Replies to post #14068 on The Rising Influence of Rising Affluence

[DewDiligence]

WY update on Canadian lumber exports: Negotiations between US and Canada are on hold until the Trump administration weighs in on this matter. In the meantime, however, the ITC decided to investigate the US complaint of Canadian softwood dumping; a formal ruling imposing anti-dumping duties is expected in Apr 2017.

WY's own lumber business includes Canadian exports to the US, but these shipments comprise only 6% of WY's lumber production, and lumber production as a whole comprise a small portion of WY's overall business. All told, a (negotiated) quota or an anti-dumping duty on Canadian lumber would help WY by stenghthening the price of saw logs from WY's timberlands.

[DewDiligence]

WY—Lumber prices are headed higher, says Barron’s:

http://www.barrons.com/articles/lumber-prices-headed-higher-1490424181

A mini-trade war between the U.S. and Canada is set to send lumber prices higher. At issue is the price Canadian foresters charge to cut down a tree, which is known as stumpage. The Canadians charge less than their U.S. counterparts, explains Kevin Mason, managing director at ERA Forest Products Research in Vancouver. U.S. producers believe the price is unfairly low and is undercutting U.S. lumber activity.

The immediate result of any new tariffs or trade restrictions would be reduced supply of wood to the U.S., where demand for housing lumber is likely to rise sharply.

…Regardless of the merits of the case, the broad outcome is pretty much a done deal. “The softwood lumber trade dispute will lead to either duties or taxes on imports of Canadian lumber by early May 2017…

…The demand side of the equation also argues for higher prices. Goldman Sachs forecasts housing starts to jump 9% this year, according to a recent report.

WY itself agrees with the above, forecasting 1.3M US housing starts in 2017, up from 1.2M in 2016 (#msg-127211243). The increased demand and lower Canadian supply imply that the gap will be made up from production in the US southeast, helping to firm the price of southern softwood logs that are the major driver of WY’s income.