Recent charges by the US Softwood Lumber Coalition that Canada unfairly subsidizes the Canadian softwood industry has led to a preliminary ruling by the US Department of Commerce. 

The previous US-Canada trade agreement signed in 2006 (when the US housing market was very strong) expired two years ago.  While the housing market has rebounded, it is not robust.  This has led to the push by the Softwood Lumber Coalition to ask for the duties against the softwood imports.  The DOC preliminary ruling in April will be followed by a final ruling schedule for early September.  It is expected that the final ruling will only clarify several finer points.  The final ruling may also push the US and Canada to reach a new agreement to replace the 2006 agreement.

The softwood prices initially jumped almost 40% earlier this year in anticipation of the increased duties.  Since the ruling by DOC in April of duties averaging 20% the lumber prices have stabilized at a composite increase of 30% over prices a year ago.

It appears that the supply of Canadian softwood will remain strong as will the US supply – it will just be at a higher price as the US mills will match prices to what the is considered to be fair market value.  As the softwood industry enters the forest fire season, it will be interesting to see how any supply factors influence the new price market.  Forest fires have recently closed many British Columbia mills but overall supply has not been affected.  The US forest fire season has started but these fires are a part of the business cycle and should not affect pricing – but time will tell.

Ralph Rupert is the Unit Load Manager at Millwood, Inc. His expertise has led him to industry engagements all over the world as an educator, learner, and innovator in unit load technologies. He currently serves as a member of the board of directors at the Western Pallet Association.