Lumber Price & Supply Volatility: What Will Happen in 2017?
Originally published by: MSR Lumber Producers Council — February 6, 2017
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The last softwood lumber trade agreement (SLA) between the U.S. and Canada expired in October 2015. From that date, until October 2016, the softwood lumber trade between the two countries was completely free from any restrictions. During that time, U.S. housing starts reached their highest levels since 2007, significantly increasing the demand for softwood lumber. Ordinarily, prices should have climbed upward, but with Canadian lumber production surging, North American softwood lumber prices grew by only 8.7 percent in 2016.
It’s likely not coincidental that a little more than a quarter of that year-over-year price increase occurred in December (2.3 percent), shortly after the U.S. Lumber Coalition filed its petition to the U.S. Department of Commerce (DOC) calling for tariffs to be placed on lumber imported from Canada.
While negotiators for both countries appear to still be working toward an agreement, there remain several sticking points (export quotas, for example) that will make a new SLA difficult to reach quickly. Meanwhile, the DOC could reach a determination on duties by spring. However, those duties can be retroactive up to 90 days, meaning we could already be in the period where Canadian exporters are facing duties on the lumber they send to the U.S.
As the market learned after the expiration of the last SLA in 2004, this situation has an impact on lumber prices throughout North America, not just on lumber imported from Canada. If you want to learn the latest on this issue, get an insider’s take on what the new SLA may look like and explore the impact import duties are having on the North American lumber market, come to the MSR Workshop April 18-20 in Seattle, WA. There will be a panel of SLA experts from both sides of the border giving producers and end users a timely update on this issue.
Don’t miss this event, you can register online today.