By Tyler Durden
Canadian lumber stocks are diving this morning following a report from BMO analyst Mark Wilde who writes that “prospects for a near-term settlement of the U.S./Canadian lumber dispute have faded”, prompting him to downgrade the main players in the space. The report has sent the stocks of West Frasier Timber (WFT), Canfor (CFP) and Interfor (IFP) as much as 6%, 4.6% and 6.2% lower, respectively.
What prompted the bold call? As the BMO analyst notes, “our sources report little substantive negotiation between Canadian and U.S. interests and little real movement in positions. Moreover, there appears to be internal divisions on both sides of the border.”
These include differences between U.S. Commerce Secretary, Wilbur Ross, and U.S. Trade Representative, Robert Lighthizer. Ross is reportedly more inclined to take a deal, while the USTR is apparently taking a firmer line in negotiations. There also appear to be differences amongst members of the U.S. Lumber Coalition.
On the Canadian side, the divisions are mainly between the East and the West. Large, low-cost Western Canadian producers are more inclined to take a harder approach, pursuing litigation and paying countervailing (CVD)/anti-dumping (ADD) duties in the interim.
So with no near-term resolution to the ongoing lumber dispute between …read more