Workers sort and move lumber at the Delta Cedar Sawmill in Delta, B.C., on Friday January 6, 2017. As softwood negotiations with the United States languish, the Canadian government says it’s readying itself for the next phase of the lumber fight: litigation.THE CANADIAN PRESS/Darryl Dyck

Canadian lumber producers get reprieve with end of 20% of preliminary duties

MONTREAL — Canadian softwood lumber producers are getting a temporary reprieve as a large portion of preliminary duties in place for four months have ended pending a final decision.

Most lumber companies will pay 6.87 per cent in anti-dumping tariffs after a 19.88 rate for countervailing duties formally ended as of Saturday.

Five producers singled out have paid duties between 9.89 and 30.88 per cent. All others paid 26.75 per cent.

The duty respite will last until the U.S. Commerce Department announces a final duty decision Sept. 7. The International Trade Commission is slated to render its judgment on that decision on Oct. 30.

In past disputes, that gap has been longer as the U.S. has delayed final duty decisions. However, Commerce Secretary Wilbur Ross has a reported aversion to such delays, says lumber analyst Hamir Patel of CIBC World Markets.

Although countervailing duties formally came off in recent days, Canadian producers have been able to ship products south of the border without CVDs since Aug. 14 by delaying paperwork by up to 10 days, he added in a report.

Countervailing duties target what the U.S. considers unfair subsidies, while anti-dumping tariffs go after the alleged selling of softwood below market value.

Quebec Premier Philippe Couillard said Monday that higher lumber prices have raised prices for American consumers buying new homes and hurt U.S., not Canadian, workers.

“It will become more and more apparent that the most threatened jobs by these policies are not Canadian but American jobs in several states, notably in the construction sector,” he told reporters after a meeting in Charlottetown between eastern Canadian premiers and New England governors.

Lumber prices, which ran up in anticipation of export duties, have begun to soften partly due to the lowering of duties.

Western SPF prices were US$385 per thousand board feet on Friday, said Madison’s Lumber Reporter, which tracks prices. That’s down four per cent from US$414 a month ago but up from US$330 a year ago.

Lumber prices are typically weaker in the fall after the main home building season.

“This is sort of this limbo period of 10 days or two weeks,” said Madison’s editor and publisher Keta Kosman.

“It will be interesting to see what the new floor is now.”

Hurricane Harvey, which has battered Texas, and the impact from wildfires in Western Canada could be factors influencing lumber prices this year.

Canada’s share of the U.S. softwood lumber market fell to 23 per cent in July, down from 32 per cent in September 2015 before the expiry of the 2006 softwood lumber agreement, according to monthly Canadian government reports.

The Conference Board of Canada has said U.S. softwood lumber duties paid at current export levels will cost Canadian producers $1.7 billion a year and cut about 2,200 jobs until a settlement is reached.

Efforts to reach a new softwood lumber agreement appear to have been overtaken by the United States’ efforts to negotiate an update to the North American Free Trade Agreement with Canada and Mexico.

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