Quebec Business Trends – February 2025
As most businesses usually enter a slower time of year during the Holiday Season, with planned downtime, this year some businesses extended that time due to most markets not performing well. Also, winter weather conditions have been milder and the ground is not frozen enough for logging activity.
The regionally important Hard Maple sales are slow, with cabinet and wood components manufacturers reducing their purchases of this species. Residential wood flooring manufacturers are also consuming less Hard Maple at this time. However, wholesalers and distributors are looking for more upper grade Hard Maple to support small and medium-sized cabinet producers.
Soft Maple market conditions are similar to Hard Maple. There is interest in FAS and kiln-dried FAS Soft Maple, but demand for the No. 1 Common and No. 2A Soft Maple is slower than for the equivalent Hard Maple items. Some companies comment that sales of No. 2A Soft Maple are a challenge.
As market conditions have not changed much over the past couple of months, exports make up the bulk of kiln-dried Ash sales. Contacts commented sales to China are holding up, with slower sales noted in Pakistan, the Middle East and Europe. Depending on areas contacted green Ash is not attracting interest from end users, but more from wholesalers.
Basswood demand continues to be weak, with business limited with overseas buyers. The exception being to established customers, but this activity has also dropped slightly.
Cherry demand on the domestic front remains low. Export markets, commented contacts, such as to China, are slower than they have been. Prices have trended upward, which is said to be a result of supply contractions.
Markets for kiln-dried Hickory are also quiet, but supply is keeping pace with demand. Demand of green Hickory is also noted as slow.
Red Oak sales have also declined on markets, with residential wood flooring manufacturers purchasing more White Oak than Red Oak for manufactured goods for truck trailer flooring. As a result, buyers scaled back their purchases of both Red and White Oak. While flooring plants reduced their No. 2A and 3A, and No. 1 Common purchases, sawmills are receiving more orders for green No. 1 Common and Better from wholesalers. Contacts noted that kiln-dried Red Oak prices are firm for most items, while edging up for others. Exports of kiln-dried Red Oak are brisk to several countries, with China leading.
Sawmills are seeing more activity for White Oak sales, while prices have come down for most grades and thicknesses. Exports to Europe of kiln-dried White Oak are slow for this time of the season. Some exporters reported having good order files for after the holiday period to Europe, Vietnam and China. The domestic markets are also performing well for this species.
Green Poplar supplies ticked up recently, according to some buyers, though markets are not overwhelmed. Prices remain firm. Kiln-dried Poplar is moving steadily in the U.S., Mexico and the Far East.
Walnut supply is meeting market demand. Contacts noted prices are soft for several items. Production of green Walnut items are low at sawmills but prices are firming due to this relatively low output.
On December 11, 2024, the Bank of Canada cut its benchmark interest rate by 50 basis points for the second consecutive decision.
The move, widely expected by markets and economists, brought the Bank’s policy rate to 3.25 percent, the top of its neutral range estimate of between 2.25 and 3.25 percent. Since June 2024, the central bank cut its benchmark rate by 175 basis points over five consecutive decisions.
“With inflation back to target, we have cut the policy rate by 50 basis points at each of the last two decisions because monetary policy no longer needs to be clearly in restrictive territory,” Governor Tiff Macklem said in an opening statement alongside the central bank’s decision.
The Bank stated “going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time.” There is uncertainty on the horizon. The Bank flagged a number of policy measures that were recently announced that will affect the outlook for near-term growth and inflation, including a reduction in immigration targets, new federal and provincial stimulus measures, changes to mortgage rules, as well as the uncertain backdrop for both Canadian fiscal policy and U.S. tariffs.
“The economic outlook is clouded by the possibility of new tariffs on Canadian exports to the United States,” Macklem said, noting that the tariff threat may also weigh on business investment.
“No one knows how this will play out in the months ahead – whether tariffs will be imposed, whether exemptions get agreed, or whether retaliatory measures will be put in place. This is a major new uncertainty.”
