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Canadian Softwood Lumber Agreement

This topic contains 35 replies, has 14 voices, and was last updated by  Doobie 3 days, 12 hours ago.

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  • #626032

    kurt@welkerhomes.com
    Pro
    Owatonna, MN - Minnesota

    With the expiration of the softwood lumber agreement with our northern Neighbors, we have seen an increase in material prices. Cedar has been most notable as it has over doubled, but OSB is up a couple of bucks a sheet and lineal has started to creep up also. Here are a couple of articles on the issue.

    What are you seeing in your areas as it relates to pricing?

    http://nahbnow.com/2017/04/what-is-the-impact-of-new-duties-on-canadian-lumber/?utm_source=newsletter&utm_medium=2-0501&utm_campaign=mmb2017

    http://nahbnow.com/2017/04/proposed-lumber-duties-will-harm-consumers-housing-affordability/?utm_source=newsletter&utm_medium=1-0501&utm_campaign=mmb2017

    #626036

    staker
    Pro

    Maybe we should stop shipping or lumber there, it seems that is what they want. most of the sawmills in my area are shut down.

    #626037

    kurt@welkerhomes.com
    Pro
    Owatonna, MN - Minnesota

    I did not mean this to be a support of denial of the merits of the agreement or lack thereof. We can leave that to the politicians. I am just looking for a discussion on what members are seeing in the marketplace as it relates to pricing. Here is a graph of what lumber prices have done over the last year. Notice the volatility in the last few months as the extension of the agreement was coming to an end.

    Attachments:
    #626046

    Shannon Rogers (Renaissance woodworker) has had a few things to say on it on Woodtalk Online, a podcast I listen to. He works for a wood company and predicted the price rise and the reasons for it. It seems that when they can inflate the price of imported plywood, the domestic suppliers up their price to increase profits.

    As for the duties and the softwood lumber agreement, this has been going on for decades. The agreements are of 10 years each, and every decade, at the end of the agreement, Canadian exports of softwood get a duty slapped on them, usually for “dumping”. Every time the duties get brought up to the governing bodies (not sure which one, GATT, WTO) the allegations of dumping are found to be not true and the duties get taken off. Every time.

    We have had a softwood lumber agreement since the ’80’s and lumber has been an issue for 200 years. Not once, not ever, has Canada been found in violation on softwood. It’s Canada, we are still “hewers of wood”. There are lots of trees and when you have lots of something it makes it inexpensive. We are really efficient at managing the process. The cutting rights (stumpage fees) for Crown Land (owned by the crown, or government) are sold off in a bidding process at auction, so they are as high as the market will bear.

    The only thing the duty achieves is to make the cost of living go up and more profit for domestic lumber companies (that is why they pay lobbyists, it makes them money). No, the prices in Canada are not likely to go down because of a glut. Canadian companies will take as much profit as they can, they don’t seem to like passing on any savings to the consumer.

    That is kind of a political take on the situation, but the story is a political one and can’t be discussed without bringing it up. Taxes, tariffs, duties and trade agreements are a political thing. Sorry for being so wordy.

    My You Tube channel: https://www.youtube.com/channel/UCA5AretE3xPoVDV61AxUdUA

    I don't do a fast job. I don't do a slow job. I do a half fast job.

    #626063

    Doobie
    Pro
    Ajax, ON

    What Jim said is my understanding of it too.

    Kevin.

    #626073

    jkirk
    Moderator
    halifax, nova scotia

    a former childhood friend is a rep for weyerhauser wood products.. a few years ago i was talking to him about the price of sheet goods. the way he explained it was that they sign contracts with the dealers for lets say a 5 year contract at a set price for so million sheets of osb or plywood…. over that 5 year time frame the cost of the raw wood goes up and they end up often loosing money by the end of the contract… when the contract resigns they have to bump the price up by upwardfs of 30% hence seeing a jump in the range of 2 or $3 on the retail end..

    another major cause jumps in lumber pricing is forest fires.

    #626077

    smallerstick
    Pro
    Listowel, ON

    Yup, Jim summed it up very well. The unfortunate thing is that the US home buyer is going to pay more for his new home and fewer of them are going to be built.

    If the women don't find you handsome, they should at least find you handy. -- Red Green

    #626085

    Shannon Rogers (Renaissance woodworker) has had a few things to say on it on Woodtalk Online, a podcast I listen to. He works for a wood company and predicted the price rise and the reasons for it. It seems that when they can inflate the price of imported plywood, the domestic suppliers up their price to increase profits.

