, and output from sawmills is also low. Prices are thus stable. Hardwood cant production is meeting market needs, and pallet manufacturers say their lumber inventories for current production levels are adequate.
Canada’s inflation rate rose in June as the Consumer Price Index (CPI) increased to 1.9 percent annually from 1.7 percent in May, according to Statistics Canada’s data. Economists mostly agreed that this data made a Bank of Canada (BoC) interest rate cut on July 30 unlikely, at the time of writing. On a monthly basis, the CPI increased 0.1 percent in June. Seasonally adjusted, CPI rose 0.2 percent.
The main reason for the jump was gasoline. While gas prices were still down 13.4 percent from a year ago — a drop due to the removal of the carbon tax — that decline was smaller than the 15.5 percent fall of May. Consequently, even though gas is cheaper than last year, its downward pull on the overall inflation rate has weakened. Prices also increased for goods like cars and furniture. Economists had expected inflation to rise to two percent in June.
Importantly for the BoC, measures of core inflation — which ignore the most volatile components to get a clearer view of underlying price pressures — remained high. CPI-median rose 0.1 percentage point to 3.1 percent from last year, while CPI-trim was flat at three percent.
BMO Chief Economist Douglas Porter stated that underlying inflation remains strong, noting the surprising job gains reported in mid-July that had already made a cut less likely. “We’ll need to see a material deceleration in core for a cut in even the September meeting to be in play, barring a steep deterioration in the economy (which can’t be ruled out with the ongoing tariff uncertainty).”
A recent survey shows Canadians are worried about their finances, with two-thirds of respondents desperately awaiting further interest rate cuts. These include shelter costs that tend to shift slowly – with rent, the single biggest contributor to inflation over the past year, rising 4.7 percent from last year; mortgage costs declining but still up at 5.6 percent; and the trade war’s impact on durable goods and some groceries.
Durable goods prices rose 2.7 percent in June, the most recent data available at press time, up from a two percent increase in May. Passenger vehicle prices rose 4.1 percent from a year ago, with StatCan also measuring the first year-over-year rise in used car prices in 18 months. Furniture prices were up 3.3 percent from a year ago.
Tariffs were a likely cause in prices for clothing and footwear rising faster in June (2 percent year-over-year) than in May (0.5 percent), Statistics Canada said.
The headline inflation rate of 1.9 percent continues to be held down by the removal of the carbon tax on energy in April. When energy is excluded, the CPI rose 2.7 percent, underlining how much pressure remains in other parts of the economy.
All of these factors are being taken into consideration by the hardwood industry as they wait and see what the outcome is before moving forward on their plans.
