Canada Lumber Exports, Not to USA

Canada Lumber Exports, Not to USA

The China section of Canada Wood Group wrote February 6 that from January to November 2017 China’s forestry fixed asset investment totalled RMB 204.1 billion (C$40.13 billion), representing +3.2 per cent growth year-on-year. During the same period wood volumes imported via Taicang Port equalled 10.29 million cubic metres, which is equal to a +27.18 per cent year-on-year. Canadian wood import volumes were 4.18 million cubic metres, rising +10.21 per cent compared to the same period last year.

During the first eleven months of 2017, 5.43 million cubic metres of Russian wood was imported through Suifenhe Port, an increase of +15 per cent. Imports via Lanshang Port, Rizhao, were 6.13 million m3 of logs, an impressive +19.5 per cent year-on-year rise, said Canada Wood Group.

Since the latest duties were imposed, Canadian lumber exports to the US have dropped by at least 8 per cent, said Department of Economics at the University of Waterloo researcher Zara Liaqat in Policy Options Tuesday. Higher lumber prices are good news, of course, for both countries’ producers. But the estimated $1.2 billion in duties to be collected in 2018 will be passed on to American consumers.

“The US does not produce enough lumber to make all of its new houses and will continue to use large quantities of Canadian wood.,” continued Liaqat. “The consumption of lumber in the US did not change a great deal during the first eight months of 2017, compared with the same period in 2016. Rising demand during the third quarter was met by higher domestic production. Despite the duties, the US will continue to build with enormous amounts of Canadian lumber, raising the cost of a new home built with Canadian lumber species by at least $5,000.”

This article is available here: http://policyoptions. ruary-2018/learning-from- the-2017-softwood-lumber-dispute/

US Timber Prices Expected to Increase 2018

Elsewhere, said Rajan Parajuli, Craig Johnston, and Bob Abt in the Society of American ForestersForestry Source also Tuesday. State and Wisconsin-Madison University professors said their simulation results suggest that a 20.83% tariff will curtail Canadian lumber shipments to the US by nearly 4 million cubic meters, and will encourage the US domestic lumber industry to produce an additional 2 million cubic metres, of which nearly 62% will come from Southern mills. Lumber prices in the US South are projected to rise by US$3.96/m3.

Projection results from the SRTS model suggest that, due to the lumber tariffs, timber prices in the US South are expected to increase by about +7.3 per cent over the next five years. Without tariffs, the prices are projected to drift downward, but with additional demand triggered by the tariffs, the prices are expected to be up +6.6 per cent in 2018.

Similarly, the tariffs could raise annual sawtimber harvests in the region by +3.2 per cent from 2018 to 2022. The researchers note that the effect on sawtimber inventory is negligible, indicating that the price effect continues to grow even after the tariff consumption effect stabilizes after 2021.

The full study is available by request from Madison’s or here:

Canada State of the Forests: 2017

Natural Resources Canada’s (NRCan) annual State of Canada’s Forests Report for 2017, released at the end of September, includes some encouraging numbers. In 2016 the forest industry accounted for 7 per cent of Canada’s total exports, injecting $23 billion into the economy and generating $1 billion in revenue for provinces and territories. The industry supports over 211,000 jobs, which includes about 9,700 Indigenous people.

Canada’s State of the Forests 2017 report is available here:

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