WoodWeek – 16 December 2009

This week we have for you:

• Contractors' Key Indicators
• Copenhagen Time Running Out, Says Forester
• Ocean Freight Index
• NZ Log Exports to China Up 174% in First 9 Months
• Finance Sector to Gain Insight into Forestry’s Future
• Increased Opportunities for Northland Forest Industry
• FITEC Congratulates Emerging Leaders
• Thanks & Merry Christmas to FICA Sponsors
• Water Licensing Concerns for SA Forestry
• BC Boosts Lumber Exports to China
• Exciting Industry Award Initiative for Eastland
• Safety Alert - Cable Hauler - Tower Failure
• …and finally…only in New Zealand…
• Buy and Sell
• …and finally, finally… one more for Christmas…

Contractors' Key Indicators

Check out this weeks changes (or should we say lack of) in diesel prices, exchange rates and interest rates here.

NZ CONTRACTORS' KEY INDICATORS 16th December 2009
Interest Rates		Diesel Price Watch
	90-day bill rate = 2.75%	NC	Average (excl GST / all regions) = $0.96
Exchange Rates		NC	Change (month) = 0%
	NZD/USD = 0.7272		Change(quarter) = +4%
	NZD/Yen = 64.45	NC	Change (year) = -8%
Labour Cost Index - Forestry/Logging		Consumer Price Index
	Sep 09 quarter = 1002		Sep 09 quarter = 1095
NC	Change (quarter) =+0.2%		Change (quarter) =+1.3%
N/A	Change (year) = N/A*		Change (year) = +1.7%

*Note:The LCI has been re-expressed on a June 2009 quarter base (=1000).

AUSTRALIAN CONTRACTORS' KEY INDICATORS 16th December 2009
Interest Rates		Diesel Price Watch
	90-day bill rate = 4.25%	NC	VIC (excl GST) = $1.06
Exchange Rates			NSW (excl GST) = $1.05
	AUD/USD = 0.9138	NC	TAS (excl GST) = $1.12
	AUD/Yen = 81.26	NC	SA (excl GST) = $1.07
Wage Price Index - All Industries		Consumer Price Index
	Sep 09 quarter = 102.0		Sep 09 quarter = 168.6
	Change (quarter) = +0.9%		Change (quarter) =+1.0%
	Change (year) = +3.4%		Change (year) =+1.3%

Copenhagen Time Running Out, Says Forester

The Copenhagen climate change conference must make progress on land use and land change issues by this weekend, says David Rhodes, the chief executive of the New Zealand Forest Owners' Association. “If not then I think time will have run out,” he told Carbon News from Copenhagen.

Changing the Kyoto rules to allow landowners to clear forest from one area and replant it in another without penalty is one of the key objectives of the New Zealand delegation.

Rhodes says that there is increasing convergence among developed counties on a number of key forestry issues. “Australia and New Zealand are well aligned. There is still, however, strong resistance by developing countries to conceding any flexibility on LULUCF (Land Use, Land Change and Forestry) issues in the belief that this will lessen the commitment to emissions reductions. Hopefully there can be agreement to developing a comprehensive text even if it contains a lot of brackets (non-agreed text) by this weekend.”

But even if substantial progress is made, he says, there is still the problem of whether or not there is a substantial international agreement with adequate commitments or not. “Without this the section that deals with forestry will likely be left stranded.”

(Source: Carbon News)

Ocean Freight Index

The Baltic Supramax Index (BSI) closed yesterday at 2420 points, an increase of 7% or 163 points since last months report. The yearly average for the BSI currently stands at 1632 points.

The BSI (Baltic Supramax Index), published by the Baltic Exchange, is the weighted average on 5 major time-charter routes. It is based on a 52,454 mt bulk carrier carrying commodities such as timber.

(Source: Cotzias Shipping)

NZ Log Exports to China Up 174% in First 9 Months

In 2008, the Chinese wood products industry slowed from the rapid growth of the previous eight years. As the global economic recession deepened, Chinese wood product exports contracted significantly in 2008. However, the Chinese government introduced a US$730 billion economic aid package in late 2008 to stimulate domestic demand in lieu of exports, and maintain overall economic growth. By Q2/09, most wood product manufacturers were seeing stronger demand (due to growing domestic consumption), and began to increase output.

