US Lumber Hits Eight-Month High Despite Canada Duty Cut

SEATTLE (Scrap Monster): US lumber futures climbed past $630 per thousand board feet this week, the highest level since October, even as Washington moved to cut the duties on Canadian softwood that have squeezed the market for years. That is according to Trading Economics data, which put the benchmark CME contract at an eight-month high as buyers raced to lock in supply ahead of a duty regime still in flux.

The rally was held precisely because the cut changes less than it appears, with most Canadian producers still facing a combined burden near 45 per cent until the revised antidumping and countervailing duties take effect in August. Even then, the all-in rate would settle near 35.9 per cent once the 10 per cent Section 232 levy is counted, a stack high enough to keep prices climbing.

Those revised rates are preliminary rather than final, leaving the market to price the risk until a final determination later in the year. Buyers have accelerated purchases ahead of that decision, adding to near-term demand at a time when US domestic production remains constrained and unable to cover the shortfall.

Housing-related consumption stays structurally large, with softwood lumber and engineered wood products built into almost every new American home. Each new single-family home absorbs roughly 15,000 board feet of framing lumber plus thousands of square feet of plywood and oriented strand board, according to Home Innovation Research Labs data cited by the National Association of Home Builders (NAHB).

That baseline keeps consumption elevated even through a softer building cycle, which is why duty-driven price moves pass quickly to American builders and buyers. The duties sit at the centre of a dispute that has run since 1982, and the US Lumber Coalition has cast the recent preliminary cut as proof of misconduct rather than a concession.

Executive director Zoltan van Heyningen said the results “confirm, yet again, that Canada continues to trade unfairly in softwood lumber.” Canadian producers reject that reading, arguing the levies punish responsibly sourced lumber and raise prices for the US homebuilders who depend on it.

Canadian Lumber Trade Alliance co-chair Luc Theriault, who heads wood products at Domtar, said the measures were “driving up costs for our neighbours in the U.S.” At the heart of the decades-long fight is the way Canadian timber is priced, with most harvesting carried out on public land where producers pay provincial stumpage fees rather than bidding for private stands as US operators do.

Washington argues those fees amount to a subsidy, the basis for the countervailing duties that Ottawa has fought through successive rounds of litigation. For now, the all-in rate on most Canadian softwood stands at about 45 per cent until the revised duties take effect, a figure van Heyningen ties to a Canadian capacity to produce 27 billion board feet a year while consuming only 7 billion.

Courtesy: www.woodcentral.com.au