WoodWeek – 15 February 2017

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Greetings from your WoodWeek news team. This week we invite people in the trade to participate in the quarterly log price outlook survey. This industry participation survey system is unique in our industry and provides valuable and easy to follow information. Thanks to the team at Scion for their focus and user-friendly approach. Looking to the statistics, export log prices have found support from Chinese demand and construction activity, and wood pulp prices gained 1.4 percent with surplus inventories "snapped up by strong Chinese demand."

Mark 20 & 21st June in your diary now. It’s HarvestTECH 2017 in Rotorua. The inaugural harvesting event ran two years ago, with close to 450 meeting in Rotorua. The event was sold out. It was the largest gathering of loggers, forest managers, owners, harvest planners and equipment suppliers seen here.

News from portside - Fumigation company Genera had to defend plans for a new system for handling methyl bromide would be fully implemented by 2019, after the environment Court quashed a bid by rival fumigator Envirofume to use methyl bromide at Port of Tauranga because of safety concerns.

Over in Gisborne, looking to revitalize wood processing, the Eastland Community Trust (ECT) is actively seeking an operator for the Prime Sawmill – launching a national campaign to seek a suitable operator.

To close out our news for you this week - Lendlease’s first engineered timber office building in Queensland, called 5 King, has been sold. At a height of almost 45 metres, 5 King will be the tallest engineered timber building in Australia and the tallest and largest engineered timber office building by gross floor area in the world. The innovative building will be the future home of global engineering firm Aurecon, taking the bulk of the floor space.

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Log Price Outlook

Misplaced optimism on pruned log prices

Log price outlooks carried out over the past year show a consistent optimism in pruned log price expectations, but none of those expectations have been met. The grey lines in the graph below depict outlooks based on the opinions of exporters, millers, off-shore buyers, consultants and forestry companies. The purple bars show the consolidated AgriHQ price for pruned logs over the past 15 months. It is clear that while higher prices were expected, the pruned log price has in general been sliding to lower levels.



This information is based on Scion’s quarterly log price outlook, which runs in February, May, August and November. The February outlook is now open until 26 February. Persons with an interest in the log markets are invited to cast their votes, stating where they think prices are heading in the future. The final outcome will be distributed exclusively to the participants of the outlook in early March.

To participate in the February Outlook, visit https://www.surveymonkey.com/r/LPO-Feb2017




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NZ commodity prices

New Zealand commodity prices dipped in January, with wool and dairy weakness counteracting broad-based gains.

The ANZ Commodity Price Index fell 0.1 percent in January to 276.8 and was up 19.1 percent on an annual basis. In New Zealand dollar terms the index fell 1.1 percent in the month and rose 8.6 percent on an annual basis as the kiwi lifted against most major trading currencies apart from the Australian dollar. On an annual basis, the dollar is up 8.2 percent against the US dollar, 11 percent against the euro and 27 percent against the British pound, putting a strain on export returns particularly in the meat sector.

Wool prices dropped 8.6 percent month-on-month and are now 30 percent weaker compared to a year ago. Prices have dropped more than 5 percent every month since September 2016, mainly due to lack of interest from China, said ANZ agri economist Con Williams.

Dairy prices dropped 0.4 percent in January, due to cheaper whole milk powder, which fell 2.3 percent in the month. Other dairy products improved in January, with skim milk powder up 1.6 percent, butter gaining 1 percent and cheese advancing 0.8 percent. Dairy prices are up 38 percent on the year, with whole milk powder gaining 55 percent since June, driven by tight global milk supplies and improved Chinese demand.

Non-dairy commodity prices gained 0.7 percent in the month. The ex-dairy index rose 7.4 percent over the year, with major non-dairy groups improving. Beef and lamb prices rose 1.9 percent and 1.6 percent respectively, with good demand from China and the Middle East for the latter, though gains are limited by the strength of the dollar against the US dollar and European currencies.

Seafood prices rose 0.9 percent for the month and 14 percent in the year, while forestry rose 0.5 percent and aluminium gained 3.2 percent in January. Log prices have found support from Chinese demand and construction activity, and wood pulp prices gained 1.4 percent with surplus inventories "snapped up by strong Chinese demand," Williams said.

