EsThe softwood lumber industry is likely to be a flashpoint in the run-up to NAFTA negotiations between Canada and the U.S. A new deal on exports from Canada is needed after a deadline was missed in October 2016. While USTR Robert Lighthizer wants to complete talks before the August start of NAFTA negotiations, Canadian Foreign Minister Chrystia Freeland has said there is not yet a position for a “meaningful negotiation” Reuters reports.
The debate comes on the heels of the U.S. starting the process of pre-negotiation consultations with Congress, as outlined in Panjiva research of May 18. It also follows a move by the U.S. Commerce Department to accelerate a decision on tariffs on the products concerned. The issue is particularly sensitive for Canada, which is seeing weak underlying export growth outside of energy, with forestry being a rare area of expansion.
Panjiva data shows that U.S. imports reached a new high in March, breaking $600 million for the first time after rising 15.8%. However, that also includes a 24.0% increase in lumber prices. That would imply underlying volumes fell around 8%. More of the same is likely in April, with seaborne shipments slumping by as much as 67% but prices increased 7% vs. March.
Source: Panjiva
The major Canadian producers have taken different approaches recently, however. All four have partly replaced lumber shipments with other products including pulp. Interfor has been the most aggressive recently, increased its exports by 31% in April on a year earlier. Canfor by contrast has been steadily reducing seaborne shipments for the past 19 months. That may also be explained by a change in shipping mode used. Tolko meanwhile, which was previously the most aggressive at increasing shipments has finally begun to cut them with a 11% drop in April.
Source: Panjiva
