WoodWeek – 16 June 2021
Click to Subscribe - It's FREE! Greetings from your WoodWeek team. Today we are hosting over 350 delegates at our Carbon Forestry Conference in Rotorua. With strong registration numbers still pouring in, it's clear there is great interest in the role of forestry in our climate change mitigation plans as an industry and as a country. Among the many reactions to the Climate Change Commission advice to Government was a positive vibe from the carbon market, where NZUs broke through $40.A recent professional paper in one of our industry journals outlines a need for promulgating a deeper understanding beyond foresters to farmers and the wider public that there are more than two kinds of forests. In that paper, forestry scientist Tim Payn outlines the need to better describe our growing forests. “The simple and widely-held dichotomous view of only having two kinds of forests – productive exotic plantations and natural conservation forests is now not an adequate way of classification. New Zealand’s bio-based economy has always and will continue to depend on forestry, agriculture and horticultural products for international export earnings and our conservation estate largely underpins attraction as an international tourism destination. However, we need to move past this dichotomy and consider a more functional and future-focused understanding beyond simply production and conservation.” Moving to log and lumber markets, we've got a quick international market summary before we look more closely, in today's issue our own market situation. The latest global log market update from Wood Resources International shows: - The strong lumber markets in North America and Europe resulted in higher sawlog prices in most parts of the world in early 2021. - The Global Sawlog Price Index (GSPI) has increased for three consecutive quarters to almost $79/m3 in the 1Q/21. This is substantially higher than its 25-year average. - The European Sawlog Price Index (ESPI) rose to €81.44/m3 in 1Q/21, up 9% from the previous quarter. The most significant price increases from late 2020 occurred in the Baltic States and Eastern Europe. So, it’s clear soaring prices for wood in all forms are happening everywhere, not just for our local or log export customers. This week's SnapSTAT shows China's log imports volumes by country, tracked by FEA. Thanks to our sponsors of this feature: the great team at Chainsaw & Outdoor Power (COP) and Oregon. The Wood Processors and Manufacturers Association claims New Zealand’s wood industry is not only too reliant on exporting but ignoring protectionism by our trading partners. Association chief executive Jon Tanner and chairman Brian Stanley claim China is subsidising the logs when Chinese importers sell them to processors at a cheaper price than they were bought for.
This week we have for you:
Log export market update - Forest 360
(OPINON - Forest 360) Another month, another set of record export prices. - June has seen A
grade export logs increase a further $8/JAS to around $170/JAS, a level that pruned logs were at not so
long ago. With improved genetics and season factors, the conversion from JAS (the sale unit of export logs)
to tonnes
for A grade logs is generally over 100%, meaning that the actual price is more like $177/tonne!!If we back the harvesting, transport and roading costs out of these figures, you would be looking at a net return between $35,000 and $40,000 per hectare for an average pruned hill country forest with a distance to the port of 180km. If that forest was flat to rolling and only 100km to the port then the net increases to over $50,000 per hectare, or $2,000 per hectare per year. Nothing has changed in the global log supply dynamic in that China and Australia are still pulling faces at each other across the playground, the European’s can’t find containers to put their logs in, USA and Canada are using all their supply domestically as Biden's stimulus package has created a building boom and Russia has signalled a total log export ban from the start of 2022. To put the global log supply into perspective, China’s imported softwood demand sits at around 60 million cubic metres annually of which around 22 million comes from New Zealand, 12.5 million from Europe, 6.5 million from Russia, 5.5 million from Australia, 3 million and from the Pacific Northwest. The remainder comes from a number of smaller suppliers. New Zealand is the single largest supplier of Softwoods into China, dwarfing all other suppliers by a significant magnitude. While we are only around 35% of the total imported softwood supply into China, China is around 60% of our total log market. It’s easy to see that if our Govt leaders take a similar line to Australia in criticising the Chinese regime, the effect of a log ban on NZ logs would be catastrophic. Having said that, China is still happily importing iron ore from Australia, which makes up around two thirds of the total iron ore imports into China. Steel is obviously a key component of the Chinese construction and manufacturing industry and, as there is no other country able to supply at the quality and levels of Australia, China cannot ban this valuable product – especially if it wants to reach the GDP target of 8.4% in 2021. New Zealand radiata is in a similar situation, there is no other alternative supply that can match the volume and delivery performance of our export market. As with steel, lumber is a very important ingredient in construction and therefore a consistent supply is vital. This is somewhat comforting as, should we decide to join Australia and pull faces across the playground, the log supply might just keep flowing. It’s not just logs and lumber that are having a dream run as most of the major globally traded commodities are seeing record pricing as well. So much so that the Chinese Government have recently expressed concern at record prices being a factor of speculation in the iron