New American duties on lumber imposed

Lumber producers cushioned somewhat by all-time high global softwood lumber prices

Softwood lumber prices in the U.S. have hit a 13-year high.

As expected, Canadian lumber producers were hit June 26 with additional duties on softwood lumber exported to the U.S.

The U.S. Department of Commerce on June 26 approved new preliminary anti-dumping duties in the 7% range against Canadian lumber producers. That’s on top of earlier countervailing duties.

Combined, the countervailing and anti-dumping duties add 27% to 31% to the cost of lumber exported to the U.S.

B.C. is Canada’s largest producer and exporter of lumber to the U.S., so the biggest impact is in B.C.

See also: Duties dampen B.C. sawmill production

The ongoing dispute with the U.S. was debated in the B.C. legislature today, with the NDP challenging the Liberals to support a non-confidence motion that would allow the NDP to form government so it can get to work on the softwood lumber file.

One of the measures the Liberals had planned to implement to help B.C. lumber producers was a plan to pre-purchase lumber from them for government projects like social housing.

But with the Liberal government likely to fall later this week, that’s one measure that may be up in the air, unless the NDP continues the plan.

For now, the duties have yet to take any major toll on B.C. companies, thanks to high lumber prices, driven by strong demand in the U.S. and a low Canadian dollar. But eventually, they will begin taking their toll.

In the past, international tribunals have ruled that the American duties are unjustified. But it can take years for such rulings, and in the meantime some of the less profitable mills are vulnerable, which is why federal and provincial governments prefer to try to negotiate a settlement.

“We continue to believe that the best option in working through this is to have a negotiated settlement,” said John Rustad, the BC Liberals’ new minister of Forest, Land and Natural Resource Operations. “We’ve had teams out in Washington. We are engaged with Ottawa to make sure our interests are front and centre.”

The NDP on Monday accused the Liberals of not doing enough to stand up for B.C. in the softwood lumber dispute – a view that appears not to be shared by the BC Lumber Trade Council.

“We’ve had very good support from the federal government and the provincial government on this file,” said trade council president Susan Yurkovich. “I think both the provincial and federal governments have made softwood lumber a top priority.

“We’ve had excellent support here in British Columbia.”

Canada’s current share of the U.S. market has been shrinking. Even so, the U.S. still represents about 50% of B.C. lumber exports, with 30% going to Asia.

The new duties being imposed on Canadian lumber might be even more punishing if global lumber prices weren’t so high.

According to Wood Resources International LLC, softwood lumber prices have hit a 13-year high in the U.S., and globally reached an all-time high in 2016.

The U.S. represented one-third of global lumber imports, with China accounting for 17%.