The US Department of Commerce is postponing a decision in the CVD case against Canadian lumber imports until April 24, leaving two nations uncertain about the state of the lumber industry. Speculation in both Canada and America is creating some concerns, which are already translating into action. We are seeing a change in the price of lumber as well as a shift in Canada’s focus for exports.
The lumber industries of Canada and the United States rely heavily upon each other. America gets most of its lumber from Canada, and the US accounts for about 70% of British Columbia’s softwood exports1. The threat of a renewed tariff is a major concern for the businesses and workers in the Canadian softwood lumber industry. As such, these businesses are exploring alternative markets. The first major shipment of B.C. lumber to India is currently underway.
The most anticipated lumber exchange to substitute American exporting is between Canada and China. This seems natural, as China is already a tapped market for Canada. More lumber going to Asia would create a supply and demand issue that would raise prices even further for America.
On the flip side, China isn’t all that perfect an option for Canada. China’s economic growth has fallen drastically. In addition, the ruble has devalued over the last few years, prompting China to tap into Russia’s cheaper wood supply. In the first nine months of 2016, B.C.’s softwood lumber exports to China dropped 11% while shipments to the US went up 31%1.
If a CVD is affirmed, “critical circumstances” could warrant a retroactive duty up to 90 days. As such, some of the smaller Canadian lumber mills are shying away from shipping to the US to avoid it. Other Canadian mills have increased their prices in anticipation of it.
Overall, we may not know what will happen with the United States International Trade Commission, but we can certainly expect the cost of pine to trend upward this year.
The outcome of this decision, as well as the interim reactions, affects many industries. Pallets and packaging are a major component of most manufacturers. If you need to optimize your packaging to reduce your costs, contact Packnet. We remain current on the laws and trends that affect packaging and shipping. Our experts can offer solutions to make the most of the materials best suited for your needs. Call us at 952-944-9124 or request a free assessment.