High demand, huge profits soften U.S. lumber duties
Record-high lumber prices have British Columbia lumber producers smiling, despite almost a year of U.S. Department of Commerce duties.
According to Madison’s Lumber Reporter, the benchmark price for 1,000 board-feet of top-quality western Canadian two-by-fours hit US$540 about a month ago, compared with US$315 at the start of 2017 before U.S. interests re-ignited the ongoing trade dispute.
Bottlenecks in rail transportation plaguing all industries are one reason lumber prices have spiked so high, but solid demand has also allowed producers to simply pass the price of tariffs along to consumers in prices, Susan Yurkovich, president of the B.C. Lumber Trade Council, told the Vancouver Sun.
“Who knows how long these prices will hold, but for now (they are) mitigating the impact of duties for Canadian producers,” said Yurkovich, who is also CEO of the Council of Forest Industries, one of the forestry sector’s main industry groups.
The U.S. Department of Commerce levelled preliminary duties against Canadian lumber producers last April, on the complaint of the U.S. Lumber Coalition following expiry of the last Canada/U.S. Softwood Lumber Agreement.
Final duties were set last fall at between 20.8 per cent and 22.1 per cent, depending on which company it is, and so far, Yurkovich said it is consumers that have felt them the most.
“It just reminds everyone that the fact the U.S. industry is claiming it has been injured is just preposterous,” Yurkovich told the Sun.
In the meantime, West Fraser Timber Co. Ltd., Canada’s biggest lumber producer, reported a $596 million profit in 2017, up from $326 million in 2016. Canfor Corp., the country’s second-biggest producer, reported $345 million in profits up from $151 million in 2016.
However, Yurkovich added, efforts to renegotiate NAFTA have put negotiations for a new Canada/U.S. lumber deal on the back burner.
“We find it frustrating that we’re still having this fight,” said Yurkovich.