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Logging industry update in June

Mark these dates in your diary. HarvestTECH 2017 in Rotorua, New Zealand on 20-21 June 2017 will follow the safety summit series running in March. The first harvesting event ran two years ago, with close to 450 meeting in Rotorua. The event SOLD OUT! It was the largest gathering of logging contractors, forestry managers, forest owners, harvest planners and equipment suppliers seen in New Zealand. Equipment suppliers, researchers, forestry companies and international contractors from Australia, Canada, the US, Finland, Austria, Germany, Indonesia, and South Africa also flew into Rotorua to attend the event.

The focus was on steep slope logging. The number of harvesting crews working on steeper terrain had seen exponential growth. Of course, with this growth came innovation. The move by forest owners and contractors to increase mechanization, the desire to increase productivity and the requirement to improve safety had led to significant advances in harvesting practices and the equipment that was been used on this steeper country.

New gear to work on these steeper slopes had been developed by some of the larger equipment suppliers. Much of the innovation though was coming from contractors working together with local engineering companies. The 2015 event run by the Forest Industry Engineering Association (FIEA) was able to showcase to the rest of the world, some of this new kiwi logging ingenuity in practice. Since then, steep slope logging innovations have been profiled in Canada in 2016 with another steep slope event being held in Kelso, WA, USA on 20-21 April.

Two years on, logging steeper terrain will again be covered in Rotorua this year. Developments by local engineers, manufacturers and contractors over the last couple of years have been significant. “The 2017 programme though is being expanded from just steep slope logging this year” says FIEA Director, Brent Apthorp. “Included this year will be new technologies and operating practices in small wood lot harvesting (particularly around some of the unique challenges being faced harvesting the increasing number of woodlots on steep and more remote sites), harvest planning, advances in the mechanisation and automation of harvesting operations and issues around attracting people and new skills into the industry”.

Those attending this year will also get an insight into some truly innovative harvesting operations. From Tasmania, delegates will hear about an Australian company that’s strapped a harvesting head onto an excavator and is working from a moored barge. They’re currently harvesting up to 26 metres under water extracting high value specialty hardwood timbers from Tasmanian waterways. From New Zealand’s West Coast, a company involved in large scale helicopter extraction of storm damaged timber since April 2014 will be outlining some of the unique issues around felling, extraction, logistics and safety with heli-lifting operations.

“The practical use of data collected from harvesting operations, improving data exchange and communications in more remote locations, eliminating log sorts and landing sizes and international developments in new harvesting equipment have also being built into HarvestTECH 2017”, says Brent Apthorp.

“Feedback from the 2015 event told us that rather than contractors setting up their own site visits around the conference, field tours to local logging operations should be set up to capitalise on delegates travelling into Rotorua. At this stage, two one-day field tours (one the day before and one the day after the two-day conference) have already been planned for HarvestTECH 2017 delegates. Full details on both harvesting field tours can be found on the event website. This is the largest tech update for wood harvesting operations in New Zealand since 2015. Plan to be in Rotorua, New Zealand with your team in mid-June, 2017.

Full details on HarvestTECH 2017 can be found on the event website, www.harvesttech.events.


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Fumigation assurances after court decision

Poison gas to be used more safely as new system kicks in, company says - A toxic gas being used to fumigate logs in Tauranga will be filtered in response to concerns about its effects on health and the environment.

Fumigation company Genera said the new system for handling methyl bromide would be fully implemented at the Port of Tauranga by 2019, phasing out an existing method in which gas was released into the air.

Methyl bromide is a highly toxic gas which has been linked with health problems including motor neurone disease. The degenerative nerve condition was suspected to have killed up to six people near fumigators at Port Nelson, although methyl bromide was never proven to have been the cause.

Genera's assurances about the filter method came after the Environment Court quashed a bid by rival fumigator Envirofume to use methyl bromide at Port of Tauranga because of safety concerns. The court's three judges described the effects of methyl bromide as "chilling", noted that Genera continued to use the gas, and said that measurements had found "worrying" quantities of the gas on the port's perimeter.

Genera chief executive Mark Self yesterday disputed the readings at the port's perimeter, stating that the hand-held meters used to measure the emissions could not be trusted.

Mr Self said the meters were unable to isolate methyl bromide from other types of gases and could be influenced by wind gusts.

"Those measurements are fraught with difficulty."

