Quebec/Ontario Business Trends

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In the SPF market, according to an Ontario wholesaler, “Prices did go up to a very high level recently. We were ecstatic when lumber hit the $1000 mark, and who ever imagined that the price would hit $2000? I never anticipated that, but I knew there was no way that that was going to be sustainable, no chance. We were selling lumber at $2100 (Toronto), it was unbelievable.”

A Quebec manufacturer reported that, “Business is currently slow and prices are heading downward rapidly. Random lengths came down this week, 2×4, in the Toronto market, they dropped off a lot. There is really nothing selling right now, it is pretty simple.” 

One Ontario wholesaler noted, “Business is definitely going downward. At the field level we have heard that things have slowed down a little bit, as there are delivery delays on materials. You can build, you can do your foundation, you can do your flooring, walls and trusses, but if you don’t have windows, you can’t do anything else and you have to stop work. If you don’t have your windows and doors in, the bank doesn’t advance you any money so you can’t start a new project because you are out of funds. So credit is a problem, material supply for building products, not just lumber, but other materials, are slowing down the demand.” 

It was reported by one Quebec producer that “COVID is getting better in many jurisdictions so people are doing other things besides renovating and building that extension on their house, so there is definitely a slowdown period here. Overall, however, the outlook for the next 18 months is still positive, but there is definitely an adjustment on price and we expect business to get back to whatever becomes the new normal in the next week or two. But we do not know what the price will be at that time.”

 Said an Ontario wholesaler, “We will find a trading level and then we will be back to trading lumber, just as we always have. Prices should bounce back up, but not to $2000, that is not going to happen. I am not sure what th

On the Pine front, there is “not a whole lot different than two months ago,” noted an Ontario wholesaler. “There is still a pretty high demand out there for product and prices are very firm. In mid-summer there could be another price increase again because of the stumpage dues that the Ministry has imposed on the mills.” 

“Even though Pine is a pretty small contributor compared to the Spruce, a drop in the bucket,” according to an Ontario 

manufacturer, “we are still subject to that. What the Ministry has done is that they have increased the stumpage on Softwood when cutters are in the bush on crown land. It is indexed and they use it as a benchmark against our stumpage fees. They do that adjustment at the end of every month. As the standard increases, and in the U.S. everything has increased dramatically, that means our log costs have gone up dramatically also and this is what is driving the increase in pricing. Mills are really at odds at how to handle this. Unlike Spruce and commodity products, where prices can be up every week, the Pine business has always traditionally been a very stable market, so you cannot really impose increases every month. Our company is trying to do it maybe every three months. What you have to live with is the perception out at the other end is that the mills are gouging everybody, which is not the case at all. We are only trying to recover our cost that we have to expend on the increased cost of logs.” 

“It would be nice if we could just increase our price and take advantage of a market that you might only see once in 12-15 years,” a Quebec producer noted. “Retailers are seeing Spruce prices for product coming in to their yard go up regularly, but as soon as something happens with the White Pine, it seems like there is a big problem. At some point we are all going to be scrambling to get an order again. The bubble is going to break and things are going to go back to normal.” 

According to an Ontario wholesaler, “I think this strong market is probably going to hold tight for the rest of the year at least before we see that. Inventories are very tight at all mills, some may have material on the ground but it is not dry and not ready to be processed and that is creating a big demand out there. People are trying to find available material and that is what is keeping prices firm out there.” 

A Quebec wholesaler indicated that “in terms of what is selling, when you get in to a market like this, it is amazing what people can use all of a sudden that they would not entertain before, as an alternative. They will replace Spruce with White Pine in the lower grades, when there is less lumber available. The pattern material is certainly in high demand and the board market is still quite strong. The market overall is pretty good, pretty much through the whole gambit of grades and sizes, so everything is moving fairly well….if you have it.”

You can’t ignore that labor comes up in most conversations. A mill in Ontario told me, “It is hard to get people to work. We have a pretty serious manpower problem all across the mills. It is so difficult to get anybody to work. That creates a bottleneck as well. You might have material but you cannot process it efficiently if you don’t have the people and everybody seems to have this problem.” 

A Quebec producer reported that, “This is nothing new, it has been going on for at least the last several years, but it is really prevalent this year. Perhaps with the COVID support from government, people are making more money sitting at home and although those programs are ending, we are still not seeing people show up at the door.” He went on to say, “The weather has been good to this point in the year, it has been quite favorable for anybody that is air drying material, with little or no rain, warm temperatures and windy conditions. But it is getting dry in some regions, and if it continues with the dry spell we could see restrictions imposed on logging due to the risk of fire, and that is always a concern coming in to the middle months of summer. That would be tough.”

According to an Ontario wholesaler, “Trucks are always a problem. It is not too much of an issue in our local area, but scheduling is always getting interrupted because of things that are happening, maybe on a back haul, that are not coming together. This can cause a challenge. Availability of trucks for our industry, and for many industries, is not as easy as it once was, and it puts a strain on things.” 

An Ontario producer noted, “The market looks strong definitely until the end of the year. It will all come to a point where people are only willing to pay so much. If they feel the prices have gone up too much and they are not willing to pay, they are just not going to do that project this year and maybe wait until next year.” 

“The Pine prices,” reported a Quebec wholesaler, “have not gone up exponentially like the Spruce. It has not doubled or tripled in price. The price has gone up maybe 25 percent and we could see the Pine prices go up about another 20 percent but that will be it. I am not expecting it to be pushed much further than that.”

An Ontario manufacturer noted, “We only get a market like this every 15 years and the mills have been through 10-12 years of tough times. Once things dropped in 2008, they never really rebounded. The retailers didn’t drop their price but the mills were just hammered. A lot of mills suffered because they were not making the money to invest in their companies. It has to be remembered that it is very costly to invest in facilities, etc. Investing in equipment is big money.” 

By Richard Lipman

Richard Lipman Guest Writer Miller Wood Trade Publications

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