Lumber producers face combined border costs nearing 50 per
cent as prices fall below break-even levels
Some sawmill workers in B.C. should brace for layoff notices,
sometime between now and Christmas.
With lumber prices below the break-even point for many lumber
producers, and new 10 per cent American tariffs being tacked
onto 35 per cent duties on Canadian lumber exports, it’s
inevitable some sawmills in B.C. will have to take at least
temporary curtailments, industry experts say.
The new tariffs of 10 per cent on lumber and 25 per cent on
other wood products were implemented late last month by the
White House, on the basis that Canadian lumber imports
constitute a national security threat.
The tariffs will stack on top of 35 per cent countervailing and
anti-dumping duties set by the U.S. Department of Commerce in
August.
Unless U.S. President Donald Trump executes one of his famous
policy pirouettes, the new tariffs take effect this month and
could cost Canadian lumber exporters about US$500 million a
year.
Given the current low lumber-price environment, curtailments
appear to be inevitable.
“If you don’t see markets pick up, I could certainly see more
curtailments coming,” said Kurt Niquidet, chief economist for
the Council of Forest Industries (COFI).
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Larger companies like Canfor and West Fraser Timber (TSX:WFG)
are somewhat hedged against American duties and tariffs, because
they own so many sawmills in the U.S., which would not pay
duties.
Smaller, private companies that are wholly domiciled in B.C. and
heavily exposed to the U.S. market are more vulnerable to export
duties and tariffs.
John Brink, founder of the Brink Group of Companies, is
frustrated. He owns three remanufacturing mills—in Prince
George, Vanderhoof and Houston.
“We employed as many as 400 people,” Brink said. “Now we are
operating at about 25 per cent of the total capacity and we
employ somewhere around 100 people. And I’m not sure how long
they will be employed.
“That’s where we are today, mainly because of duties, but also
because of provincial forest policy.”
Pressure is mounting on Prime Minister Mark Carney to get some
kind of negotiated deal to end American duties on Canada lumber.
Source:
biv.com
