Market Update: Canadian Plywood Tariffs Add Pressure to Western Plywood Market

The Western Plywood market has been steady in both sales pace and price during the past month. Decent to good sales, but unspectacular. Customers seem to be content to continue their just-in-time buying behavior, with few exceptions. Prices have also continued to edge higher during this period. 

We seem to have avoided the summer doldrums period of the building season that often accompanies this place on the calendar. With September near, the fall building season is upon us. This is typically a good time for plywood sales and consumption. With light inventories in the field, it would seem a good bet that the markets keep the balance between supply and demand – and maintain current price levels or better. The western plywood sector continues to outperform SYP plywood and OSB both in price appreciation and sales pace.

As of Saturday morning, August 22nd, 50% US tariffs were implemented on Canadian Plywood and Veneer. This is a big whack on these items that regularly move into the U.S. As I write this on Monday, August 24th, the response and reaction from US customers has been mixed. Frankly, many were uninformed about the tariff. Many got wind of it on Monday. Many are asking what this means and how it will affect our plywood markets. I think that is still to be determined.

On the face of this action, however, it would seem reasonable to expect it to be bullish to our plywood markets – if the tariffs remain intact for any length of time. The amount of Canadian plywood that has entered the US this year is likely underestimated by most people. The 50% tariff would appear to be a difficult hurdle for Canadian producers to overcome, but we’ve heard few details on current cross-border transactions between the U.S. and Canadian players. We are likely to get more clarity on trading dynamics in the week ahead. Canada is set to implement their own, dollar-for-dollar, counter-tariffs on U.S. goods, on September 8th.

Certainly, a lot is at stake here in this current trade battle. U.S. plywood manufacturers are fighting for survival against foreign trade practices and policies that seem to often benefit the importer over our domestic manufacturers. That shouldn’t be. Meanwhile, amidst the uncertainty, I believe customers will continue to do what they have been doing – buying their needs only at the going prices, each week.

There continues to be little appetite for speculative buying in the marketplace. This is not a bad thing for plywood sellers in the U.S. With modest, but steady demand coupled with low inventories in the field, this buying behavior will likely continue to feed into and support the plywood marketplace.