Although expiration of the Canada-U.S. softwood lumber agreement on March 31 left Canada with free access to the U.S. market in theory, Canadian producers are reluctant to let shipments increase too much for fear of triggering "countervailing duties."

Some firms were reported scaling back production in hope of avoiding penalties.

Meanwhile, average lumber prices in the U.S. have increased steadily since March, when fears of the Canadian influx were highest. Lumber reached low of $220 per thousand board feet (MBF) in March, but rebounded to a peak of $375 in mid-May. Mid to late June prices were back into the $300 range.

In mid-June, Canada reported exports of softwood such as spruce and fir have increased 14.4 percent since April 1, below the 15 percent level that would allow the United States to levy retroactive duties against Canadian producers if the U.S. Commerce Department finds there is a "critical circumstance."

Canada supplies about 30 percent of the U.S. softwood lumber market, with supplies used mainly in housing construction. Inventories were reported building at sawmills in British Columbia, where producers are holding back on shipments, which required by provincial law to keep cutting on their tenures of publicly owned forests.

West Fraser Timber Co., and International Paper Co. both announced that they would take downtime at mills in British Columbia and Alberta. West Fraser, parent company of West Fraser South at Joyce, Louisiana, said it would reduce production by 140 million board feet, and IP/Weldwood by up to 50 million board feet.