Quebec/Ontario Business Trends

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The optimism continues in the eastern Canadian SPF community. An Ontario producer describes the market this way…“demand is extremely good and pricing is through the roof.” The Natural Resources Canada current Softwood lumber price data shows, for Eastern SPF, in Canadian dollars, a 52-week average of $841, the 4-week average at $1239 and for the latest week available, early February, the price at $1285 Canadian. 

A Quebec wholesaler said “supply is low and demand is high and people are already thinking about the spring.” A Quebec producer remarked that “the problem is that nobody stopped building throughout the winter, because of the mild weather we have experienced so far, even though we now are having a bit of a winter spell up north for sure and at least some cold weather down south.” An Ontario manufacturer noted that “even though real winter is now happening in some areas in the U.S. and throughout Canada, if you look at the calendar, you are thinking February is almost over (even though we are only in mid-February at the time of this writing), so logically it is spring time. People are thinking how am I going to get my lumber for spring because I don’t have any in my yard yet at this point and I haven’t even hit my high season yet!” Reported an Ontario producer, “It is multiple factors impacting the market right now and the stars seem to have lined up properly, you could say. It is a perfect storm, meaning you have favorable demand and supply conditions, good general economic conditions, a new government in the U.S., stimulus packages available etc.” 

Another aspect is that “you have an improvement in the COVID situation,” indicated a Quebec wholesaler, “no matter how you look at it…at least everybody believes it is true, even if it is or is not, whatever, that is what the mindset is right now, with infection numbers going down in Ontario and Quebec.” Looking ahead, an Ontario wholesaler noted, “The economy cannot continue to be stalled forever, but the economy that is touching the wood products, whether it be engineered wood, which is also running like crazy, when it comes to wood products for construction, that sector has not slowed down and I don’t anticipate it to be slowing down for 2021.” An Ontario manufacturer replied “supplies are not great, so there will be some shortages throughout the pipeline, no doubt about it. Those that have good relationships with their suppliers will benefit and if not, for those who have not treated their suppliers correctly, they will have to figure out what to do.”

It was reported by a Quebec wholesaler that currently, “across the board, there is nothing that doesn’t sell well. The hottest item right now, the biggest thing that people cannot find, is premium 2×4, 2×6, 2×8 and 2×10, those things are unbelievably hot. People are getting prices that are $50-$100 above print on some items. We are still paying a bit of duty noted an Ontario producer, but it is not being looked at as a deterrent to selling in US vs. Canada. Really the duty, at its current level, is just not part of the equation any more.”

An Ontario wholesaler described transportation as satisfactory. “The weather is not helping and there have been some road closures up north, so that makes it tougher. We are in our traditional period where there are some car shortages occurring across the pipeline. This is due to weather for one reason. The other reason is every year the railways are taking cars off line because in winter it is best for them to have less cars on the tracks if they have one in service, it can cost them money, because of weather, so for less hassle and less maintenance, they create this almost a false sense of car shortages. They say there is a shortage but it is because they are literally taking cars off the line.”

On the Pine side, one Ontario producer reported that there is “no white Pine to be had for most everybody out there. As far as the retailers and the box stores go, they are having a heck of a time to source it.” A Quebec producer indicated that “overall, prices are quite firm and they are rising. Some of the low grade guys have stepped up a notch there too, and that has helped out a little bit. There are really no items to speak of that you can’t move. There is a pretty good diversification across the board. I see the market will be much like last year, with a big peak then it might taper off a little bit. Everything is really on supply and demand.”

Regarding what is driving this, noted a Quebec wholesaler, “The demand is because people just have so much free time on their hands. They are busy doing little projects and fixing things up around their residences, or cottages, if they can get in this time of year. It is amazing how much material these box stores go through, echoed an Ontario wholesaler, that has probably attributed to a lot of it. With lock downs or nightly curfews or stay at home orders, people are bored and they have time available that they didn’t normally have in the past, so they are doing repairs, renovations and building things.”

“This good market is hard on inventory and there are a lot of holes out there that you are trying to replenish. It makes it difficult alright,” remarked a Quebec producer. “Spring is not even here yet and that is your big push time. It is going to be hand to mouth pretty much all summer,” an Ontario producer proclaimed. “Overall transport has been pretty good for us observed a Quebec wholesaler. These next few months are going to be busy and overall it is going to be a good year.”

A Quebec manufacturer reported that “there is lots of material to cut, there is no problem there. You could always use a second shift on production, just to shore the inventory up, but it is hard to get workers out there.”

 “It is a common problem and it doesn’t matter who you talk to, you just can’t find anybody to work,” said an Ontario counterpart. “I could see this coming several years ago, but it has been really in the last 3 or 4 years that it is emerging as such a prevalent issue. Young folks don’t want to do any kind of manual labor. At work, they are interested in a controlled environment, where they can just work on a computer, or work at a desk job and not get their hands dirty.”

By Richard Lipman

Richard Lipman Guest Writer Miller Wood Trade Publications

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