Amid revved-up rhetoric of U.S. election season comes more news from the U.S. Lumber Coalition that hints of negotiation strategies for any SLA down the road. A press release from the coalition yesterday suggests a hybrid of quota and export taxes, arguing that any deal with Canada must:

• maintain Canadian exports at or below an agreed U.S. market share
• establish border measures that are effective in all market situations.

A July 17th industry update from CIBC Institutional Equity Research projected that “the next SLA will resemble the structure Canada proposed to the United States on June 21, 2016, with Option A (B.C./Alberta) duties ranging up to 25% (vs. the 2006 SLA’s maximum of 15%), and lower U.S. market share constraints for Canadian mills.”

Further to CIBC’s May 16th update projecting preliminary duties as early as Feb/Mar 2017, CIBC explains lumber equities trading today around three-year lows “the market pricing in a long multi-year trade battle with very limited pass-through of the cost of duties to consumers.”

Here in B.C., it’s reported the volume of softwood lumber shipped to the U.S.through May 31st ballooned +36% YTD. Some might be wondering what role any consideration for reducing production might have in B.C. mills’ stance /position going forward toward resolution of softwood trade with the U.S. The CIBC report does state that “a period of duties in 2017 could accelerate permanent beetle-related capacity curtailments slated in B.C. over the next three years.” RBC Capital Markets analyst Paul Quinn has also predicted that any preliminary duties imposed in 2017 would result in a number of mill shutdowns right across Canada.