hardwood price

Overview :

The global pandemic has disrupted some of the major demand and supply equilibriums across the wood industry and ‘Poplar’, often known as ‘Whitewood’ is no different.

• We (Brenlo Ltd) prefer American Poplar because it has smoother finish, and clean sharp edges unlike Canadian Poplar (Aspen) which is not ideal for painting, tends to fuzz up during milling process and is not a stable product.

• FAS (First and Seconds) grade that we use, is the best grade in the market that offers the least amount of defect based on surface measure of each board. The minimum width of FAS is 6”.

Moreover, Toronto is the single largest consumer market for primed grade Poplar.

Breaking the Equilibrium:

1. Broken Supply Chain

• As the pandemic urgency commanded, the mills were shut down, directly impacting the production lines. The sawmills-initiated layoffs and scaled down the production.
As we discussed in our last newsletter, the basic economics can be clearly observed in Poplar price hike scenario as well.

•The production lines continued to be closed causing an all-time supply dip in 60 years and this was way down from the annual prediction made by industry specialists.

2.  Rise in DIYers and High-end Renovations

• Interestingly, when people were at home, they started looking at renovations and home improvements. In a couple of months, the continuous demand for furniture, luxury home renovations, kitchen cabinetry and more, kicked up once again.

• Massive ongoing renovations not only impacted the softwood, but also the hardwood. This effect was clearly visible on different product groups including ‘Poplar’ wood.

During the first two months of the recession, home-improvement sales shot up by 13%. That phenomenon caused lumber demand to spike, even as sawmills were halting production. (Credit: The Fortune)

• The following graph depicts the macro level scenario where there is an approximate increase of a billion DIYers over the period of 1 year.

Moreover, there is a significant rise of approximately 40 % in housing starts in GTA, Ontario over the last 2 years.

Wood price hike
Credit : Fortune.com

3. Major Employee Crisis

As the demand continued rising up, employees were still preferring to stay back at home with the acceptable subsidiaries and incentives offered by the government. This industry is still suffering from the lack of staff.

 

American Poplar - Unfolding the Pricing and the Road Ahead:

Home construction remains high in demand. With an incessantly increasing demand, prices surged beyond expectations and the figures almost doubled in the last 2 years.

BRENLO is communicating, on a weekly basis, with some of the largest hardwood mills in North America who consistently agree to the following points:

Prior to the new Covid variant (Omicron), Poplar prices were stabilizing with a chance of potential price reduction based on volume increase from the Mills. However, this new variant is going to have an impact on production and our expectation is of an estimated price rise between 5%-15% in the coming months.

• The production lines are open and mills are incentivizing employees such as signing bonuses to join back. However, the situation still remains delicate.
• Production is likely to increase but it will take some time to bring everything on track and meet the demand curve.
• The organizations such as Northwest hardwoods are investing in upgrading their capabilities and technologies. They are focusing on increasing production and buying more timberland.

What is Brenlo doing:

Hardwood Poplar price

In fear of further disruptions in supply chains, Brenlo is taking a large position in Poplar, specifically 4/4 (which is used for most casing, jambs, doorstops & baseboards). Our goal is to ensure that we carry a strong inventory position so that you have confidence that we will have your product in stock or be able to meet custom product lead times.

1. We have doubled our rough lumber inventory for the year 2022 to balance out an unsure supply chain.

2. We are increasing our manufacturing capabilities to meet tight project deadlines.

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65 Worcester Road
Toronto, ON M9W 5N7
P:  416-749-6857
F:  416-749-8969
E:  [email protected]

7000 Tranmere Dr
Mississauga, ON L5S 1L9
P:  905-677-9204
F:  905-677-7859
E:  [email protected]

Copyright © 2021 Brenlo Ltd.

1. Broken Supply Chain

• As the pandemic urgency commanded, the mills were shut down, directly impacting the production lines. The sawmills-initiated layoffs and scaled down the production.
As we discussed in our last newsletter, the basic economics can be clearly observed in Poplar price hike scenario as well.

•The production lines continued to be closed causing an all-time supply dip in 60 years and this was way down from the annual prediction made by industry specialists.