Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

You know these are strange times in the Canadian forest industry when lumber futures are hotter than bitcoin.

In the two decades until 2020, Canadian forest companies shed capacity and jobs faster than a champion lumberjack could saw through a sturdy Western white pine. Once the country’s dominant resource industry, the forest products sector shrank dramatically as newsprint consumption crumbled and the 2008 U.S. housing crash took a chainsaw to lumber prices.

Lumber is suddenly on fire, however, with U.S. housing starts hitting pre-crash 2006 levels and as consumers spend savings accumulated during the COVID-19 pandemic on home renovations instead of travel. Lumber futures for May delivery soared to a record of more than US$1,600 per thousand board feet on Tuesday on the Chicago Mercantile Exchange – about four times the average price fetched prior to the pandemic.

Story continues below advertisement

Most Canadian producers that supply the Western spruce, pine and fir (SPF) grades preferred for framing new houses slashed sawmill capacity in the decade before the pandemic and cannot increase production fast enough to satisfy surging demand. Soaring lumber costs have added upward of US$30,000 to the price of a new home in recent months, leading the U.S. National Association of Home Builders to call on President Joe Biden to scrap countervailing and anti-dumping duties on Canadian lumber imposed by the former Trump administration in 2017.

In the current bull market, the duties hurt U.S. consumers far more than lumber companies. Large Canadian-based producers such as Canfor Corp. and Resolute Forest Products Inc. have not had it this good in more than two decades and are practically drowning in cash. Their share prices have skyrocketed in the past year and investors are piling into lumber stocks in hopes of riding what many see as a rising wave as supply bottlenecks drive wood prices even higher.

Vancouver-based Canfor reported first-quarter net income of $428-million, a nearly $500-million turnaround from a $70-million net loss in the same period in 2020. Montreal-based Resolute earned $87-million in the first quarter, up from a $1-million loss a year earlier, as juicy lumber profits helped offset a continuing decline in the company’s newsprint business.

If anything, the lumber boom has reduced the political pressure on Prime Minister Justin Trudeau’s government to push for a new softwood lumber deal with the Biden administration. With lumber prices more than tripling in the past year, duties averaging around 9 per cent are practically a rounding error. Canfor’s duty was reduced to 4.62 per cent from 20.52 per cent last December by the U.S. Department of Commerce. Resolute faces a stiffer 20.25-per-cent duty.

Former Canadian trade official Eric Miller believes a new softwood deal is currently a lower priority for the Trudeau government than negotiating with the Biden administration to prevent a shutdown of Enbridge’s Line 5 natural gas pipeline by Michigan Governor Gretchen Whitmer or to exempt Canadian companies from the Buy America provisions of the new President’s multitrillion-dollar stimulus and infrastructure programs.

“Lots of Canadian government and industry players would like a softwood lumber deal, but immediate priorities and limited bandwidth in Washington make this unlikely in the short term,” said Mr. Miller, president of Rideau Potomac Strategy Group. “It is also true that nobody screams quite as loudly for relief when they are making lots of money, but experienced market players know that conditions always change and that it is better to lock in a predictable regime when they have a chance.”

Indeed, the only certainty about the current lumber boom is that it will eventually end. In recent years, Canfor and Resolute have bought sawmills in the U.S. South as a hedge against the perennial softwood lumber dispute. But a permanent end to the dispute remains critical to the survival of dozens of Canadian sawmills and the communities that depend on them.

Story continues below advertisement

The World Trade Organization has repeatedly refuted U.S. claims that Canadian provinces subsidize lumber producers with low stumpage fees and cheap electricity, ruling in Canada’s favour as recently as last August. The U.S. has appealed that ruling.

U.S. lumber producers, meanwhile, have hit back against home builders’ claims that tariffs on Canadian wood are “aggravating already high lumber prices” and hurting consumers.

“Lumber only makes up 4 per cent of the cost of a new home – the import duty on Canadian lumber has near zero impact on homebuyers, at around US$1.40 per month in a new 30-year mortgage, at worst,” the U.S. Lumber Coalition insists. “Reversing the course on enforcing U.S. trade laws against subsidized and unfairly traded Canadian lumber imports would be devastating to the hundreds of thousands of U.S. workers who depend on the forestry industry.”

Clearly, despite today’s red-hot prices, Canadian lumber industry is not out of the woods yet.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies