Duty Free

With the “Prevailing Monthly Price” above $355/M, there is no export charge this month on Canadian softwood lumber shipments to the United States. The Prevailing Monthly Price is calculated by averaging the four weekly Framing Lumber Composite Prices available 21 days prior to the beginning of the month to which it is applied. With one week remaining for the February calculation, the Prevailing Monthly Price is clearly going to be over $355 again (the composite average after three weeks is $381/M).
The four Composite Price dates for March will be 1/18, 1/25, 2/1, 2/8. Could the entire first quarter be ‘duty-free’? If the pressure on order files is deemed to be a leading indicator of future demand, that seems likely. Traders will certainly be monitoring the impact of this month’s tax-free window on lumber prices with interest.
News today that the U.S. House passed the $9.7 billion Hurricane Sandy relief bill lends some certainty to reconstruction going forward on the Eastern Seaboard.

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