MADISON’S KEY SOFTWOOD LUMBER MARKET WEEKLY COMMENT:
“ Confusion pervaded; buyers short-covered and sawmills experimented with prices. ”
Prices updated May 23, 2017
(CLICK TABLE TO ENLARGE)
All prices are net FOB mill in U.S. dollars per 1000 board feet unless otherwise noted. Green = not dried KD = kiln dried PET = precision end trim R/L = random lengths SPF = Spruce-Pine-Fir Std&Btr = standard & better (a grade)
SOFTWOOD LUMBER INDUSTRY MARKET PRICES, NEWS AND INFORMATION
The conversation shifted slightly this week; or perhaps more correctly expanded, from specifics of assignation of US duties on imports of Canadian softwood lumber to the effects of that on a tenderly burgeoning US home building industry.
Rising wages and moderating home prices offset a rise in mortgage interest rates to give housing affordability a slight boost in the rst quarter of 2017, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released Thursday.
US Housing Affordability: 1Q 2017
In all, 60.3 per cent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the US median income of US$68,000. This is up from the 59.9 per cent of homes sold that were affordable to median-income earners in the fourth quarter of 2016.
The Washington-based industry group said its index of mortgage applications to buy a home, a proxy for future home sales, increased 1.7 per cent on a seasonally adjusted basis to 250.3 points in the week ended May 5.
This was the highest level for this measure since 257.4 in the week of October 2, 2015, Mortgage Bankers Association data showed.
Interest rates on conforming 30-year fixed-rate mortgages were unchanged at 4.23 per cent last week, while average mortgage rates on other types of 30-year loans MBA track were 0.03 percentage point to 0.04 percent- age point higher than the prior week.
Conforming loans are those with balances of US$424,100 or less which qualify for guarantees from federal mortgage agencies Fannie Mae and Freddie Mac.
MBA said its seasonally adjusted index on conforming loan activity to buy a home rose to 316.9, which was the highest since April 2009.
Selected Operating Statistics, Large Publicly-Traded Home Builders
Below is a table from Calculated Risk showing selected operating statistics for nine large, publicly-traded home US builders for the quarter ended March 31, 2017.
Preliminary statistics from the Commerce Department estimated that US new single-family home sales (unadjusted) last quarter were up 12 per cent from the comparable quarter of 2016.
Chris Whalen, a housing finance analyst, said to the Financial Times Friday: “The big problem is the lack of construction lending. In the recovery, the whole system had a bias to more expensive housing and to jumbo loans [for high-end housing]. That US$150,000 or US$300,000 house in the middle market is not so good for the builder.”
As one executive at one large non-bank mortgage lender says: “Our company is gaining share in the market for mortgages on existing and new home sales, but if you look at the long-term trend line at the macro level, these are still at depressed levels. They have not recovered in the way, say, that auto sales have.”
One of many, many outstanding questions on the new Canada-US softwood lumber dispute was answered Friday morning when the US Senate approved US President Donald Trump’s appointment of US Trade Representative.
The upper chamber voted with a large bipartisan majority Thursday to approve Robert Lighthizer, which gives the administration its U.S. trade representative and allows it to kick-start its NAFTA process, according to CBC Friday.
Lighthizer was deputy U.S. trade representative under president Ronald Reagan and has worked on trade issues as a lawyer representing various manufacturers and high-tech companies.
“We are going to be good, collaborative constructive partners who effectively stand up for the national interest — I hope that we’ll be able to conclude negotiations quickly,” Canada’s Foreign Affairs Minister Chrystia Freeland said Thursday night in a conference call from Alaska.
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BREAKING NEWS MID-DAY FRIDAY:
The Canadian government has found several Oregon business-assistance programs it says may constitute illegal subsidies. It is considering a process that could lead to retaliatory duties on imports from that state's products, such as plywood, flooring, wood chips, packaging material and wine, according to several mainstream news sources mid-day Friday.
Prime Minister Justin Trudeau will launch the first salvo in a letter to BC Premier Christy Clark, informing her that he's seriously considering her request for a ban on thermal coal exports and that it's being explored by federal trade officials.
