(Adds investor quotes and details on lumber prices and U.S.
homebuilders, updates prices)
By Fergal Smith
TORONTO, April 25 Shares in Canadian lumber
companies soared on Tuesday as new U.S. tariffs on softwood
imports came in at the low end of what some investors were
expecting in the face of protectionist rhetoric from the Trump
The average 20 percent anti-subsidy duties announced late on
Monday compared to a 20-30 percent range expected by RBC equity
"It is bad for British Columbia but not necessarily bad for
the lumber companies," said Norman Levine, managing director,
Portfolio Management Corporation.
Levine said that in the last few years, many Canadian lumber
companies bought operations in the United States as a hedge
against such tariffs.
Shares in West Fraser Timber Co, which would pay
the highest duty rate of the affected companies, rose 8.6
percent to C$61.22, its highest point since July 2015, while
Canfor Corp stock gained 6.4 percent to C$19.34, its
highest since January 2016.
A strong U.S. housing market has supported demand for
Canadian exports of lumber, while lumber prices are
trading at nearly their highest in 12 years.
"Supply is about to be constrained and the tariff is going
to add to prices and make lumber more expensive. So if you're
selling it, you're going to make more money," Levine said.
"It is the home builder and the home buyer that is going to
News of the tariff may have added to pressure on U.S.
homebuilding stocks on Tuesday, said Jay McCanless, analyst at
Wedbush Securities in Nashville, after the No. 3 U.S.
homebuilder, PulteGroup Inc, posted its slowest growth
in quarterly orders in more than a year.
"The general fear was that with all protectionist rhetoric
coming out of the States they (the Trump administration) might
just swing for the fences and try for a really high rate," said
an analyst who covers forestry products who declined to be
identified, citing company policy.
Still, the analyst sees West Fraser as most exposed to the
prospect of duties given it has 40 pct of its Canadian capacity
in Alberta, where stumping rates are lowest, a much bigger
exposure than most.
(Additional reporting by Alastair Sharp in Toronto and Lewis
Krauskopf in New York; editing by Chizu Nomiyama and Grant