    As for the duties and the softwood lumber agreement, this has been going on for decades. The agreements are of 10 years each, and every decade, at the end of the agreement, Canadian exports of softwood get a duty slapped on them, usually for “dumping”. Every time the duties get brought up to the governing bodies (not sure which one, GATT, WTO) the allegations of dumping are found to be not true and the duties get taken off. Every time.

    We have had a softwood lumber agreement since the ’80’s and lumber has been an issue for 200 years. Not once, not ever, has Canada been found in violation on softwood. It’s Canada, we are still “hewers of wood”. There are lots of trees and when you have lots of something it makes it inexpensive. We are really efficient at managing the process. The cutting rights (stumpage fees) for Crown Land (owned by the crown, or government) are sold off in a bidding process at auction, so they are as high as the market will bear.

    The only thing the duty achieves is to make the cost of living go up and more profit for domestic lumber companies (that is why they pay lobbyists, it makes them money). No, the prices in Canada are not likely to go down because of a glut. Canadian companies will take as much profit as they can, they don’t seem to like passing on any savings to the consumer.

    That is kind of a political take on the situation, but the story is a political one and can’t be discussed without bringing it up. Taxes, tariffs, duties and trade agreements are a political thing. Sorry for being so wordy.

    Yup. Moral of the story is “same old, same old”
    This time though, there is another (still non-political) aspect. We used to have “minimums” that we had to retain for sale to the USA. Last year, at least one of the bigger guys was in a position to have to turn down sales to china because they didnt have the available bandwidth left to cover the minimums to the states as well as sell to Asia. Same guy says that this time, he doesnt have to lay anyone off – he can sell the same wood over the pacific for higher profits this time.

    I assume this will go the way it always has, but it isnt impossible that this time some of that supply will go to a different trading partner for increased profit

    #626097

    r-ice
    Pro
    Durham region, ON

    Shannon Rogers (Renaissance woodworker) has had a few things to say on it on Woodtalk Online, a podcast I listen to. He works for a wood company and predicted the price rise and the reasons for it. It seems that when they can inflate the price of imported plywood, the domestic suppliers up their price to increase profits.

    As for the duties and the softwood lumber agreement, this has been going on for decades. The agreements are of 10 years each, and every decade, at the end of the agreement, Canadian exports of softwood get a duty slapped on them, usually for “dumping”. Every time the duties get brought up to the governing bodies (not sure which one, GATT, WTO) the allegations of dumping are found to be not true and the duties get taken off. Every time.

    We have had a softwood lumber agreement since the ’80’s and lumber has been an issue for 200 years. Not once, not ever, has Canada been found in violation on softwood. It’s Canada, we are still “hewers of wood”. There are lots of trees and when you have lots of something it makes it inexpensive. We are really efficient at managing the process. The cutting rights (stumpage fees) for Crown Land (owned by the crown, or government) are sold off in a bidding process at auction, so they are as high as the market will bear.

    The only thing the duty achieves is to make the cost of living go up and more profit for domestic lumber companies (that is why they pay lobbyists, it makes them money). No, the prices in Canada are not likely to go down because of a glut. Canadian companies will take as much profit as they can, they don’t seem to like passing on any savings to the consumer.

    That is kind of a political take on the situation, but the story is a political one and can’t be discussed without bringing it up. Taxes, tariffs, duties and trade agreements are a political thing. Sorry for being so wordy.

    Yup. Moral of the story is “same old, same old”
    This time though, there is another (still non-political) aspect. We used to have “minimums” that we had to retain for sale to the USA. Last year, at least one of the bigger guys was in a position to have to turn down sales to china because they didnt have the available bandwidth left to cover the minimums to the states as well as sell to Asia. Same guy says that this time, he doesnt have to lay anyone off – he can sell the same wood over the pacific for higher profits this time.

    I assume this will go the way it always has, but it isnt impossible that this time some of that supply will go to a different trading partner for increased profit

    so basically this works better for the Canadian wood suppliers, more money for the same amount of work.

    #626098

    Shannon Rogers (Renaissance woodworker) has had a few things to say on it on Woodtalk Online, a podcast I listen to. He works for a wood company and predicted the price rise and the reasons for it. It seems that when they can inflate the price of imported plywood, the domestic suppliers up their price to increase profits.