Increased wood products output for the domestic market strengthened demand for log and lumber imports by the second quarter of 2009. As a result, log imports, which were in major decline during 2008 (from 3.4 million m³ in March 2008 to 1.35 million m³ in January 2009) started to turn up again in February 2009; they have been on the rise into Q3/09.

The slump in Chinese wood product exports, in combination with significantly higher Russian log prices (caused by the 25% Russian log export tax), decreased Russian log imports from 25.3 million m³ in 2007 to 18.7 million m³ in 2008; only about 14.5 million m³ are expected in 2009. Lower Russian log imports have been offset mainly by a major increase in New Zealand radiata pine log imports (+174% in the first nine months of 2009).

Chinese lumber imports dropped briefly in the first quarter of 2009, but have since soared quickly to almost record levels to offset more expensive Russian logs. Total lumber imports in 2006 were 6.1 million m³ and are estimated at 9.5 million m³ in 2009 (+56%). In fact, Chinese exports have generally been rising since 2006; they only stumbled at the start of the global economic recession, but now are soaring.

As long as Russia maintains its current minimum Euro15/m³ log export tax, softwood lumber exports to China should continue to grow as Russian log exports to China decrease. The main beneficiaries of growing Chinese softwood lumber imports are likely to be Russia, Canada and some southern hemisphere radiata pine lumber exporters.

(Source: International Wood Markets Group, www.woodmarkets.com)

Finance Sector to Gain Insight into Forestry’s Future

A pan-forest-industry conference in Sydney on 1-2nd March 2010 and again in Auckland on 4-5th March 2010 will focus on strengthening ties between the finance and forest products industries in New Zealand. The global recession has forced many industries to review their attitudes to risk and industry growth. Meanwhile New Zealand forestry has prospered through 2009 through exports and now looks set to capitalise on improving business conditions for both domestic and export products. Many of the countries that are key buyers of our wood exports are now rebounding from recession. Forestry is also poised to capitalise on potential new rules for the next Kyoto Protocol commitment period which could make for huge change and growth in this carbon-friendly industry.

“Forest products companies in New Zealand have huge export opportunities in both bioenergy supplies and carbon credits– and finance company risk managers need to learn more about these.” says conference organiser John Stulen of the Forest Industry Engineering Association. The “Future Forestry Finance” conference is being organised by this group in association with a number of key forestry groups including the New Zealand Forest Owners Association and Wood Processors Association and Forest Industry Contractors Association.

Much has happened in forestry exports over the past year – but it has certainly not been a recession – quite the opposite. During 2009 stable forest harvest levels have been maintained since the biggest driver of demand, China, has lifted its softwood log imports from New Zealand by 47%. This has widened the market base for plantation forestry exports. Meanwhile traditional log markets such as Korea and Japan have begun to rebound – adding to firm pricing and steady volumes of logs passing through our major export ports. At the same time there has been considerable growth in wood for bioenergy. A major new bio-energy plant is due for commissioning in Taupo in March – aimed at wood pellets exports for commercial energy buyers.

“There have been some important changes in forestry ownership in New Zealand with treaty settlements adding significant Maori ownership of the timberlands. With Maori making up a big percentage of the workforce in traditional forestry their new land ownership role bodes well for the industry’s future.” said Stulen. “Finance industry leaders and executives will also learn a lot from the collection of international forestry investment experts who will play a leading part in the conference on 1-2nd March at the Novotel Brighton Beach in Sydney and again on 4-5th March at the Rendezvous Hotel in Auckland.”

It’s also vital that financiers are aware of the global factors which will affect future forest and forest products developments in Australia. The conference in March will include key international forestry investment experts who will provide that global view.

Key note speakers include:
Eva Greger of GMO Renewable Resources, Boston, USA – speaking on international forestry investment comparisons to Australia.
Russell Taylor of International Wood Markets Group, Vancouver, Canada – speaking on international wood markets and future competition from Russia and China.
Bob Flynn, RISI – speaking on international biomass and woodchip markets and future competition from South American forest industries. RISI is the leading information provider for the global forest products industry.