Two government sources say a long-term deal on softwood lumber would be the best way to prevent the dispute from escalating.
Canada's government says it has zeroed in on nine programs in Oregon that assist businesses, primarily in lumber.
They include: the Oregon Underproductive Forestland Tax Credit, the Oregon Forest Resource Trust, the Oregon Tree Farm Program, the Pacific Forest Trust, property tax exemptions for standing timber, a small winery tax exemption program and other tax credits.Read more link text
The much-anticipated Preliminary Countervailing Duty on a wide range of Canadian softwood lumber product exports into the US became known last week, but the announcement created more questions than it answered.
Forest operators in the north scrambled to all available sources for answers about changes to paperwork and any new mechanism at the border, while those in the US tried to find out as much as they could about the effect of that for themselves.
Canada US Softwood Lumber Duty 2017 Documents
To download the actual documents filed please visit our website:
On Thursday afternoon of last week was held the British Columbia NAWLA regional meeting, featuring a panel of experts to explain the CVD announcements, it’s implication, technical details for operators with US Customs, Canada’s strategy going forward, and other updates.
Jason Fisher, Associate Deputy Minister, Forest Sector at Ministry of Forests, Lands and Natural Resource Operations, for the Province of BC explained some important differences between this current round, Softwood Lumber V, and the other lumber trade disputes.
“Previously the countervailing duty was arrived at as an industry aggregate, this time it is company-specific,” said Fisher. “The ‘all others’ rate is a weighted average of the range announced for the five individual companies. “There will be retroactive CVD and new anti-dumping invoices this summer.
“On April 28 there will be CVD invoices on new shipments. There is a gap period after four months, so the end of August, meaning there will be no CVD from September to December 30. However any AD would continue.
“The final determinations will be announced in November,” added Fisher.
US Softwood Lumber Duty on Canadian Imports 2017
“The final duty decision will be in December.
“Final duty payments will be known January 2018, and that is also when Canada will be in a position to appeal to the WTO and table evidence,” concluded Fisher.
US CUSTOMS INVOICES AS OF APRIL 28, 2017
As well, Madison’s reached out Thursday morning to intrepid US Customs Broker Mike Jones, for more tangible details on changes to the mechanism at the border for Canadian operators shipping wood into the US starting Friday.
During the week, as this confusion unfolded, Madison’s looked at some lumber price history to try to get a better understanding of these new market conditions for Canadian and US industry.
In an email explaining to clients Wednesday, Jones detailed, “The DOC’s official announcement with regard to Scope Inclusions, other than the understood dimensional lumber, is still only including the language; square cut box spring frame, pallet, door and window frame, and truss “components” and “parts”, not such articles when imported unassembled as allowed under title 19 CFR GRI2(a). However, they continue to include the HTSUS classification codes for such unassembled articles, as well as edge-glued lumber (4421.99.9400), but not the actual commodity; edge-glued lumber. Again, the DOC indicates these articles’ description is dispositive, not the HTSUS classification code. Edge-glued , as a description, is not included, but it’s classification code is, and the edge-glue classification code is specific to edge-glued lumber only, not like other codes that encompass a number of product descriptions.”
Jones replied to a Madison’s email Thursday morning, “The biggest unknowns impacting companies wanting to export at this time are;
• What articles will be included in the Federal Register publication, i.e., unassembled pallet, door and window frames, fence pickets, etc.
“From our experience, there are still a number of companies who were still using the $500.00 CAP for their Export Prices, which would have to be questions and resolved as part of U.S. Customs’ process to determine the duties applicable.”
This is the situation as it stood at time of printing Friday morning; Madison’s will have more updates next week on what happened April 28 onward.
For more tangible details, Mike can be reached at:
Jones & Jones Customs Brokers & Trade Consultants Michael D. Jones, President – CHB – Inactive Marine NCO
Blaine Phn: 360-332-6090 or 888-536-5079
J&J Website: www.joneschb.com
Cargo Tracking: www.smartborder.com
Filer Code: WQO (Whiskey-Queen-Oscar)