Source: Bay of Plenty Times

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Prime sawmill seeks commercial operator

In a major move to reactivate the Prime Sawmill site, Eastland Community Trust (ECT) is actively seeking an operator for the Prime Sawmill – this week launching a national campaign to seek an appropriate operator.

This move comes on the back of securing innovative wood processing company WGL late last year and is a key component to creating the region’s first wood processing centre of excellence - an innovative wood processing cluster that, the Trust expects, will house a number of sustainable businesses and create over 120 jobs in the coming years.

Since the Prime Sawmill was decommissioned in late 2010, it has undergone a regular maintenance programme to keep the plant functional. As it stands, recent assessments of the sawmill by independent forestry specialists Forme Consulting Group, indicate there is potential to establish a significant business processing 80,000 to 100,000 cubic metres of mixed log grades per annum. With further investment in the plant, Forme believes there is potential for the site to grow to process over 400,000 cubic metres per annum.

Those in industry circles believe the opportunity to restart the mill is well timed. New Zealand’s Ministry for Primary Industries recently provided data that indicated significant increases in wood availability in the East Coast wood supply region. Credible industry reports suggest the regional forestry harvest is forecast to increase by 50% - 75% over the next five years, requiring a potential increased workforce of 30% - 50% in the sector. Harvests have already increased, and new infrastructure is being established to support additional logging and transport capacity north and south of Gisborne city.

Because they work collaboratively, clusters are often the driving force in business growth and innovation. ECT will, over time, seek a mix of industry tenants to occupy and operate the wider Prime site, creating a high value, innovative wood processing cluster. That mix will likely include wood processing companies, marketing and distributions businesses, and even tertiary and industry training organisations. The vision is to create a wood processing hub where businesses benefit from competition, cooperation and collaboration.

Other industry innovators and stalwarts have already seen the potential and have made long-term commitments to the Prime site. In 2016, WGL (headed by industry leaders including Angus Fletcher, Michael Andrews and Peter Pettit) took the opportunity to become the anchor tenant. The team is currently constructing the first of their plants and expects that, when operational (early 2018), they will have 20 staff on site. Mr Evans say there are other parties also willing to add value to the cluster waiting in the wings.

Proposals are currently being accepted through a formal RFP process. ECT’s point of contact is Tony Coombe who can be contacted via the Trust’s office in Gisborne.

Background: Eastland Community Trust was established in 1993 as a result of the privatisation of regional lines companies. ECT is the sole shareholder of Eastland Group, which specialises in regional infrastructure: ports, electricity distribution and transmission networks, and electricity generation. Eastland Group’s operations include Eastland Port, Gisborne Airport, and Eastland Network – the electricity network for Gisborne, Wairoa and the East Coast – as well as Eastland Generation, which produces electricity from hydro, diesel and geothermal plants.

In early 2016, the Eastland Community Trust invested NZ$7.4million in the purchase of the Prime site, intending to establish a wood processing cluster or centre of excellence in Tairawhiti.
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Ocean Freight Index

The Baltic Supramax Index (BSI) closed on Friday at 672 points, an decrease of 94 points (or 12.3%) since January.

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: Capital Link Shipping

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NZTA proposes new Northland motorway

New motorway will improve travel between Northland and Auckland - The NZ Transport Agency says the proposed route for a new road between Warkworth and Wellsford announced today will make traveling between Northland and Auckland safer, faster and easier.

It has shared an Indicative Route for the Warkworth to Wellsford section of the Ara Tuhono Puhoi to Wellsford Road of National Significance.

“Building an off-line motorway, completely separate from the existing State Highway 1 will improve safety, reduce congestion and support Northland’s economic growth,” says Ernst Zollner the Transport Agency’s Northland Director.

“Removing sharp bends, providing better passing opportunities and a dual carriageway to separate north and southbound traffic will improve safety and is predicted to reduce the fatal and serious injury crash rate by 80% through this area.”

Due to the natural environment through the Dome Valley, State Highway 1 is susceptible to flooding, slips and ongoing repairs. The location of the new motorway, to the west of the Dome Forest, will provide a reliable alternate route between Northland and Auckland.

The Indicative Route ties into the local road network helping to connect local communities.

