Countervailing Duty on Canadian Softwood – The Platinum Tape, a blog by Kelly Fox

Friends and Neighbors,

After months of speculation, it finally happened, the Trump administration announced that the countervailing duty on Canadian softwood would be set at 19.88%.  If this was the end of it, we could let the smoke clear and start anew in the weeks and months ahead.  Unfortunately, this is not the case so we have a long protracted fight on our hands that will keep the consumer doing what they always do, pay the higher price.  Let us look at what we do know and what we can expect.

Through the regulatory process and our part of the NAFTA agreement, both sides will get the opportunity to state their case in an appeals process.  The final ruling on this issues is not expected until sometime in January 2018.  If history is a good teacher on these issues, the Canadians have almost always won the argument.  Now that we know the fight is a long way from over, let us get down to the more immediate impact on our community.

The first thing I looked following the announcement this morning were the currency markets.  As expected, the Canadian dollar declined.  In a part of the country that depends on Canadian tourism to support our local economy, the weak dollar does not help.  Seeing the restaurants full and the Black Ball moving at capacity is good for all of us that call Clallam County home.  At the end of the day, our business is only as strong as the local economy and every part helps.

The second thing I looked at this morning was the lumber markets to see what was happening.  Surprisingly, everything has remained fairly calm with very little commotion in price files. Of greater concern to us, the impact of this announcement on supply has yet to be fully felt.  We know that we are running into shortage issues in the current market.

If any big producers decide to take drastic action, like not selling into the US market it could leave us very short on supply.  We are conducting a survey to find out how you would like us to respond in the event supply of the #2 & Better Premium we currently offer becomes unavailable.  If you would like to help us, please click here.

The last thing I did this morning was grab the phone and ask for input from our buyers, our supplier partners, and our network.  I learned that most everyone is in the same position as we are with more questions than answers.  That consensus opinion is to not take speculative positions on excess inventory in the near term.

We will follow the market and replace what we sell and try to maintain our business to be nimble with the market.  This will keep our pricing current and eliminate the potential for big profits and big losses.  With that position, we will be relying heavily on our buyers to ensure that we are refilling our stock more frequently in addition to our vendor managed programs.

Like everything in life, the dust will settle on this issue.  When it does, we will be here taking care of our friends and neighbors just as we have been for 111 years.  As always, if you have any questions or concerns about the market; we are here to help.  Please follow our blog or friend us on Facebook for updates as they become available.  I can also be reached via email at kellyf@lumbertradersinc.com or in the store @ 360-452-8933 for more pressing concerns.

Thanks,

Kelly

Volatile Lumber Trading and the Affect on Lumber Pricing

Friends and Neighbors,

Lumber trading right now is extremely volatile with no end in sight per many of our supplier partners.  The cause of the spike in the lumber prices is related to increased demand around the country and uncertainty related to the expired softwood lumber agreement.

With the market growth and the tariff looming, dealers like us are taking on inventory positions that are pushing out order files at the mill level for many months so that we can make sure to cover our customers in the peak season.  The tariff is aimed at balancing the pricing between US and Canadian producers that will most likely result is a retroactive tax on the Canadian goods.  This has caused the producers to collect the money upfront to protect themselves when, not if, it is imposed.  The struggle right now is no one knows what the amount will be so most mills and suppliers are collecting at the worst-case rate.

Since the beginning of the year, our stores have seen our cedar prices grow by more than 40%.  Since the beginning of February, we have seen our lumber commodity prices increase by 20-25% with some seeing 35%+.  Because we cannot sell our inventory at current market pricing and still make the profits our business needs to survive, we are selling at our replacement cost.  We expect treated lumber to follow the commodity markets up at about the same rates in the next few days.

One way we continue to look out for our customers is to look at our inventory position and the price increases to see if we can cover ourselves week to week without passing on the full weight of our cost increases.  The down side to this is that we cannot honor our quoted prices beyond one week.

Thank you for your understanding, we are here to help in any way that we can.  If you have any questions about the market or need some clarification about a specific segment, please shoot me an email or talk with your sales person.  We will continue to watch the prices and adjust up and down as the market dictates along with keeping all of you posted with our weekly lumber commodity hot sheet updates.  If you would like to be added to the email list for the Lumber Commodity Hot Sheets please email Josh Bergesen at joshb@lumbertradersinc.com .  You can always find the newest lumber commodity pricing on our Blog page, through Facebook and on our Twitter feed.

Thank you for placing your trust in us and we all look forward to serving you in 2017 and beyond.

Thanks,

Kelly