Newspaper article The Canadian Press

Reports on Softwood Lumber Encouraging, Offer Hope of a Deal: CIBC Analyst

Newspaper article The Canadian Press

Reports on Softwood Lumber Encouraging, Offer Hope of a Deal: CIBC Analyst

Article excerpt

CIBC analyst: Reason for optimism on softwood

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WASHINGTON - The latest news on softwood lumber is being greeted as an encouraging sign by one analyst, who points to several developments that increase hope of a deal between Canada and the United States.

That sense of optimism is being expressed by Hamir Patel, the director of paper and forest products research at CIBC Capital Markets, who points to three recent signs: Comments from Prime Minister Justin Trudeau, comments by B.C. Premier John Horgan, and a report by The Canadian Press on what's holding up a deal.

"We have been encouraged by signs of further progress," Patel said in a newsletter.

He referenced the CP report, which quoted the Canadian ambassador to Washington describing the state of affairs. Ambassador David MacNaughton said the countries' governments had agreed to a roughly 30 per cent cap on Canadians' share of the U.S. softwood market.

MacNaughton said a main outstanding irritant involves whether Canadian suppliers would get to exceed the 30 per cent cap under emergency conditions, when the construction market is hot and American producers can't keep up to supply the other 70 per cent.

MacNaughton said it would be unfair to sign a deal without that so-called hot-market provision. In his view, such a deal could simply steer business off the continent, to the benefit of producers elsewhere: "It's got to do with making sure we're not having mills idled in Canada in order to create jobs in Russia and Brazil.''

He said Canada is awaiting a response to its insistence on that set of conditions.

Patel said that sounds like a manageable irritant: "We are encouraged by these reports as we do not believe a 'hot-market provision' is a deal breaker, especially if Canada is granted 30% market share (only modestly lower than the country's 31. …

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