It joins the Puhoi to Warkworth section of motorway near Kaipara Flats Road. It will then travel on the western side of the Dome Valley until it reaches the Hoteo River where it will cross eastwards over the existing SH1 to an interchange proposed at Wayby Valley Road in Wellsford. Another motorway interchange is proposed near Mangawhai Road, with the motorway then meeting the existing State Highway 1 north of Vipond Road. “Once the motorway is built travel will also be safer for local road users because 90% of regional traffic, especially heavy traffic, can avoid townships making their main streets safer for motorists, pedestrians and cyclists.”

The Indicative Route will be shared with the public for their feedback which will help further refine the route. If the route is confirmed it will be taken forward for consenting and route protection by 2018.

More information about the project is available on our website from 18 February, and comments and feedback can be made at www.nzta.govt.nz/warkworth-wellsford or by visiting one of the five public information days, to be held.

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Tenon Clearwood sale agreed

Rubicon, private investors agree to buy Tenon's Clearwood for US$55M - Rubicon, the NZX-listed forestry biotech company that controls Tenon has teamed with US and New Zealand investors to agree to buy the wood processing company's remaining asset, the Clearwood manufacturing business, for US$55 million, a deal that would actually free up cash and reduce Rubicon's exposure.

The deal needs sign-off from Tenon shareholders before it can be settled on the target date of April 28. Tenon is tied to the transaction by a US$1.65 million termination fee if it halts the sale plus costs for the bidding group of up to US$500,000.

The offer amounts to $2.12 a share net of costs, or $2.39 before costs, within the sale and liquidation range in an assessment by Grant Samuel, they said. It also exceeds the top end of value range if Tenon was to continue with the business.

"Deutsche-Craigs ran an exhaustive sales process for Tenon, generating expressions of interest from eight parties, domestic and international," but the Rubicon-led offer was deemed to be the best by the two independent directors. Tenon's three directors linked to Rubicon weren't involved in evaluating the offer.

"Given an extensive investment bank-led process has been run, Tenon’s independent directors have accepted the consortium’s offer and signed the sale and purchase agreement as being in the best interests of Tenon shareholders," the company said.

Grant Samuel valued Clearwood, inclusive of costs, under a sale and subsequent liquidation of Tenon, at US$45.8 million to US$56.3 million, or NZ$1.99 to NZ$2.45 per share.

Net of transaction, wind-up and liquidation costs, total cash to be returned to Tenon shareholders under the sale of Clearwood and the subsequent liquidation of Tenon would be about US$48.8 million, made up of a US$43 million capital return and a further US$5.8 million distribution after liquidation.

Rubicon owns about 60 percent of Tenon and also owns about one-third of American seedling company ArborGen. Tenon shares last traded at $2.38. Rubicon rose 2 percent to 25 cents.

Hugh Fletcher, chair of Rubicon's independent committee managing the deal, said there were several reasons why Rubicon was involved.

"Firstly, to ensure that Tenon’s strategic review is completed successfully, with an appropriate outcome for all shareholders," Fletcher said. "Secondly, we have indirectly managed the Clearwood business for a long time and know it well. We are a comfortable owner, but would rather own our Clearwood investment directly through a private vehicle, than via a public entity."

He said the investment vehicle allowed new investors to come on in future, he said. Rubicon’s own cash position would lift by about US$10 million as a result of this transaction, because it is effectively a selldown from its holding through Tenon, of about 60 percent, and Rubicon will get its share of the US$43 million to be returned.

Source: BusinessDesk via Scoop News

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Tallest timber building in Australia sold

Lendlease’s first engineered timber office building in Queensland, called 5 King, has been acquired by Impact Investment Group (IIG), in its second commercial building acquisition in the $2.9 billion Brisbane Showgrounds redevelopment.

At a height of almost 45 metres, 5 King will be the tallest engineered timber building in Australia and the tallest and largest engineered timber office building by gross floor area in the world. The innovative building will be the future home of global engineering firm Aurecon, with the company committing to lease four of the nine office floors.

Designed by architect Bates Smart and with engineering services provided by Aurecon, the ground plus nine-storey tower includes three bespoke ground level retail tenancies. 5 King will be built using a revolutionary building timber called cross laminated timber (CLT) and glulam (glue laminated timber) which has a structural strength akin to the traditionally used concrete and steel. The typical commercial floor plate will comprise 1,588 square metres of net leasable area (NLA), with a total area of 14,921 square metres (NLA) over 10 levels.

