This week, the ITC (International Trade Commission) voted unanimously to kill both the anti-dumping countervailing duties that were implemented last April. These tariffs have increased the costs of Chinese plywood by 74%. This ruling essentially says that US business was not effected by the influx of import plywood and business can continue as usual as companies use both domestic and import panels.
Remember when I wrote about this tariff back in April and I was concerned that the domestic plywood manufacturers raising their prices to balance the differential between their products and import? That did come to pass and we have seen a 7-10% price increase across the board in response. So now that the tariff is gone what are the chances that the domestic products will drop 7-10%?
Let’s just say I’m not optimistic. For one thing new import material at the lower, tariff free price is easily 60 days from our shores. In other words, we won’t see any lower priced competition until then and dealers will also want to get rid of their higher cost material first. The other thing in play is that many users of import plywood made the switch to domestic after the price increase. Now a lot of cabinet shops are not seeing the reason to switch back. There is obviously a quality difference and a lot of these shops I have talked to like that and have been able to either absorb the overhead increase or pass it along to their customers. I can’t see much changing with domestic plywood any time soon.
However there is good news with the striking down of these tariffs. Not all import plywood is terrible quality and the higher end panels do serve a purpose in fine work. In fact many of our customers’ B grade and “shop grade” panels are import panels. So this is very good news indeed that we can expect prices to return to normal and many of the companies that took a large hit in overhead can now breathe again.
We have been selling a premium import Birch panel for years and are excited to hear that we will be able to get a lower cost panel once again. For now the prices remain constant on both import and domestic while the current priced inventory remains in the supply chain. Time will tell if the domestic panel prices will drop, let’s hope so if for no other reason than to close the price gap between domestic and import.