An Ontario producer summed up current trends by saying, “The market is very, very strong right now. There was another rally again last week, which pushed the pricing further up, which is quite incredible. I don’t know anybody out in the marketplace that doesn’t see this continuing for some time.”
One Quebec wholesaler noted, “I don’t see things softening for the next 12-18 months, it really is a phenomenal time to be in the Softwood lumber industry right now. This helps to offset some of the slower, tougher times we have seen in the past, and if you can’t make money in the Softwood market today, you have a big problem!”
“The challenge,” according to an Ontario wholesaler is, “supply and demand —there is not enough supply to meet the demand out there at the moment and nobody really knows what is going to change that. I am at a loss to identify the catalyst that could slow the demand down at the current time. We wonder when will that be and what it will take to slow things down?”
“I don’t see the prices going back to where they were 3 or 4 years ago, so I think $1,000 wood is pretty much average now. The pricing is not going down to $400 wood again at any point in the foreseeable future.”
A Quebec producer told me they are “often asked what is driving this. It is home renovation and home building. A lot of people have now been in COVID lockdown for just over a year and they are now really taking to spending money on their home. With the first lockdown, people found out what was wrong with their homes, or what they wanted to fix, because they had not spent that much time at home before. So buying new housing or updating their current housing is the big activity and with interest rates where they are right now, any of those possibilities in doing home improvements makes it much more feasible. They can’t put their money anywhere else, they are not going on vacation, so they might as well spend it on your home.”
“I find it interesting,” recounted an Ontario manufacturer, “where we were so used to looking at what products were and were not hot. But right now, across the board it is strong, there is no one item selling better than anything else. Everything is moving nicely, every product that we have is selling well. There is demand in both the States and Canada. In the States people are having a hard time finding and keeping wood on the ground. Up here, there are folks worried about whether they will have wood to sell and the amount of time it is taking to source material has increased considerably for many. There are no crystal balls, so it’s anybody’s guess when things will be more like what we know as normal.”
Said one Quebec manufacturer, “A lot of the wholesaler/distribution people we deal with say that the wood is going out as fast as it is coming in.”
Said a Quebec wholesaler, “Nobody is looking to overbuy at the levels we are at, everyone is trying to play it lean and mean. You want to make sure they ‘burn it and turn it’; they need to make money off of it, so if anything were to happen to the markets, they would not get stuck with that inventory being upside down in their yard. That would be costly. The forecast for the next 6-12 months is really good. I do not see a slowdown happening.”
An Ontario wholesaler did note that, “Transportation is an ongoing concern. Rail has been difficult and very spotty up and down with what we are able to manage and what they are able to provide for service. The trucking situation in the US has also been difficult. From what we hear, a lot of the distribution yards in some major centers, like Buffalo and Detroit, see that it is difficult to find trucks, because they can’t get on-loading times and they can’t get appropriate off-loading times wherever they are going. With COVID, everyone needs appointments and there is less staff in yards. It has been a real challenge. There is so much demand for the trucks that they must get the times they want, or they could go somewhere else.”
Pine markets are pretty much unchanged over the last couple months. A Quebec producer noted that “The inventories are low and the prices are obviously firm and gaining. The market is pretty diversified out there, most of the retailers and big box stores are just happy to get what they can get.”
“Lots of shipments are delayed because of low inventories,” reported an Ontario wholesaler.
An Ontario producer noted, “Mills are still producing and everyone is putting product out there, but it takes time to process. To dry it, grade it, dress it and get it in the pipeline, it takes time. You can’t wiggle your nose to make it appear.”
One Quebec wholesaler indicated, “I know the SPF is off the map, but as far as the Pine goes, it will be pretty stable right through. It will take a good while before we will see a situation where supply meets the demand that is currently out there. The inventories are low so that keeps the prices stable. In terms of activity in the States, which is another go-to market, if people can’t get material here or if the prices are lower there, customers will shop there. But the prices in the States are actually higher than they are in Canada on the Pine side and with the differential on the dollar, you are not going to have the bigger distribution centers looking to try to supplement their supply there, because currently it is just too expensive and that is helpful to the Canadian market too.”
It was noted by a Quebec producer, “The weather has been quite favorable for us, we could use some rain, but it has been a good spring so far weather wise and market wise. Luckily this early spring has not lead to fires yet. In the north there has been rain, so they are pretty good up there at the moment. It is pretty early for fires and Softwood producers in general don’t need that challenge in this market – one stumbling block at a time! The south is quite dry in some areas and the temperatures have been well above normal, so stay tuned potentially for an early fire season. But hey, things are genuinely very positive.”
Natural Resources Canada is showing the weekly current lumber price at $1,405 Canadian dollars, per thousand board feet on 2×4 eastern SPF, along with a very strong 52-week average price of $969, and a four week average of $1,409. Canadian housing prices are high. In December, the Canadian Real Estate Association expressed concern that the average house price in Canada was expected to reach $620,000 throughout 2021, but then reported in late March that February home sales were up 39.2 percent compared to a year ago and the average price had surpassed $678,000, up 25 percent from the previous year. The pandemic is helping to fuel the price increases and people are leaving the expensive major cities but prices are climbing in the spots they are moving to. The lumber prices are at record highs, and that is adding tens of thousands of dollars to the cost of building a home, depending on its size according to the Canadian Home Builders Association.
A Quebec producer mentioned, “People are expressing concern that if home costs get beyond what people can afford, it could affect the ability to attract skills, talent and workers to certain locations. Getting people to come work in our industry is already hard enough. I see the Federal government is hearing more calls for them to look at ways to control the housing prices.”