    As for the duties and the softwood lumber agreement, this has been going on for decades. The agreements are of 10 years each, and every decade, at the end of the agreement, Canadian exports of softwood get a duty slapped on them, usually for “dumping”. Every time the duties get brought up to the governing bodies (not sure which one, GATT, WTO) the allegations of dumping are found to be not true and the duties get taken off. Every time.

    We have had a softwood lumber agreement since the ’80’s and lumber has been an issue for 200 years. Not once, not ever, has Canada been found in violation on softwood. It’s Canada, we are still “hewers of wood”. There are lots of trees and when you have lots of something it makes it inexpensive. We are really efficient at managing the process. The cutting rights (stumpage fees) for Crown Land (owned by the crown, or government) are sold off in a bidding process at auction, so they are as high as the market will bear.

    The only thing the duty achieves is to make the cost of living go up and more profit for domestic lumber companies (that is why they pay lobbyists, it makes them money). No, the prices in Canada are not likely to go down because of a glut. Canadian companies will take as much profit as they can, they don’t seem to like passing on any savings to the consumer.

    That is kind of a political take on the situation, but the story is a political one and can’t be discussed without bringing it up. Taxes, tariffs, duties and trade agreements are a political thing. Sorry for being so wordy.

    Yup. Moral of the story is “same old, same old”
    This time though, there is another (still non-political) aspect. We used to have “minimums” that we had to retain for sale to the USA. Last year, at least one of the bigger guys was in a position to have to turn down sales to china because they didnt have the available bandwidth left to cover the minimums to the states as well as sell to Asia. Same guy says that this time, he doesnt have to lay anyone off – he can sell the same wood over the pacific for higher profits this time.

    I assume this will go the way it always has, but it isnt impossible that this time some of that supply will go to a different trading partner for increased profit

    so basically this works better for the Canadian wood suppliers, more money for the same amount of work.

    At least in the medium/long term

    Smaller guys will get squeezed though – they cant just pick up the phone to a new market. Lots of time to work out all the logistics and the deal.

    #626105

    Shannon Rogers (Renaissance woodworker) has had a few things to say on it on Woodtalk Online, a podcast I listen to. He works for a wood company and predicted the price rise and the reasons for it. It seems that when they can inflate the price of imported plywood, the domestic suppliers up their price to increase profits.

    As for the duties and the softwood lumber agreement, this has been going on for decades. The agreements are of 10 years each, and every decade, at the end of the agreement, Canadian exports of softwood get a duty slapped on them, usually for “dumping”. Every time the duties get brought up to the governing bodies (not sure which one, GATT, WTO) the allegations of dumping are found to be not true and the duties get taken off. Every time.

    We have had a softwood lumber agreement since the ’80’s and lumber has been an issue for 200 years. Not once, not ever, has Canada been found in violation on softwood. It’s Canada, we are still “hewers of wood”. There are lots of trees and when you have lots of something it makes it inexpensive. We are really efficient at managing the process. The cutting rights (stumpage fees) for Crown Land (owned by the crown, or government) are sold off in a bidding process at auction, so they are as high as the market will bear.

    The only thing the duty achieves is to make the cost of living go up and more profit for domestic lumber companies (that is why they pay lobbyists, it makes them money). No, the prices in Canada are not likely to go down because of a glut. Canadian companies will take as much profit as they can, they don’t seem to like passing on any savings to the consumer.

    That is kind of a political take on the situation, but the story is a political one and can’t be discussed without bringing it up. Taxes, tariffs, duties and trade agreements are a political thing. Sorry for being so wordy.

    Yup. Moral of the story is “same old, same old”
    This time though, there is another (still non-political) aspect. We used to have “minimums” that we had to retain for sale to the USA. Last year, at least one of the bigger guys was in a position to have to turn down sales to china because they didnt have the available bandwidth left to cover the minimums to the states as well as sell to Asia. Same guy says that this time, he doesnt have to lay anyone off – he can sell the same wood over the pacific for higher profits this time.

    I assume this will go the way it always has, but it isnt impossible that this time some of that supply will go to a different trading partner for increased profit

    so basically this works better for the Canadian wood suppliers, more money for the same amount of work.

    No, there will be lay offs and mills being idled. The duty on softwood lumber is paid to the US government, not to Canadian suppliers.

