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The US Commerce Dept today issued its third administrative review of duties on Canadian lumber and lowered the rate to 11.64% from 17.99%.
Lumber isn’t in the headlines as much as it was six months ago but prices went on another run in Q4 and early this year before dropping again in the past two weeks.
I believe US housing is set for a long-term secular increase after a decade of under-building. Prices are high and home builders are eager to get busy as supply chain issues get sorted.
Lumber prices will be a beneficiary and I expect they’ll stay persistently high, well above the peaks near $500 in the last housing boom, in large part because there’s now less Canadian supply. The reno market is also in a secular shift towards more activity.
Canada and the US have been battling over softwood lumber for generations. The main issue is that virtually all Canadian timberlands belong to the crown while US timberlands are private. That creates a dispute about what stumpage rates should be for Canadian trees.
In November, US tariffs were jacked up to 17.99% from 8.99%. This move in no way ends the fight and I don’t think either side wants to enter into negotiations.
In terms of FX, there’s a real impact. Canadian wood product exports were the third-largest export from Canada to the US last year.