Preliminary ruling lowers Canada’s softwood lumber duty

February 7, 2020

By: The Working Forest Staff

 Madison’s Lumber Reporter — As the Softwood Lumber Dispute V file winds it’s way through the usual US domestic as well as international trade court tribunals, a preliminary ruling from the US Commerce Dept brings a sharp reduction in the duty rates paid on Canadian softwood lumber entering the US. All companies named, as well as the group “all others” category — except Resolute Forest Products — will likely be paying much less on their wood sold into the US come August 2020.

The Commerce Dept will be releasing reasons for this ruling “within a few days”. In August will be the final ruling, and soon after the new, lower, duties will take effect.

The other, something new, currently afoot is that the international tribunal for softwood lumber at the World Trade Organization is stymied since December 2019 due to refusal by the US to appoint new arbitrator judges. Another working softwood lumber retired, leaving only 3 judges on that panel. It’s supposed to be a minimum of 5.

This arbitration was quite close to nearing conclusion in 3Q 2019, that’s one of the reasons it was allowed to go on with only 4 judges. At last update, it is unknown if the WTO will be continuing with the ongoing Canada-US softwood lumber arbitration in international trade court.

In the week ending January 31, 2020, benchmark North American construction framing lumber item Western Spruce-Pine-Fir KD 2×4 #2&Btr (RL) prices popped up by +$6, or +1.5%, compared to the previous week, to US$408 mfbm. This week’s price is +$10, or +2.5%, more than it was one month ago. At this time last year this price was falling, so is now only up by +$4, or +1% compared to the end of January 2019, a significant drop from the recent trend.

On February 3, 2020, the U.S. Department of Commerce released its preliminary determination for the First Administrative Review (AR1) in the antidumping duty (AD) and countervailing duty (CVD) investigations of imports of certain softwood lumber products from Canada.

The final determination by the US Commerce Dept on Canada’s softwood lumber duty rate will be in August. At that time duty rates could be lowered to:

9.08 per cent from 23.56 per cent for West Fraser

4.63 per cent from 20.52 per cent at Canfor

15.84 per cent from 17.90 per cent at Resolute Forest Products

4.32 per cent from 9.38 per cent at J.D. Irving

8.21 per cent for “all others”.

Compared to historical trend, last week’s WSPF 2×4 #2&Btr price kept rising, this time up by +$32, or +8.5%, relative to the 1-year rolling average price of $376 mfbm, but are down -$25, or -6%, relative to the 2-year rolling average price of $433 mfbm. This week’s price is up +$33, or +9% relative to the 5-year rolling average price of $375 mfbm.

The momentum of demand from the previous week carried into the end of January, rounding out a solid month of sales activity for the US WSPF market. Pockets of cold weather afflicted certain areas, but comparatively balmy conditions were also found in some target markets and buyers continued to take away good volumes each day.

Construction activity was surprisingly strong considering the time of year. Producers extended their sawmill order files into late-February on a handful of items, as earlier-availability dried up on others. Players agreed that 2020 has kicked off in a much more encouraging fashion than 2019.   

 

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