B.C. softwood producers cushioned by Chinese market, observers say
MONTREAL — Canada’s lumber industry is in a stronger position to weather a U.S. trade battle than it was during the last major clash a decade ago, but smaller Quebec and Ontario producers would be particularly vulnerable to duties that may arrive within weeks, industry observers say.
B.C. producers such as West Fraser Timber, Canfor and Interfor have hedged their bets, purchasing sawmills in the U.S. primarily in the years when there was a truce over softwood. They’ve also seen softwood exports to China grow, giving them some protection against tariffs that the U.S. could impose as early as May.
“The big players in the West are now in a more comfortable position than they were 10 years ago,” said André Tremblay, head of the Quebec Forest Industry Council.
“We are in a much more delicate situation now than during the last conflict.”
Due to their distance from China, Quebec and Ontario sawmills largely missed out on the surge of shipments to Asia’s largest economy.
Canadian softwood exports to the country grew from $55 million in 2005 to $1 billion last year, according to Statistics Canada. Almost all was supplied by British Columbia.
China accounted for about 10 per cent of total Canadian softwood exports last year, up from less than one per cent before the last softwood agreement was signed in 2006 though down from a peak of about 21 per cent in 2011.
British Columbia’s efforts to ramp up exports to Asia have helped better position the Canadian industry in the latest trade dispute, despite the pressures in other provinces, said provincial Forests Minister Steve Thomson.
“If we’re more diversified here, it provides opportunities for the rest of the country,” he said in an interview.
In Central Canada, sawmills tend to be smaller, don’t have as much cash flow to pay duties and are therefore more at risk of closing.