TORONTO — Shares in Canadian lumber companies rose Feb. 4 on news that the US government could reduce duties on softwood lumber imports in August.
In early trading in Toronto, Canfor Corp. stock rose as much as 7.5%, West Fraser Timber Co. Ltd. jumped by 6.2% and Resolute Forest Products Inc. was up 3%.
The shares closed at lower levels, with Canfor up 4.3%, West Fraser up 2.1% and Resolute down 5.2%.
In a report, CIBC analyst Hamir Patel suggested average US duties would drop from about US$67 per thousand board feet to about US$30 based on current pricing levels of about US$400.
“According to trade contacts, preliminary revised duty determinations from the US government have been communicated to the Canadian industry,” Patel said.
“We expect Canadian lumber equities to respond positively to this news as these rate revisions were better than most Canadian industry participants were expecting.”
West Fraser’s rate may fall from 23.6% to 9.1%, Canfor’s from 20.5% to 4.6% and Resolute’s from 17.9% to 15.8%, he said.
The report says the “all others” duty rate could fall to eight per cent from 20.2%, but added it’s not expected that Canadian companies will receive any refund or credit for overpayment until the trade dispute is resolved, something not expected for two to three years.
A US Commerce department spokesman confirmed preliminary results of an administration review were issued on Feb. 3 but said the impact on softwood lumber deposit rates are not yet determined.
The US imposed duties on most Canadian softwood exports in April 2017, alleging that Canada was unfairly subsidizing its industry and dumping wood into the US at unfair prices.
This is the fifth time Canada and the US have fought over the same issues.
In September, a joint Canada-US trade panel gave the US 90 days to rethink its tariffs, finding there was no evidence Canadian imports were causing injury to the US industry.
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