Further information is available at www.forestryfinanceevents.com

Registrations for this key event on the forestry and finance calendar in Auckland event can be made directly online via the event website by phoning 0800 34 22 69 in New Zealand.
Early Bird Registration closes this Friday (18th December).

Increased Opportunities for Northland Forest Industry

A steady increase in regional wood availability will lead to new opportunities for the Northland wood processing sector and the wider community, say the authors of the latest wood availability forecast report.

The Ministry of Agriculture and Forestry this week released its Northland Region Forest Industry and Wood Availability Forecasts Report. The report describes Northland’s forests, wood processing industries and the infrastructure necessary for the industry to operate efficiently.

The forecasts in the report show a gradual increase in annual wood availability from about 2 million cubic metres to 3.7 million cubic metres per year is possible by 2012. A further increase up to around 4.7 million cubic metres starts after 2020.

MAF Principal Advisor Paul Lane says the report aims to assist forestry industries, planning practitioners, and infrastructure and service providers to plan resources, assess opportunities and identify issues related to the availability of wood. “Although the supply curve rises until around 2012, it remains relatively flat at that level until 2020. This means that there are opportunities now to identify opportunities and efficiencies that will improve the long term utilisation of the forest resource” Mr Lane said.

The report provides new wood availability forecasts and associated commentary for the region, covering the period 2008 to 2040, and outlines opportunities and constraints facing the region's forest industries.

A copy of the report can be found at: www.maf.govt.nz/mafnet/publications/wood-availability

FITEC Congratulates Emerging Leaders

For the second time in 2009 FITEC has selected four of New Zealand’s potential leaders in the wood industries for a FITEC Emerging Leaders Scholarship – just in time for Christmas!

The scholarships are an initiative to identify emerging leaders, promote excellence and encourage a higher level of training for those working in the forest and wood manufacturing sectors.

FITEC Chief Executive Ian Boyd says that over the last eighteen months since the initiative was launched, a total of 13 scholarships have been awarded – a reflection, he says, of the calibre of applicants and the interest businesses have in developing future leaders.

The four Christmas recipients are:

Frankie Taituma, Lake Taupo Forest Trust, Turangi

The scholarships must be undertaken over the next 12 months and recipients choose from either an eight-day Outward Bound Navigator Leadership Development Programme, or a three-day NZ Institute of Management Leadership, Motivation and Team Building course.

Of the 20 applications that were received, 10 finalists were short-listed and interviewed. Their employers provided more in depth information via phone interviews, before a FITEC panel chose the recipients.

Ian Boyd says, “FITEC is pleased to be able to help them step up to the next level and we hope they gain a lot from their course.”

The next round of scholarships will open in May 2010, with up to four more scholarships being awarded in August 2010. Interested applicants need to be over 21, have at least three years work experience, a minimum of a Level 3 National Certificate and want to be a leader in the forest, wood manufacturing or furniture industry (see: www.fitec.org.nz).

Thanks & Merry Christmas to FICA Sponsors

We would like to thank all of the organisations who support FICA, which in turn works to promote business growth and improved safety and efficiency amongst forestry contractors for the benefit of New Zealand's Forestry Industry.

STRATEGIC PARTNERS






MEMBERS' BENEFITS – BUSINESS PARTNERS
Blackburne Group (ACCOUNTANCY & MANAGEMENT SERVICES)
UDC Finance (BANKING & ASSET FINANCE)
Sweeney Townsend & Associates (INSURANCE SERVICES)
TLC Insurance (INSURANCE SERVICES)


GOLD SPONSORS
Goughs CAT
Cableprice NZ Ltd
Mini-Tankers (Shell)
Komatsu Forests NZ
Shaw's Wire Ropes (John Shaw NZ Ltd)


SILVER SPONSORS
FITEC
Ensign
Liebherr
Timbersaws (Levin Sawmakers)
Taupo Rigging & Safety Services
Trinder Engineers
Pirtek

Water Licensing Concerns for SA Forestry

A forestry industry source has claimed the South East Natural Resources Management (SENRM) Board’s proposal to introduce a sweeping permit and water licensing system on the region’s timber industry could wipe $75m in value from the sector. The board’s draft regional plan — now released for public comment — proposes a permit system for commercial timber plantations for the first time.

