Quebec Business Trends

Sept Issue

Share this...

With the construction break in Quebec, there was the usual slow-down in activity. Businesses were working hard to obtain the supplies they needed, as well as find skilled workers, as is the case for most businesses. With easing COVID-19 restrictions, companies are focusing efforts on finding logs or lumber they need to move forward as the economy continues to recover. Sawmills say they have better log inventories now, and production is gaining traction, although labor shortages and transportation issues are a challenge. Most markets are doing well and absorbing developing production. Sawmills, wholesalers and end users are seeing higher fulfillment rates on their purchase orders. Some state they are buying certain items less as their inventories are mostly in good shape. Flooring and cabinet manufacturers are seeking more materials. 

Contracts report that Canadian, U.S. and Mexican Red Oak markets are performing well. China is still being the greater buyer of steady volumes for this species. Kiln-dried inventories are thin for most grades and thicknesses, thus price has risen. Green Red Oak production has improved over the summer, even though work was to keep whitewood log decks supplied. Supply is marginally adequate to satisfy buyers’ needs.  

White Oak demand for green and kiln-dried products is not being met. It is hard to find sufficient volumes of White Oak saw logs, and green lumber output is limited, noted contacts. 

Ash is reportedly doing well on domestic markets, sellers report steady business to end users and wholesalers. Export sales to secondary manufacturers are also good, but sluggish to China. Ash production was increasing along with many other species as we moved through the summer, but supplies were still tight for some items. 

Basswood demand from established customers is remaining at a good pace, added some contacts. There were also more prospective customers seeking additional Basswood supplies or as an alternative for the more difficult to find species or wood composites. Demand from Southeast Asia and Mexico end users were seeking good volumes of Basswood.

The regionally important Hard Maple gap between supply and demand is getting narrower, due to improved production in most regions in Canada and the U.S. border states. Flooring manufacturers, cabinet and components producers are vying for this species.  

On the Soft Maple side, furniture manufacturers and cabinetmakers are keeping up a steady demand of this species and are in need of more. Demand of this species varies by grade; upper grade availability is lagging demand, whereas No. 1 Common and No. 2A are more available. 

Almost everyone who is producing, selling or using Cherry has had to adjust to the reduced demand of this species from China. Although demand for Cherry has risen in the U.S., Mexico and Canada from their very low levels, contacts noted. 

Market activity for Hickory is vibrant, especially with residential wood flooring. Manufacturers have managed to build larger Hickory inventories over the last several months. Demand by consumers for Hickory flooring is holding up. Hickory is also moving to other end user sectors domestically and to export markets, led by Mexico. 

It was noted that residential and truck trailer flooring manufacturers have been very busy. Prices for Oak strip flooring have climbed to record highs, with demand approaching levels seen in the mid-2000s. Truck trailer flooring markets are strong with plants trying to ramp up production. Flooring manufacturers say they need more lumber to meet current and anticipated demand. With the housing sectors in both the U.S. and Canada, it doesn’t appear it will let up any time soon.

Flooring manufacturers are also aggressively pursuing raw materials of Red Oak, and green Nos. 2A and 3A. Demand from wholesalers for No. 1 Common Red Oak is also good. Exports to China for kiln-dried Red Oak are sluggish, which is seen as normal for this time of year. 

Demand for Poplar remains solid and strong. Interest from long-time customers is good, and shortages of competing materials are also helping sustain Poplar demand. Poplar producers and users watch softwood availability and pricing since both materials vie on the same markets. With softwood prices coming down, it has had little to no effect on Poplar business. 

Walnut is doing well on the domestic front, in the U.S. and demand has climbed from Mexico. 

Despite the pandemic, close to 70 percent of business owners in Canada feel optimistic says a Canadian Imperial Bank of Commerce (CIBC) poll. The CIBC study suggests business owners feel brighter days may be ahead: 69 percent say they feel optimistic about the long-term future of their business. Findings also show there is a downward trend in how business owners feel they have been negatively impacted by COVID-19: 58 percent, down from 68 percent reported in November 2020 and 81 percent in April 2020.

“Canadian business owners continue to show extraordinary resilience during these difficult times,” said Senior Vice-President, Business Banking, CIBC, in a prepared statement. “As the economy moves toward opening up, I encourage owners to seek advice about any additional relief they may need, including help with cash-flow management or additional future-proofing to meet their long-term ambitions.”

Top concerns remain similar to when the pandemic first broke, but amongst fewer business owners. A reduced demand for products/services is still a worry for 34 percent (-18 percentage points from last April), while 21 percent have concerns for the overall viability of their shops (-11 percentage points from last April). Conversely, there is a slight uptick in worries over the availability of inventory/materials to 19 percent, up seven percentage points from April 2020.

Many business owners have implemented a number of changes to manage through the pandemic and into the future. A quarter (26 percent) have undertaken health and safety measures beyond legislative requirements, while a similar number (25 percent) have increased their online presence and 21 percent have introduced new payment technologies. Almost a third (29 percent) reduced operating expenses to get through the crisis while 20 percent had to dip into savings.

Main ambitions moving forward are to grow their business (34 percent), go from surviving to thriving (32 percent), remain operational (29 percent) and develop new revenue sources (25 percent). 

By Miller Wood Trade Publications

The premier online information source for the forest products industry since 1927.

Share This
Related Articles