Originally Posted by
92redragtop
Little more on the above discussion (part of longer article from G&M):
Red-hot lumber prices ease pressure on Trudeau to reach softwood deal with U.S.
KONRAD YAKABUSKI
PUBLISHED 18 HOURS AGO
UPDATED MAY 5, 2021
FOR SUBSCRIBERS
You know these are strange times in the Canadian forest industry when lumber futures are hotter than bitcoin.
In the two decades until 2020, Canadian forest companies shed capacity and jobs faster than a champion lumberjack could saw through a sturdy Western white pine. Once the country’s dominant resource industry, the forest products sector shrank dramatically as newsprint consumption crumbled and the 2008 U.S. housing crash took a chainsaw to lumber prices.
Lumber is suddenly on fire, however, with U.S. housing starts hitting pre-crash 2006 levels and as consumers spend savings accumulated during the COVID-19 pandemic on home renovations instead of travel. Lumber futures for May delivery soared to a record of more than US$1,600 per thousand board feet on Tuesday on the Chicago Mercantile Exchange – about four times the average price fetched prior to the pandemic.
Most Canadian producers that supply the Western spruce, pine and fir (SPF) grades preferred for framing new houses slashed sawmill capacity in the decade before the pandemic and cannot increase production fast enough to satisfy surging demand. Soaring lumber costs have added upward of US$30,000 to the price of a new home in recent months, leading the U.S. National Association of Home Builders to call on President Joe Biden to scrap countervailing and anti-dumping duties on Canadian lumber imposed by the former Trump administration in 2017.
In the current bull market, the duties hurt U.S. consumers far more than lumber companies. Large Canadian-based producers such as Canfor Corp. CFP-T +1.85%increase
and Resolute Forest Products Inc. RFP-T -2.42%decrease
have not had it this good in more than two decades and are practically drowning in cash. Their share prices have skyrocketed in the past year and investors are piling into lumber stocks in hopes of riding what many see as a rising wave as supply bottlenecks drive wood prices even higher.
Vancouver-based Canfor reported first-quarter net income of $428-million, a nearly $500-million turnaround from a $70-million net loss in the same period in 2020. Montreal-based Resolute earned $87-million in the first quarter, up from a $1-million loss a year earlier, as juicy lumber profits helped offset a continuing decline in the company’s newsprint business.
If anything, the lumber boom has reduced the political pressure on Prime Minister Justin Trudeau’s government to push for a new softwood lumber deal with the Biden administration. With lumber prices more than tripling in the past year, duties averaging around 9 per cent are practically a rounding error. Canfor’s duty was reduced to 4.62 per cent from 20.52 per cent last December by the U.S. Department of Commerce. Resolute faces a stiffer 20.25-per-cent duty.
Former Canadian trade official Eric Miller believes a new softwood deal is currently a lower priority for the Trudeau government than negotiating with the Biden administration to prevent a shutdown of Enbridge’s Line 5 natural gas pipeline by Michigan Governor Gretchen Whitmer or to exempt Canadian companies from the Buy America provisions of the new President’s multitrillion-dollar stimulus and infrastructure programs.
Likes: 
Reply With Quote