According to industry sources, the proposal — which will need to be legislated — will also restrict new rotations of plantations on some current estates. The proposal also includes introducing water licences for forestry, creating fears it may deter investors from undertaking carbon plantings in the South East because of the added cost. An industry source, who did not want to be named, described the detail in the draft regional plan and the proposed water allocation plans as “rewriting history” that could have widespread ramifications. It is believed the proposed rules could slash up to $75m from both the forestry plantation sector and processing facilities such as factories and mills.

SENRM Board general manager Hugo Hopton confirmed a permit system for forestry plantings was being proposed for the first time. He said the draft regional plan was a “blueprint or roadmap” for the management of natural resources into the future. Mr Hopton said strategic measures needed to be put in place to secure the water supply in the long term for community, business and the agricultural sector. He said one of the targets was to ensure the resource remained at least in its current position into the future.

Under the draft plan, Mr Hopton said the blueprint categorised forestry as a water affecting activity. “We now see it as a bonafide primary industry production,” Mr Hopton said. He said the board wanted to set clear rules to give the forestry industry certainty into the future. “The forestry industry is telling us they want certainty,” Mr Hopton said.

Regarding possibilities for growers to plant carbon forests, Mr Hopton said this would occur within the permit system. Under a proposed emissions trading scheme, farmers could plant forests for carbon trading to large companies such as power businesses who need to offset their usage. Mr Hopton said a government department would be tasked with issuing the permits.

While acknowledging the importance of the timber industry, he argued the water resources had to be protected for the long term. “We don’t want one industry to come at the cost of another industry,” Mr Hopton said. He said the specific details of the changes were found in the water allocation plans, which had yet to be debated by State Parliament.

A public meeting on the board’s draft regional plan will be held in Mount Gambier on Wednesday (December 16) at 7pm at the SENRM Board office. Submissions on the draft plan close February 2.

(Source: The Border Watch)

BC Boosts Lumber Exports to China

Chinese wood demand has lifted export production in many wood-based supply countries, not just New Zealand. Chinese demand for BC lumber has surpassed projections that were considered optimistic two months ago and prompting one major forest company to reopen a mothballed sawmill.

Sales to China are expected to top 18% of BC’s total lumber production by the end of 2009. Export lumber sales from BC to China hit 1.2 billion board feet (2.8 M m³) by the end the third quarter on track to hit 1.8 billion by year end. BC’s total annual lumber production is 10 billion board feet (23.5 M m³). Projections of 3 billion board feet (7.1 M m³) in sales by the end of 2010 are now not unrealistic. If some BC mills convert some of their production to metric measurements, which are more in demand in China, he said that figure could easily hit 3.5 billion board feet.

An industry analyst said the key to Chinese growth for BC suppliers is a new building code for the city of Shanghai. The code has been designed to allow lumber applications and includes an agreement signed between BC and the city of Shanghai to use lumber in new apartment construction. It link BC producers to a $141-billion urban housing initiative that’s part of China’s stimulus package.

(Source: Vancouver Sun)

Exciting Industry Award Initiative for Eastland

With over a million tonnes of trees harvested each year in the Tairawhiti region, there is no better reason to celebrate and acknowledge the huge workforce of 1450 people directly involved with achieving successful harvesting, transporting and processing annually. This year the East Coast Forestry Council have initiated an inaugural Awards Programme which will reward these trained employees and highlight that they are an extremely important asset to the forestry industry. It will also be the objective of the group to raise the profile of the industry, including all those that are within its workforce and supporters.

In association with FITEC, the national training organisation, there are three awards that recognise training excellence, five sections that award skilled professionals (including contractor of the year) and four further awards that recognise industry development (including “Outstanding Business Innovation”). Completing the awards programme is the top overall major prize “Eastland Wood Council Skilled Professional of the Year” which will recognise an individual for leading in their field of expertise, demonstrating excellence in professional skills, attitude and attributes recognised by their peers and employers.

