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Component Manufacturing dverti$er
May 2017 #10214 Page #65
Adverti$er
Don’t Forget! You Saw it in the
Lumber Briefs By Matt Layman Publisher, Layman’s Lumber Guide
Countervailing Duty Preliminary Ruling...19.88%...Bearish For Lumber Duty Calculations...Who Pays What?
Preliminary CVD announced at 19.88%
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Duties placed on the five companies investigated are listed below. The amount of subsidies the foreign producer receives from the government is the basis for the subsidy rate by which the subsidy is offset, or “countervailed,” through higher import duties. West Fraser, 24.12%; Canfor, 20.26%; Tolko, 19.50%; Resolute, 12.82%; JD Irving, 3.02%. The weighted average of those five companies’ rates determine the CVD rate for everyone else...19.88%. It is important to note that the CVD’s for each company investigated was proportionate to their estimated subsidy from the Canadian government. The amount of Crown owned timber used versus privately owned timber has a bearing on the subsidy. In general, eastern Canadian provinces use less Crown timber. JD Irving, with substantial timber holdings, was penalized least.
he pieces are falling into place. Department of Commerce has issued its preliminary countervailing duty on Canadian softwood lumber exports destined for the U.S. The rate of 19.88% is lower than the anticipated 30%. In addition, the four largest producers of Canadian lumber will be exempt from retroactive duties. On two occasions this year, Canadian producers have boosted prices to build in a premium for the anticipated duties. My estimate is that no less than 25% or $100 per thousand board feet of the current value of 2x4#2 SPF-W at $410 fob mill is duty Definition premium. I see this CVD as bearish for the lumber market. An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced Definition below fair market value. Dumping is a process where a company Countervailing duties (CVD) are meant to level the playing exports a product at a price lower than the price it normally charges field between domestic producers of a product and foreign on its own home market. producers of the same product who can afford to sell it at a lower price because of the subsidy they receive from their government. The “SPLINTER” Next on the agenda is Canada’s legal attempt to nullify, Critical Circumstances = 90-day Retroactivity reduce the CVD. At the same time, the Anti-Dumping case will Early afternoon on Monday, April 24, DOC released its be addressed. It is no secret that Canadian lumber mills sell to findings that the four largest Canadian lumber producers who had non-U.S. destinations at different prices when a duty is in place. been required to provide U.S. export data had not exceeded a 15% Canadian lumber buyers plan for it and expect it. increase, or surge that would have created the basis for “critical The splinter will be proving that the price in its home market circumstances.” Critical circumstances are required to implement is “normally” lower. For example, if the list price is the same for a 90-day retroactive duty. That was a huge win for the big four... every customer, plus all applicable duties, tariffs, taxes...and there West Fraser, Canfor, Tolko, and Resolute. That ruling means they are no penalties to add for shipping to Canada and China...there is are exempt from paying retroactive duty...saving them $millions. no dumping. However, if mill sales prices to Canadian companies JD Irving, a producer in eastern Canada, was found to have are normally lower than sales to the U.S.; there’s the rub. A simple surged shipments and will be taxed retroactively. Only the top four examination of invoices will reveal that truth. [And for the record, producers, who make 40% of Canada’s softwood lumber, will be I'll do the leg work for $200 per hour plus expenses and complete exempt from retroactive duties. All others, that produce the other the job in six weeks or sooner. That is a firm offer.] 60%, will be fined...costing them multiple $millions. Looking Forward...ml These five companies’ total production and exports to the U.S. were subtracted from Canada’s total to determine that the A veteran lumberman, Matt Layman publishes Layman's Lumber remaining producers, and Irving, surged shipments. “All others” Guide, the weekly forecasts and buying advisories that help component manufacturers save money on lumber purchases every will be assessed retroactive duties. day. You can reach Matt at 336-516-6684 or matt@laymansguide.org.
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