    There are some new trade agreements being formulated right now with Europe, Asia and South America to open up their markets more to Canadian lumber.

    In the end this means that those countries will benefit from less expensive supplies, and, as Shannon noted in his blurb, they will make products from them and export them to the US at a cheaper price than can be made locally, forcing domestic cabinet shops and other manufacturers to fold.

    So the duties will hurt, rather than help the US manufacturing sector, though their lumber suppliers will make more.

    My You Tube channel: https://www.youtube.com/channel/UCA5AretE3xPoVDV61AxUdUA

    I don't do a fast job. I don't do a slow job. I do a half fast job.

    #626118

    My current market hasn’t yet raised its prices . So far the yard is keep prices down . But they said they will raise prices once there contact is up with there buyer .

    Always willing to learn .

    #626571

    GTokley
    Pro
    Madoc, ON

    I know logging has slowed down in my area over the last 5 to 10 years. Most the loggers cut hardwood and softwood logs. There is 3 sawmills & 1 pulp mill in my area. When the Pulp Mill reduced the loggers quotas per month. This pretty much put there out of business.

    Greg

    #626576

    Doobie
    Pro
    Ajax, ON

    In the news today, Mr Trudeau has decided to retaliate. Now let’s see where that goes.

    Kevin.

    #626625

    kurt@welkerhomes.com
    Pro
    Owatonna, MN - Minnesota

    In the news today, Mr Trudeau has decided to retaliate. Now let’s see where that goes.

    I saw the news about the retaliation, It sounds like he will focus on products from Oregon as it is one of the Oregon Congressmen or Senators that are pushing for the Tariffs. Coal Shipments that pass through Canada also.

    It does sound like the law is on Canada’s side, this has gone to an international trade court several times in the last 40 years and Canada has won every time.

    IN the end they say it will cost less than an additional $1500 to build a house with the tariffs, but new construction is already skewed so much above existing in our area, we can’d afford additional costs to make that number worse.

    #626632

    In the news today, Mr Trudeau has decided to retaliate. Now let’s see where that goes.

    I saw the news about the retaliation, It sounds like he will focus on products from Oregon as it is one of the Oregon Congressmen or Senators that are pushing for the Tariffs. Coal Shipments that pass through Canada also.

    It does sound like the law is on Canada’s side, this has gone to an international trade court several times in the last 40 years and Canada has won every time.

    IN the end they say it will cost less than an additional $1500 to build a house with the tariffs, but new construction is already skewed so much above existing in our area, we can’d afford additional costs to make that number worse.

    There in lays the crux of the matter. They (the government experts) say only and additional $1500 for a house….and when have the experts ever been correct?….lol.

    Then, the taxes on the house are related to the price of the home, so they will go up too.

    Hey honey! we can still get that house, but we can’t put any appliances in it…lol.

    My You Tube channel: https://www.youtube.com/channel/UCA5AretE3xPoVDV61AxUdUA

    I don't do a fast job. I don't do a slow job. I do a half fast job.

    #626636

    I thought this whole started with Canada banning importing of certain milk products from the US. I know it was big news here in WI with a number of dairy farms scrambling to find buyers for their milk. Regardless, I do not like this back and forth. It is not good for either countries consumers.

    #626641

    smallerstick
    Pro
    Listowel, ON

    I thought this whole started with Canada banning importing of certain milk products from the US. I know it was big news here in WI with a number of dairy farms scrambling to find buyers for their milk. Regardless, I do not like this back and forth. It is not good for either countries consumers.

    True that some dairy products are limited but they have always been limited. The US actually enjoys a trade surplus in dairy products with Canada at the present time. Oversupply of dairy products in the US is an issue but unrelated to international trade.

    If the women don't find you handsome, they should at least find you handy. -- Red Green

    #626700

    True that some dairy products are limited but they have always been limited. The US actually enjoys a trade surplus in dairy products with Canada at the present time. Oversupply of dairy products in the US is an issue but unrelated to international trade.

    @smallerstick, here’s an article that may shed some light with what happened on the WI dairy products. The governor of WI & President Trump got involved with this.

    http://host.madison.com/wsj/business/need-milk-dozens-of-wisconsin-dairy-farmers-scrambling-to-find/article_b9f59d70-8c4b-5210-9938-719a5f15dec2.html

    #626715

    Really don’t think this will change the housing market here at all. There are so many other variables that impact it more.

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