ore market. While there hasn’t been any talk of their eyes being cast over the log market, it will only be a matter of time if prices continue to increase at the current rates. In-market log and lumber inventories have continued to track down slowly with no easing in demand and no upside in supply. While it is expected that construction activity in China will decrease slightly over the hotter months, it will take a significant drop to see any worrying inventory build. We generally see a reduction in NZ supply over winter months as wet weather slows harvesting crews, especially in the private woodlot and forest sector. This may not be as significant as previous years as, at current pricing levels, you can afford to spend more on road construction and maintenance to keep the log volumes moving. While the harvesting sector is enjoying what has been a much longer than usual run, domestic sawmillers have been sweating bullets each time the monthly export prices have been released. As many of the sawmills are locked into medium term lumber price contracts it is hard for them to pass on additional costs of raw materials as they occur. The last time we saw a sustained log price increase such as this was in the 2012 – 2014 period where increases were in the magnitude of $30/JAS. Although there was a couple of significant crashes in the 18 months following that period, the market rebounded quickly and continued to increase albeit slowly through to mid-2019. Fingers crossed we may have now taken another leap in long term price levels. Wood processors fear industry in jeopardy
China's high prices leave wood industry fearing for its survival - Thirty
years ago the Government
sold off much of its Crown forestry estate. Today it's looking to forestry, now
largely in private hands, to
achieve many aims. Help offset carbon, provide enough timber for our housing
industry, earn export
income, and supply biofuels and biocoal to fill our vehicles and boilers.But some in the industry believe those aims are in jeopardy because of the sheer amount exported overseas, in raw form to one market. Last year 80 per cent of our US$2 billion (NZ$2.8b) log trade was earned in China. Under geo-political pressure, Foreign Minister Nanaia Mahuta recently urged exporters diversify their markets more widely. But her warning falls as international log prices have reached historic levels. Good news for exporters but bad news for domestic mills which have to pay the international price for local logs. The Wood Processors and Manufacturers Association claims New Zealand’s wood industry is not only too reliant on exporting but ignoring protectionism by our trading partners. Association chief executive Jon Tanner and chairman Brian Stanley claim China is subsidising the logs when Chinese importers sell them to processors at a cheaper price than they were bought for. Tanner says that is artificially raising log prices, against World Trade Organisation rules. But New Zealand won't speak out. “It's like world trade is a black and white board, and New Zealand is playing a game of checkers, and everyone else is playing chess,” he says. In his view, other countries are acting protectively too, placing exporting bans to protect their own wood supplies. Canada has shut off its log exports so it can supply the United States housing market. Russia plans to stop exporting softwood and hardwood logs next year to encourage investment in its own lumber kilns, Tanner says. However, New Zealand forest owners enjoying the high prices find it irrational that you would not make hay while the sun shines. “We have responsibilities to our forest owners to optimise return on investment but also to manage and mitigate risk,” Forest Owners Association president Phil Taylor says. He also rejects a long-held claim by processors that the owners won’t offer long-term supply contracts to local mills, preferring the export markets. More >> Source & photo credit: Stuff .jpg) SnapSTAT - China Log Imports Chart   Tasman mill closure confirmed
Sixty-six years of newsprint production at the Tasman Mill in Kawerau will
come to an
end in less than a month, following the announcement that Norwegian global
wood
processor Norske Skog will close the mill on June 30. The mill closure will cost 160 jobs in the timber town that also hosts pulp and packaging manufacturer Oji Fibre’s plant, also confusingly called the Tasman Mill. All workers will be paid full redundancy on a decision that had clearly been on the cards since a strategic review was commissioned last September. In recent weeks, Norske Skog had heavily cut back production at the mill as it was more profitable to trade electricity supplied at a low fixed price on the wholesale electricity market, where prices have been consistently over $200 per megawatt hour for months. The newsprint operation began in 1955 and the existing plant was capable of churning out 150,000 tonnes of newsprint a year, but the collapse in newspaper advertising and circulation has reduced demand for the product. Norske Skog will seek to sell the mill’s assets. “I know that today’s decision is disappointing and sad for many people,” said Norske regional president Eric Luck, adding, “it’s the end of an era, but the structural change in the newsprint industry provided no viable alternative for paper production at Tasman. The domestic market for newsprint has shrunk considerably and so too have export markets. Covid-19 has hastened the decline.” He acknowledged the mill had been “an important contributor to the local and national economy”. The closure follows the announcement on May 31 that the Whakatāne mill, employer of 210 in the eastern Bay of Plenty town, would be saved from what had seemed like certain closure by a consortium of offshore and NZ buyers. Ray of hope - The Whakatāne plant will reduce its product range, moving out of packaging for liquid drinks and investing further in folding box, carrier and food service board. Oji Fibre, meanwhile, recently sought political intervention to secure natural gas supplies, applying pressure that saw methanol producer Methanex, which uses 40% of total gas produced in NZ, reduce supply and allow fuel to flow to Oji, electricity generators and some other major gas users. More >> Source: Stuff news Carbon Match Market Update
