TRADING SYMBOL: Toronto Stock Exchange - HWD
LANGLEY, BC, May 1, 2013 /CNW/ - Hardwoods Distribution Inc. ("Hardwoods" or the "Company") today announced that the US Department of Commerce ("Commerce") has issued its preliminary determination regarding antidumping duties against hardwood plywood manufactured in China and imported into the United States.
On September 27, 2012 an unfair trade petition was filed in the United States seeking the imposition of countervailing duties ("CVD") and antidumping duties ("AD") against Chinese hardwood plywood. The trade petition was brought by a coalition of U.S. plywood manufacturers, alleging that Chinese imports are sold in the United States at prices below cost and are subsidized by the Government of China. As previously announced by the Company, on February 27, 2013 Commerce completed the preliminary stage of its CVD investigation and imposed a preliminary CVD rate of 22.63% against product imported to the U.S. from substantially all Chinese mill producers.
On April 30, 2013 Commerce announced it had completed the preliminary stage of its AD duty investigation, imposing a preliminary AD duty rate of 22.14% against most Chinese mill producers. As a result of this announcement made yesterday, once the preliminary AD duty takes effect, the combined preliminary CVD/AD duty rate on hardwood plywood imported from China into the United States will be 44.77%.
Hardwoods estimates that approximately 14% of its total sales in 2012 was product that would have fallen within the scope of this U.S. trade action. The majority of the Company's U.S. product mix is comprised of products that are not subject to this trade dispute, namely hardwood lumber, specialty wood products, domestically produced plywood products, and plywood imported from counties other than China. In addition, these preliminary duties have no effect upon Hardwood's Canadian operations.
It cannot be determined to what extent imported Chinese hardwood plywood will be priced out of the U.S. market after bearing a combined 44.77% preliminary CVD/AD duty rate. Although Chinese product becomes immediately more expensive, prices for U.S. produced domestic plywood have also been steadily increasing in the past several months. Current volume demand for hardwood plywood is also strong, reflecting the ongoing recovery in the U.S. housing market. As a result, Hardwoods expects customer demand to continue for some dutiable products from China, whereas some customers will choose to look at alternative product options. Hardwoods strategy includes selling both imported and domestically produced hardwood plywood to satisfy demand and product preferences from Hardwoods customers. The Company has active supply lines for hardwood plywood both in the U.S. and in international markets other than China. Although markets are likely to be disrupted in the short-term by the imposition of preliminary CVD/AD duties, the Company believes that if necessary it is well positioned to respond to its' customer needs through other sourcing channels that are not dependent upon Chinese production.
The AD and CVD rates that have been announced by Commerce represent their preliminary determinations only, and are subject to further investigation and revision. The final determination regarding both CVD and AD is now expected to be issued by Commerce on September 13, 2013. In addition, a separate decision from the US International Trade Commission ("ITC") is expected on the trade case on October 28, 2013. On that date the ITC will announce whether it finds U.S. plywood manufacturers have been injured, or are threatened to by injured, by hardwood plywood imported from China. An injury finding by the ITC is required to affirm that Commerce can proceed with any CVD and AD duties that Commerce has imposed in the trade case.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
This news release includes forward-looking statements. These involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", "expect", "may", "plan", "will", and similar terms and phrases, including references to assumptions. Such statements may involve, but are not limited to: the Company's view that it cannot be determined at this time to what extent imported hardwood Chinese plywood will be priced out of the U.S. market after bearing a combined 44.77% preliminary duty rate; that Hardwoods expects customer demand to continue for some dutiable products from China, whereas some customers will choose to look at alternative product options; the Company's belief that it has active supply lines for hardwood plywood both in the US and in international markets other than China, and that although markets are likely to be disrupted in the short-term by the imposition of preliminary CVD/AD duties, the Company believes that it is well positioned to respond to its' customer needs through other sourcing channels that are not dependent upon Chinese production; the Company's expectation that the final determination regarding both CVD and AD will be issued by Commerce on September 13, 2013, and that a separate decision from the US International Trade Commission ("ITC") is expected on the trade case on October 28, 2013.
These forward-looking statements reflect current expectations of management regarding future events and operating performance as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: national and local business conditions; political or economic instability in local markets; competition; consumer preferences; spending patterns and demographic trends; legislation or governmental regulation (including trade outcomes that impact upon our business); acquisition and integration risks.
Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, management cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements reflect management's current beliefs and are based on information currently available.
All forward-looking information in this news release is qualified in its entirety by this cautionary statement and, except as may be required by law, the Company undertakes no obligation to revise or update any forward looking information as a result of new information, future events or otherwise after the date hereof.
Hardwoods is one of North America's largest wholesale distributors of hardwood lumber and related sheet good products, operating a network of 31 distribution centres in the US and Canada.
SOURCE: Hardwoods Distribution Inc.
For further information:
Chief Financial Officer
Phone: (604) 881-1990
Fax: (604) 881-1995