With the expectations that the Tairawhiti district will see significant growth in log production by 2013 , the demands at all levels of the industry including horticulture, silviculture, harvesting, forest management, research, marketing and wood processing will require a skilled workforce which will add to the region’s economic opportunities.

Nomination forms will be available by Feb 1, 2010 and close April 2, 2010. The winners of the awards will be celebrated at an official gala dinner at the Emerald Hotel on May 7, 2010.

The awards are proudly sponsored by: FITEC, Blackburn Group, Williams & Wilshire, UDC Finance, STIHL, Hikurangi Forest Farms, C3, Eastland Port and Eastland Wood Council Members, Heavy Equipment Ltd., Kohntrol, Emerald Hotel

For more information please contact Prue Younger by email or phone 021 2765484.

Safety Alert - Cable Hauler - Tower Failure

Background
A Madill 171 tipped over as the result of an aluminium talurit clamping the eye on a guyline extension failing while under load. The 171 has 4 supporting guyline anchors. The hauler operator was lifting the skyline during the inhaul phase when the talurit on the deadman end of the extension, outside guyline failed. This action shock loaded the next-door inner guyline which in turn resulted in the talurit on the extension eye attached to the guyline end failing. The hauler tipped forward and pivoted 90 degrees clockwise as the next inner guyline pulled tight and swung the machine around. The hauler tipped over and came to rest on its side with the tower partially over the edge of the landing. No one was injured in the incident.

Conclusions
The following investigation found that the aluminium talurits being used on the guyline extensions had a significant amount of wear around their surface. One talurit measured after the incident had lost 35% of its strength due to wear. The majority of this wear was caused by dragging the extensions on forest roads when doing in-forest shifts. The extensions were between 6 and 7 years old and would have been replaced at 7 years.

Recommendations

Consider the use of steel talurits if they are available.

…and finally…only in New Zealand…

A seagull in Dunedin has developed the habit of stealing ETA Chips from a neighbourhood convenience store. The seagull waits until the Manager isn't looking, and then walks into the store and grabs a snack-size bag of cheese chips.

Once outside, the bag gets ripped open and shared by other birds.

The seagull's shoplifting started early this month when he first swooped into the store in Dunedin, and helped himself to a bag of chips. Since then, he's become a regular. He always takes the same type of chips.

The Manager thinks it's great because people are coming to watch the feathered thief make the daily grab and run, and that's good for business, and especially since customers have begun paying for the seagull's stolen bags of Chips because they think it's so funny.

However, the Manager did say, "This is New Zealand, and if that seagull starts to grab a 6-pack of beer to go along with the Chips, I may have to put a stop to it.

Buy and Sell

Expressions of Interest Cable Logging Harvesting Opportunity

…and finally, finally… one more for Christmas…

A man is dining in a fancy restaurant and there is a gorgeous redhead sitting at the next table. He has been checking her out since he sat down, but lacks the nerve to talk with her.

Suddenly she sneezes and her glass eye comes flying out of its socket towards the man. He reflexively reaches out, grabs it out of the air, and hands it back.

"Oh my, I am sooo sorry," the woman says as she pops her eye back in place. "Let me buy your dinner to make it up to you," she says.

They enjoy a wonderful dinner together, and afterwards the theater followed by drinks.

They talk, they laugh, she shares her deepest dreams and he shares his. She listens. After paying for everything, she asks him if he would like to come to her place for a nightcap...and stay for breakfast the next morning.

The next morning, she cooks a gourmet meal with all the trimmings. The guy is amazed!! Everything had been incredible!!!!

"You know," he said, "you are the perfect woman. Are you this nice to every guy you meet?"

"No, she replies.........


(Wait for it...)



(It's coming.............)


(The suspense is killing you........)



“ You just happened to catch my eye."

And on that note, Merry Christmas and Happy New Year from the WoodWeek Team.
Cheers.

John Stulen
Innovatek Ltd Rotorua Office
PO Box 6160
Rotorua 3043
New Zealand

Ph:+64 7 921 1382
Fax:+64 7 348 1420
Web page: www.innovatek.co.nz

This week's extended issue can be viewed at www.woodweek.com

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