Business as usual for lumber producers

Booming softwood lumber prices are letting Canadian producers carry on business as usual despite the onerous countervailing duties slapped on them by the U.S. Department of Commerce.

South of the border, lumber prices have gone up by almost exactly the same amount this year as the countervailing duties, says Joel MacLaggan, sales manager at Waverley-based lumber broker Eacan Timber.

Since April this year, Canadian softwood lumber exporters have been paying countervailing duties of 19.88 per cent on their exports to the United States. But softwood lumber prices since February this year, when the market first started to react to the news about those countervailing duties, have shot up by 21 per cent, said MacLaggan.

That uptick in prices comes in the wake of upward movement on U.S. lumber prices in 2016.

“Prices have increased since the beginning of last year by 30 per cent,” said MacLaggan.

At Elmsdale Lumber Company, owner Robin Wilber said in an interview recently his company is still churning out as much lumber as usual, roughly 30 million board feet annually.

“It’s all being sold,” he said. “The market is strong. We’re mostly local but we also sell to the United States . . . and we’re affected by the United States because our competitors are.”

Despite the countervailing duties, lumber producers in Canada have so far emerged largely unscathed.

Fuelling those higher American prices is a fairly robust homebuilding sector in the United States and the limited capacity of producers in that country to mill more lumber.

“The United States doesn’t produce any more lumber now than they did before (the countervailing duties took effect),” said MacLaggan. “They don’t have any more capacity and Canada is about 30 per cent of their market . . . They can’t be self-supported right now.”

When Canadian softwood lumber exporters had to raise their prices to offset the countervailing duties, American producers followed step and also raised their prices, said the lumber broker.

That’s in stark contrast to what happened the last time the Canadian industry was hit with softwood lumber tariffs in 2001. By the time a deal was inked by the two countries in 2006, thousands of workers north of the border had lost their jobs, including roughly 15,000 in British Columbia alone.

During this round in the ongoing softwood lumber dispute, the economy is better south of the border and Canadian producers were already seeing an upswing in prices when the countervailing duties were announced.