{"id":21050,"date":"2024-10-02T16:15:13","date_gmt":"2024-10-02T06:15:13","guid":{"rendered":"https:\/\/woodcentral.com.au\/?p=21050"},"modified":"2024-10-21T20:17:04","modified_gmt":"2024-10-21T10:17:04","slug":"why-a-3-4-price-range-is-key-to-canada-usa-lumber-dispute","status":"publish","type":"post","link":"https:\/\/woodcentral.com.au\/why-a-3-4-price-range-is-key-to-canada-usa-lumber-dispute\/","title":{"rendered":"Why a 3.4% Price Range is Key to the Canada-USA Lumber Dispute"},"content":{"rendered":"\n

Price is the main driver of the decades-long North American softwood dispute, with two economists revealing a 3.4% band in the sweet spot for the substitutability between the United States and Canada.<\/p>\n\n\n\n

That is according to Yifei Zhang and Barry Goodwin, both from North Carolina State University, who used threshold modelling to assess differentials between Spruce-Pine-Fir (SPF) and Southern Yellow Pine (SYP).<\/p>\n\n\n\n

The study – published in the Forest Policy and Economics<\/a> – found that consumers and builders are more likely to consider product substitutes when the price difference between Canadian SPF and US SYP is within the 3.4% sweet spot:<\/p>\n\n\n\n

“Within this narrow price range, buyers may switch between SPF and SYP based on minor price fluctuations,” they said. However, when price disparities exceed this threshold, “the likelihood of substitution diminishes, and the two products operate independently in the market.”<\/p><\/blockquote><\/figure>\n\n\n\n

This finding has significant implications for the trade dispute.<\/h6>\n\n\n\n

“If Canadian lumber is only a substitute for US lumber within the narrow price range,” the economists said, “then duties and trade restrictions might have varying impacts depending on market prices.” At the same time, the US argument that Canadian imports compete with and harm domestic products “may hold more weight when prices are aligned.”<\/p>\n\n\n\n

The study also highlights the differences between SPF and SYP lumber’s physical properties and uses. “SPF is lighter and preferred for wall framing due to its high strength-to-weight ratio and resistance to warping, while the denser SYP is favoured for structural applications like beams and joists.”<\/p>\n\n\n\n

Despite these differences, the application overlaps when prices converge: “Builders may opt for the more cost-effective option when minimal price differences increase the products’ substitutability.”<\/p>\n\n\n\n

\n
Click here to download the research.<\/a><\/div>\n<\/div>\n\n\n\n

The new research comes after Wood Central<\/a> reported that the US Department of Commerce (almost) doubled its anti-subsidy and anti-dumping duty on all Canadian softwood entering the US \u2014representing more than 84% of all lumber imported into the world’s second-largest consumer market for timber.<\/a><\/p>\n\n\n\n

The Canada\u2013US softwood dispute is one of the nation’s most significant and enduring trade disputes. First arising in 1982, it remains unresolved more than 40 years later. Under the US Tariff Act, the US Department of Commerce determines whether goods are being sold at less than fair value or benefiting from subsidies provided by foreign governments.<\/p>\n\n\n\n