Final Advice Out, NZUs Break Through $40 - The Climate Change Commission's final advice was
tabled in parliament and made public recently. This time, the Commission has set out three different broad
pathways showing that achieving their recommended budgets is possible - budgets which cover the next 4,
9 and 14 years.Getting through what is a 400 page rework of the draft advice will take time. And on first blush the budgets recommended appear to be slightly more generous than those initially consulted on. Is that a back peddling, a lessened ambition? The realpolitik of those real world constraints? We think of it rather as a pragmatic flattening of the front end - a nod to the fact that the success of this entire gargantuan exercise continues to rest on public support, and on striking some kind of balance between getting moving, but not with such a jerk that folks fall off the bus. The NZU price reaction so far has been positive. This is a milestone event for a ten year old carbon market. The PM has confirmed the intention of the Government to respond with an emissions reduction plan by year end. Minister Shaw has reiterated that every part of the Government will need to come to the table and commit to urgent action to bring down emissions in their sector. Moreover work is underway to increase our NDC. At the ETS level, the Commission has reiterated its recommendations on raising ETS settings at the earliest opportunity such that auctions deliver a much higher price corridor. Our understanding is that this work is expected to be finalised over the course of the next few months such that regulations can be passed and new settings can be in place for 1 Jan 2022. There's far more to digest and weigh up in the coming days, but this is where we are right now. As we continue to read through the report, along with the rest of you, NZUs have rallied, trading up from $39.20 to bust through $40 for the first time ever. As of writing this, our last trade was $40.10, best bid $39.80, with a little bit offered for the taking at $40.00. Source: Carbon Match from 10am - 5pm every weekday. .jpg)
Call for bipartisan support for climate change plans
The Sustainable Business Council (SBC) and the Climate Leaders Coalition (CLC) welcome last week’s
release of the Climate Change Commission’s final advice to Government as a major milestone for New
Zealand’s zero carbon future. Executive Director of the Sustainable Business Council, Mike Burrell, says the Commission’s advice is critical in getting New Zealand on track to achieving our emissions reduction targets. "This report is a milestone. But it is a first step. We look forward to working with government on the development of the Emissions Reduction Plan (ERP) to ensure that the policies are ambitious and informed by the practical perspectives of our members," he says. Mike Bennetts, Z Energy Chief Executive and Climate Leaders Coalition Convenor, says the steps Government takes in response to this advice will be vital in determining the success of New Zealand’s transition saying, "I’m pleased to see the Commission recommend Government seeks cross-party support on the emissions budgets. The investment choices that businesses make will determine the success of New Zealand’s transition. Bipartisanship on the budgets is essential to provide the certainty we need to make those decisions. There will be opportunities. There will be challenges. But with clear signals and cross-party support, we can do this." Mr Burrell says he is pleased to see many of SBC and CLC’s recommendations taken up in the Commission’s final advice. "We welcome the increased emphasis on collaboration and partnership with business, and recognition of the need to leverage private sector leadership in the transition. We are also pleased to see the Commission respond to our call for greater transparency on the modelling and assumptions that underpin its advice, as well as clarity on the central role of the Emissions Trading Scheme (ETS) and the rationale for policies that sit alongside the ETS." Source: Scoop news .jpg) Hard work and a million trees celebrated
The chainsaw-loving Taranaki forestry worker who planted a million trees
- Morris Fisher
has personally planted a million trees and has overseen a further seven or eight
million seedlings
going into the ground.Fisher, of Hāwera, was recently honoured at the Southern North Island Wood Council Awards for his lifetime of commitment to the forestry industry. At 73, he still has three chainsaws and would rather spend a day cutting firewood than playing golf. During his 56-year career, he worked as a log scaler, instructor and manager before establishing his own contracting business TAML Forestry in 1980. He was involved in setting up areas of native bush for the Queen Elizabeth Trust and planted native riparian and wetland areas, taking an interest in how they are protecting streams and rivers. Over the years, the industry had changed a lot, including now having women working alongside men, planting manuka trees where he once cut them as scrub, and more stringent health and safety practices. But one thing hasn’t changed. “The thing that disappoints me the most is, in 1965, when I joined the forest service, we were exporting raw logs to Japan, and 56 years later we are doing the same thing to China. We are not adding value,” he said. More >> Source: Stuff news Tasman region gets million for restorationTasman wildfire regeneration project receives $1m from Forest Service - A four-year project is about to begin to restore sections within a trio of significant natural areas in Tasman District that were damaged in 2019 by a large wildfire. The blaze, which started in Pigeon Valley on February 5, 2019, burnt through about 2400ha, of which 1400ha was plantation forest managed by Tasman Pine Forests Ltd. Patches of native bush and wetland areas within the pine plantation were also affected. Tasman District Council has received just under $1 million from Te Uru Rākau – New Zealand Forest Service for the restoration project, with Tasman Pine Forests Ltd contributing another $70,000 in cash and resources. Three sites within the Teapot Valley catchment, identified by the council as significant natural areas, are to be restored as part of the project through a mixture of weed control, replanting of about 10ha with seedlings and direct seeding of about 2ha.More >> Source: Stuff EV opportunities revealed for fleet operators
