Associations Press for Interventions Over Lumber Prices at the Highest Levels

May 24th, 2021 by Drew Vass

The costs for building materials remains a red-hot issue for suppliers and construction firms, as representative associations plea with government officials to investigate and take action. In late March, a cohort of 36 construction-related organizations, including the National Lumber and Building Material Dealers Association (NLBMDA), the National Association of Home Builders (NAHB) and the Associated General Contractors of America (AGC), sent a letter to U.S. Department of Commerce secretary Gina Raimondo pleading for action, citing lumber prices that have more than tripled. Those efforts resumed in recent weeks, this time urging President Joe Biden’s administration to roll back tariffs and quotas on imported materials, which officials say add to issues of cost and availability. Meanwhile, in a statement issued Friday, Canada’s Minister of Small Business, Export Promotion and International Trade, Mary Ng, suggested that preliminary determinations made by the U.S. Commerce Department (Commerce) point to just the opposite.

“The U.S. Department of Commerce’s preliminary results of its second administrative review suggest its intention to significantly increase duties on Canadian softwood lumber later this year,” Ng said. “This is entirely unjustified and will hurt consumers, businesses and workers on both sides of the border,” she added.

Commerce conducts an annual review of anti-dumping and countervailing duty orders, Ng said, which is similar to initial investigations but applies only to specific companies. According to Ng’s office, preliminary results of the second administrative review propose a combined countervailing and anti-dumping duty rate of 18.32%, while the current combined rate is 8.99%.

The news roiled officials for the National Association of Home Builders (NAHB) over the weekend.

“At a time when soaring lumber prices have added nearly $36,000 to the price of a new home and priced millions of middle-class households out of the housing market, the Biden administration’s preliminary finding yesterday to double the tariffs on Canadian lumber shipments into the U.S. shows the White House does not care about the plight of American home buyers and renters who have been forced to pay much higher costs for housing,” said NAHB chairperson Chuck Fowke. “This action clearly shows the White House is disingenuous when it claims the nation’s housing affordability crisis must be an important priority. This move certainly demonstrates a lack of courage to stand up to the U.S. lumber lobby that is already reaping record profits off the backs of hardworking American families.”

While officials for various associations cite issues stemming from the COVID-19 pandemic and one-time events, such as freezing conditions in Texas in February, for hindering output for some materials, federal policies—particularly those establishing tariffs and quotas on lumber, steel and aluminum—have exacerbated price increases, supply shortages and delivery delays, they suggested. As a result, they’re now urging the Biden administration to end those “import obstacles.” Doing so, they said, will help to free up bottlenecks in supply chains.

“The Biden administration must address these unprecedented lumber and steel costs and broader supply-chain woes or risk undermining the economic recovery,” said Stephen E. Sandherr, AGC’s CEO. “Without tariff relief and other measures, vital construction projects will fall behind schedule or be canceled,” he warned.

While import duties aren’t the primary cause of pricing volatility for lumber, NLBMDA officials said they remain concerned about the impact tariffs have on the North American lumber market. Resolving a longstanding dispute with Canada over softwood lumber pricing is ever important amid inflated prices, they suggested. In comments submitted to the Senate Committee on Finance and House Committee on Ways and Means, NLBMDA officials urged the Biden administration and Congress to prioritize and resolve the softwood lumber dispute. Both committees hosted U.S. Trade Representative Katherine Tai for hearings on the administration’s trade agenda for 2021.

NLBMDA officials called on Tai to reopen negotiations with Canada, pursuing a new Softwood Lumber Agreement, aimed at bringing long-term stability to the market.

Tai held a virtual meeting recently with Ng, in which the two discussed softwood lumber and World Trade Organization reform, agreeing to collaborate on those and other issues, while maintaining an open line of communication.

In the meantime, a recent Random Lengths price index showed the price of framing lumber near $1,200 per thousand board feet—up nearly 250% since last April. The softwood products considered in those calculations include various dimensional lumber (including pressure treated), plywood, oriented-strand board (OSB), particleboard, fiberboard, shakes and shingles, and any products sold by U.S. sawmills and tracked by Random Lengths.

Soaring prices now add what NAHB officials said equates to nearly $36,000 to the price of a new, average sized, single family home—up from $16,000 in August 2020 and $24,000 in February 2021.

“This unprecedented price surge is hurting American home buyers and homebuilders and impeding housing and economic growth,” said Fowke.

Commerce isn’t expected to issue final results of its administrative review until November 2021.

When [DWM] reached out to Commerce press officials to confirm the preliminary results of its second administrative review, the department failed to respond by press time.

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