Kylie Rampa, Lendlease’s Chief Executive Officer, Property, Australia said Lendlease is extremely proud of its partnership and collaboration with IIG and Aurecon to deliver the next generation of sustainable workplaces in Queensland.

“5 King is the latest example of high-performance workplaces setting new benchmarks in environmentally sustainable building practices.

“The office building will offer tenants the opportunity to generate significant business benefits through large, efficient floorplates that provide flexibility for a variety of modern workplace formats. Its location on King Street provides excellent access to lifestyle amenity and transport options for employees,” she said.

Buildings made from engineered timber have a lower carbon footprint than other building materials: the production process produces zero waste, and timbers are sourced from certified sustainably- managed forests. 5 King will feature exposed timber structures, creating a contemporary and creative studio environment. Large glass areas will maximise natural daylight, while sunshades on selected facades will reduce energy consumption; further reducing the building’s carbon footprint.

According to Neil Barr, Aurecon’s Queensland Regional Director, the use of timber to lower the carbon footprint is a medium that Aurecon has used to good effect.

“Aurecon has been closely involved in providing structural and building services engineering design for 5 King, and has taken an active role in reducing building costs through digital design and modularisation," he said.

"Our firm has long seen timber as a viable alternative to steel and concrete and 5 King will showcase the strength of CLT in a ten-storey building."

Lendlease is committed to achieving sustainable solutions with 5 King targeting a 6 Star Green Star Design and As Built v1.1 and a NABERS Energy 5 Star rating. The tower is serviced by 56 car parks over one basement level, and has 152 bike racks, 16 showers and 158 lockers.

5 King is due for completion in November 2018, with Lendlease both developing and building the asset. Lendlease will continue to work with its partners to lease the approximately 7,900 square metres of remaining office space.

5 King is Lendlease’s fifth engineered timber building in Australia and joins International House Sydney, Forte Apartments and Library at the Dock in Melbourne, and Jordan Springs Community Hub in Western Sydney.

Source: Lendlease Corporation Limited

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Thanks 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 Insurance Brokers (Insurance Services)
TLC Insurance (Insurance Services)

GOLD SPONSORS
Cableprice NZ Ltd
Mini-Tankers (Z Energy)
Komatsu Forest NZ
Shaw's Wire Ropes
Pirtek
Crediflex
STIHL
Woodsman Pro
Madill
Beker Findlay Allan
Minter Ellison Rudd Watts
Ensign
Bridon Cookes
EMS
DC Equipment

SILVER SPONSORS
Blackwoods Protector
Trinder
Timbersaws (Levin Sawmakers)
Total Lubricants
Active Equipment
Manage Company
Aegis Oil

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Jobs


... and finally ... kids vs adults

When I was a kid I went to an immoral school.

It had no principal and no class.

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Difference between childhood and adulthood:

1.Going to bed early
2.Not leaving my house
3.Not going to a party

My childhood punishments have become my adult goals.

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Moving on to the Irish who as adults often remind us of kids:

Murphy showed up at Mass one Sunday and the priest almost fell down when he saw him. He'd never been to church in his life. After Mass, the priest caught up with him and said, "Murphy, I am so glad ya decided to come to Mass. What made ya come?"

Murphy said, "I got to be honest with you Father, a while back, I misplaced me hat and I really, really love that hat. I know that McGlynn had a hat just like mine and I knew he came to church every Sunday. I also knew that he had to take off his hat during Mass and figured he would leave it in the back of church. So, I was going to leave after Communion and steal McGlynn's hat."

The priest said, "Well, Murphy, I notice that ya didn't steal McGlynn's hat. What changed your mind?"

Murphy replied, "Well, after I heard your sermon on the Ten Commandments, I decided that I didn't need to steal McGlynn's hat after all."

With a tear in his eye the priest gave Murphy a big smile and said; "After I talked about 'Thou Shalt Not Steal' ya decided you would rather do without your hat than burn in Hell?"

Murphy slowly shook his head. "No, Father, after ya talked about 'Thou Shalt Not Commit Adultery'..... I remembered where I left me hat."

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The two cities in USA with the highest alcohol consumption are Las Vegas and Washington, DC. The difference between the two is that in Las Vegas the drunks are gambling with their own money.

Slogan spotted on back of camper van: The older I get, the earlier it gets late!



Have a safe and productive week.

John Stulen
Editor

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