New web service shows real-world Scenarios for fleet operators to consider commercial EVs –
Critchlow Geospatial has launched SwitchMyFleet, a free-to-air website for fleet operators who
are considering switching to electric vans and trucks and could be the catalyst to give New
Zealand businesses the confidence to switch to EV fleets and reduce New Zealand’s greenhouse
gas emissions. Most New Zealand businesses that have a fleet of commercial vehicles know they will switch to low emission electric vehicles at some future time. Compiling realistic and appropriate data to build the business case can be an obstacle that may delay this. The goal of SwitchMyFleet is to forecast operating costs of commercial EVs using typical travel routes as specified by the users, calculating the energy needed. Importantly, SwitchMyFleet takes into consideration the changing terrain, payloads and speeds throughout the routes to provide assurance that EVs will return to base with comfortable levels of spare battery capacity. The project was co-funded by New Zealand government in Round 8 of the Low Emission Vehicles Contestable Fund administered by the Energy Efficiency & Conservation Authority (EECA). EECA’s Manager Transport Portfolio, Richard Briggs, says "This free web tool will enable van and truck operators in multi-vehicle fleets to compare combustion engine and electric vehicles for typical routes that they travel. The tool uses geospatial data to calculate the optimal routes and can compare the benefits of different types of vehicles. This means operators in this cash- strapped sector will be able to make vehicle choices across their fleets based on their real-world scenarios, which will save them money and reduce emissions." Steve Critchlow, Group Managing Director of Critchlow Geospatial, says "This is a great endorsement of the value that route optimisation can provide to businesses that are looking to improve their fleet’s green credentials. This co-funding has enabled us to deliver credible operating cost forecasts and battery sizing to New Zealand transport businesses." SwitchMyFleet is powered by NationalMap, which provides a fully navigable, comprehensive road network for New Zealand. Source: Scoop Fieldays Special - Free haircuts!
Free Chop And Chin Wag With The EPA At Fieldays - How about a new do for a new you?
- How about a Sustainable Side Fringe or Waste Buster Buzz Cut? The Environmental Protection
Authority (EPA) is exhibiting at Fieldays for the first time, offering haircuts in exchange for
conversations about how we drive a more sustainable future together."Our Sharing Shed will provide an opportunity for us to listen and learn from people in the agriculture sector, and to share a bit about our work," says the EPA’s General Manager of Engagement, Paula Knaap. "We see Fieldays as a great ‘on the ground’ opportunity to hear from farmers and the wider agriculture community about some of the challenges they’re facing when it comes to protecting the environment, and some of the innovative ideas being tested. We know many people in the sector want to be part of the solution - supporting a resilient industry where care for people and the environment is front and centre. We’re keen to hear their vision for the future of New Zealand’s environment - looking forward 3, 30, or even 300 years." One of the ways we’ll be facilitating these conversations at Fieldays is through Cutz and Kōrero. We’re offering a range of bespoke haircuts - from the Fencer’s Fringe and Mutton Chop to the Riparian Plant Pixie Cut - at the hands of trained hairdresser and expert conversation-starter Jason Muir. "We’re anticipating some fascinating kōrero with Fieldays visitors, including comedian Te Radar and this year’s FMG NZ Young Farmer of the Year finalists, who are set to drop by." Our community science programme, Wai Tūwhera o te Taiao - Open Waters Aotearoa, is another Sharing Shed feature. Paula Knaap says: "There’s been a lot of interest in our environmental DNA programme, with over 200 community groups, hapū and kura already taking part. Visitors to our stand will get to see how easy it is to take samples to get a better understanding of the health of their local waterway. "They’ll be able to explore an interactive map of New Zealand, revealing what species are present in waterways already sampled. "There’s not much our work doesn’t touch; it extends from the ozone layer, to the seabed, and right across the land. It includes the regulation of hazardous substances - from cosmetics to agrichemicals; through to administering the Emissions Trading Scheme and Register. "We all have a part to play in shaping the future of our environment. Our Sharing Shed is a conversation space where we can build better understanding around the challenges and opportunities, and hear about some of the great initiatives from the sector that are already creating momentum for change." Need a trim and a chinwag? Rattle ya dags over to the EPA’s Sharing Shed in the main pavilion at site PD42, from 16-19 June. Jobs
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