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Canadian companies may not see immediate financial gain from U.S. decision to cut softwood duties


January 1, 2006
By Pulp & Paper Canada

SAN DIEGO, CA — Canadian forest products companies won a significant victory in the long-running softwood lumber dispute early in December, when the US Department of Commerce (DOC) slashed softwood d…

SAN DIEGO, CA — Canadian forest products companies won a significant victory in the long-running softwood lumber dispute early in December, when the US Department of Commerce (DOC) slashed softwood duties almost in half. But if lumber prices fall to reflect the lower duty rates, as some analysts believe, any financial boost could be limited.

On December 6th, the DOC announced the final results of its 2nd administrative reviews on the antidumping (AD) and countervailing (CV) duty orders on Canadian softwood lumber covering the period of May 1, 2003 through April 30th, 2004 for the ADD review, and April 1st, 2003 through Mar. 31, 2004 for the CVD review.

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The CVD rate has been cut from 16.37% to 8.70% and the, “all others” ADD rate from 3.78% to 2.11%, leaving the combined 10.81% duty close to half the 20.15% Canadian companies have been paying.

The new rates were implemented at the end of December, as they went into effect as soon as the notice was published in the U.S. Federal Register.

In a December 6th ‘Fact Sheet’ on its website, the International Trade Administration said the DOC had received more than 400 individual requests for review of the ADD order from Canadian softwood lumber producers. It chose the following eight mandatory respondents: Abitibi-Consolidated Co. (new rate 2.52%); Buchanan Lumber Sales Inc. (2.86%); Canfor Corp. (1.36%); Tembec Inc. (4.02%); Tolko Industries Ltd. (3.09%); Weldwood of Canada Ltd. (0.61%); West Fraser Mills Ltd. (0.51%); and Weyerhaeuser Co. (4.43%).

The final dumping margin for the producers for which a review was requested but which were not reviewed individually is 2.11%. (The ITA Fact Sheet notes this rate is different from the, “all others” rate of 11.54% that applies only to Canadian producers/exporters that have never participated in an administrative review.)

Although news of the reduced duties had a positive impact on Canadian forestry stocks, it was greeted with mixed feelings by the Canadian industry, which argues the duties have already been ruled unjustified under the North American Free Trade Agreement (NAFTA). And analysts’ views differ on whether and when companies will see a difference on their bottom line.

For complete article, see www.forestweb.com


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