Replies

I appreciate the information...however, I am not certain how one would conclude that the raw costs are 30% lower than that of the US merely because the volume of their product is higher than ever before.

Would it not also be true that the demand from the destruction caused by multiple hurricanes might have increased demand in the US so that even at the higher prices there would have been a higher demand?

Isn't there always an incentive to decrease costs and efficiency for the sake of profit? Why would the US producers not be able to implement the same savings?

Are the Canadian producers robbing Peter to pay Paul to make their margins higher?

I'm not in the lumber business.

The 30% was a rough estimate that was based on the maximum 29% tariff from a couple of years back. I don't know exactly how the Canadians managed to slash their production costs, but I estimated a 30% discount on their costs because they were underselling U.S. producers before the tariff was imposed, and after some initial rough times they were soon underselling U.S. producers after the original 17% tariff was imposed. And they still underselling U.S. producers when the tariff was raised to 29%.

Isn't there always an incentive to decrease costs and efficiency for the sake of profit? Why would the US producers not be able to implement the same savings?

I think the real reason the U.S. producers couldn't implement the same cost reduction measures was that Canada's mills are generally newer and more efficient to begin with -- especially after the tariff drove so many of the older mills in British Columbia out of business.

Would it not also be true that the demand from the destruction caused by multiple hurricanes might have increased demand in the US so that even at the higher prices there would have been a higher demand?

That's an issue that has only come into play in the last six months. Before that, the U.S. lumber industry was in pretty bad shape. I'd be curious to see just how well the industry has recovered in recent months, but I believe the primary impact has been a steep increase in lumber imports. The latest issue of The Journal of Commerce shows some decent gains in lumber imports from Canada, and huge gains in imports from Sweden and Germany.