The demand for Canadian lumber continues to climb, as the housing market in the United States is seeing a projected 6 per cent increase.
Moody's Investors Service recently produced a report which says that Canadian lumber exporters have been implementing higher lumber prices in 2018 to help cover the extra costs of newly introduced softwood lumber duties.
"The continuation of tight lumber markets will allow the estimated $1.2 billion of duties to be collected in 2018 to be passed on to the US consumer via elevated lumber prices," says Ed Sustar, a Moody's Senior Vice President. "This is credit positive for our rated Canadian and US lumber producers, as high prices will outweigh the cost of the duty," he said.
Moody’s noted that lumber prices have increased roughly 25 per cent in the past year, and are expected to remain high due to demand. The housing market in America is seeing a projected 6 per cent increase, due to several hurricane repair and rebuilding efforts.
Canadian lumber producers are now facing the implementation of new softwood lumber duties. The duties are now in effect, after failed negotiations between Canada and the United States. The majority of Canadian lumber exporters pay an average of 21 per cent in duties for lumber shipped to America. The duties were announced in November.
In 2016, Canada's softwood lumber imports were valued at over $5.6 billion.