Lumber contacts reported that demand for most species was up as recently as March. With a positive housing market continuing at a strong pace, those in the Hardwood sector are more optimistic for 2021 and moving into spring. With COVID-19 vaccinations increasing, there is renewed optimism that the pandemic will hopefully end as more and more inoculations are completed. With the onset of spring, sawmills are keen to avoid potential stain during this time.
Sources reported that Ash sales are good both on domestic and international markets. Sawmills are having no difficulty moving developing production. Hickory demand has improved to flooring and finished goods manufacturers. It was noted that the furniture, cabinet and moulding and millwork manufacturers were also vying for this species as well as to export markets. With the onset of spring, it was anticipated that availability of this species would improve.
The regionally important species Hard Maple is doing extremely well, in all grades and thicknesses, as the tight grained whitewoods, are prominent in the cabinet sector. It was noted that some furniture manufacturers were also interested in this species.
In certain areas, such as the U.S. border states, supplies of Soft Maple are being sought to supplement limited Hard Maple availability. Contacts noted that demand for Soft Maple is increasing from established customers, as well as from the furniture, cabinet and mouldings and millwork sectors.
Flooring manufacturers are seeking more Oak supplies, but are limited by the supply. It was noted that truck trailer flooring producers had large backlogs for finished goods. Both sectors are having difficulty finding sufficient Red Oak and White Oak for their needs. Some gains were made in early March as there was an increase in production, but not enough to meet the total demand. As such, prices for these species, as for most species, have climbed.
Red Oak demand is strong on both domestic and export markets. The demand is from residential flooring producers and truck trailer flooring plants, the cabinet sector and the strong housing markets in both Canada and the U.S.
White Oak supplies are thin, with sawmills wanting more logs, while wholesalers and flooring producers would like to increase their green White Oak lumber supplies. Contacts noted that demand from overseas and domestic markets are undersupplied for kiln-dried products.
Demand for Poplar is very strong and sawmills cannot produce enough of this species to supply it. Contacts note that demand from the U.S., China and Vietnam for this species are also strong. Another species that is in great demand, said sources, is Walnut. Green and kiln-dried Walnut are said to sell very quickly once ready for shipping. Competitive offers are received for most loads. This is resulting in steep price increases.
The trend in housing starts was 242,777 units in February 2021, which was the most current data available at presstime, down from 244,963 units in January 2021, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.
“The national trend in housing starts declined in February, but remained elevated,” said CMHC’s chief economist. “Single-detached SAAR starts declined in February following strong growth in January, particularly in Montreal. Multi-family SAAR starts also declined in several centers in February, further contributing to the decline in the overall trend.”
CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations, analyzing only SAAR data can be misleading, as the multi-unit segment largely drives the market and can vary significantly from one month to the next.
The standalone monthly SAAR of housing starts for all areas in Canada was 245,922 units in February, a decrease of 13.5 percent from 284,372 units in January. The SAAR of urban starts decreased by 14 percent in February to 231,042 units. Multiple urban starts decreased by 15.8 percent to 163,757 units in February while single-detached urban starts decreased by 9.3 percent to 67,285 units. Rural starts were estimated at a seasonally adjusted annual rate of 14,880 units.
According to Statistics Canada, Canada posted a trade surplus of $1.4 billion in January, the first since May 2019, owing to a sharp 8.1 percent increase in merchandise exports. It was also the largest surplus since July 2014. Imports rose 0.9 percent in January compared with the previous month.
Total exports rose 8.1 percent in January to $51.2 billion, with increases in all product sections. This was the largest percentage increase since the rebound in the summer of 2020 that followed the easing of restrictions following the first wave of the pandemic. Excluding the strong fluctuations in 2020, the January increase was the largest since August 1995. Approximately one-third of the increase in the value of exports was driven by price growth. In real (or volume) terms, exports were up 5.1 percent.
Exports of forestry products and building and packaging materials (+10.7 percent) also contributed to widespread growth in January. The increase was largely attributable to lumber exports (+30.4 percent), which reached a record-high $2.1 billion in January. Since April 2020, exports of lumber have risen every month except one, mainly on strong price growth. As explained in the February Industrial product and raw materials price indexes releases, demand for lumber has been rising consistently for several months. In January, although prices rose again, the increase was largely attributable to higher volumes. Year over year, the value of lumber exports has more than doubled.
Exports to the United States rose 11.3 percent in January to $37.2 billion, the highest value since September 2019. The spike in exports of aircraft, gold bars, crude oil and lumber was largely due to stronger trade with the United States. Following the steep declines in the spring of 2020, exports to the United States had remained below pre-pandemic levels. For the first time in January, exports to the United States were higher than February 2020 levels.
