WoodWeek – 14 February 2018

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Greetings from your WoodWeek news team. As log prices and volumes continue to bring smiles to the faces of many, it’s not necessarily making everyone happy. While the log prices won’t be a big factor in the decision to reduce production at Juken New Zealand – as they own their own forests – many other processors without some access to their own forests will be feeling the margin squeeze between lifting log prices and their ability to increase their own lumber pricing.

Another large group of investors will be wanting to make healthy profits when they sell their forest blocks planted in the 1990's planting boom. Their profit aspirations come with a warning though. In today's story from Southland, log marketing company executive, Greg Lindsay, has wisely advised growers to exercise caution before rushing to harvest.

"Forest owners need to be aware of not cutting radiata stands prematurely when they've been fully tended, as they won't achieve potential returns by not maximising high value pruned grades or yield per hectare," Lindsay said.

He added, “Typically, export pruned prices are below the equivalent of domestic sawmill prices being offered. Export log prices are based on JAS cubic metre volumes, measured on small end only. Generally, this converts to significantly less than per tonne equivalent."

Moving to the tree-planting end of the forestry business cycle, Crown Forestry is chasing unproductive farmland suitable for commercial planting of pinus radiata to help it meet the government's one billion trees program.

Farmers and other landowners with at least 200ha to spare are being asked by Crown Forestry, a business unit of the Ministry for Primary Industries, to consider the offer. Land owners are being offered a lease or joint-venture option with Crown Forestry paying all establishment and management costs, paying rent to the land owner and allowing any carbon credits to be retained.

Looking across the other primary industries, many of you may be aware of another major industry conference run by Innovatek. MobileTECH has, for the last six years, been the key tech event for New Zealand’s agritech community. “We focus on showcasing new digital technologies and how they’re integrated into businesses throughout agricultural, horticultural and forestry,” says programme manager Ken Wilson.

“We’re really excited about how artificial intelligence and machine learning are changing. This year’s focus is on industry collaboration and hearing from early adopters,” says Mr Wilson. “It’s a unique opportunity for developers to get together and learn from each other. Our panels with young people have always been popular. We help everyone to make new contacts and set up alliances for mutual business benefit.”

MobileTECH 2018 will be running on 27-28 March 2018 in Rotorua, New Zealand. Further details can be found on the event website, www.mobiletech.events.

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Crown Forestry offers farmers deal

Crown Forestry offering farmers deal to plant pines - Crown Forestry is chasing unproductive farmland suitable for commercial planting of pinus radiata to help it meet the government's one billion trees program.

The 10-year target will require new planting to cover 500,000 hectares.

Farmers and other landowners with at least 200ha to spare are being asked by Crown Forestry, a business unit of the Ministry for Primary Industries, to consider the offer.

Land owners are being offered a lease or joint-venture option with Crown Forestry paying all establishment and management costs, paying rent to the land owner and allowing any carbon credits to be retained.

The land would need to pass a few other tests, such as being reasonably fertile, have easy access and be identified as suitable for production forestry.

Warwick Foran from Crown Forestry said the figure of a minimum of 200ha per block came out of its experience in managing leases.

"Commercial forestry is impacted by scale - bigger areas give you better returns."

It is hard to say just how much land fits the criteria, he said.

"Studies show that there is a fair bit of marginal sheep and beef country that is eminently suited to forestry."

When carbon returns are added in forestry stacks up as pretty good land use, he said.

"When putting out the call we have, so far 30 or 40 people have come to us with fairly large blocks."

Mr Foran said primarily it will have to be farmland that is used for the massive tree planting scheme.

More >>

Source: RNZ

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Billion tree plan: Landowners keep credits

Landowners will keep the carbon credits and liability under proposed new production forestry joint ventures with the Government as part of its One Billion Trees programme. The programme is expected to generate 10 million tonnes to 30 million tonnes of carbon credits by 2030, on top of the 18 million tonnes from existing forests.

The Ministry of Primary Industries is on the hunt for land to turn into commercial forests, and is writing to landowners saying its commercial trading arm, Crown Forestry, wants to talk to them. The programme is part of the coalition agreement between Labour and New Zealand First. The agreement says that 100 million trees will be planted a year under a $1 billion-a-year regional development programme.

In a letter to landowners, MPI’s climate change operations manager Peter Lough says Crown Forestry would lease the land for one 30-year rotation. The Crown would pay for all establishment and management costs over the lifetime of the crop, and would pay a negotiated rent for the land.

“Rents will reflect the quality of the land, proximity to ports or wood-processing plants and the costs Crown Forestry expects to pay over the lifetime of the crop,” Lough said. Landowners would retain all rights to carbon credits, and any areas of regenerating native forest would be left as enclaves with the new forest, he said. The Forest Owners’ Association says the offer should be welcomed by hill country farmers and iwi as a low-risk way to get new land planted, providing an extra income.

Source: Carbon News 2018
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Forest Safety & Technology Conference

FIEA’s Forest Industry Safety & Technology conference is scheduled for 8th August in Rotorua and 15th August 2018 in Melbourne. This conference is focussed on the needs of forestry contractors, managers, owners, health & safety leaders, harvest planners, transport operators, safety technology innovators and government representatives.

We are working closely with a wide range of international specialists, service suppliers, researchers and government bodies to develop a strong and innovative programme. Feedback from previous events is a key driver as well. A focus group will be formed to guide our speaker choices.

If you are keen to be a speaker at our conference and you are an early adopter, developer, innovator, technology supplier, service provider or researcher within the forestry sector specifically around safety, our conference team would like to hear from you. Also make contact if you are keen to be part of our focus group deciding where the emphasis of the program should be.

The 2018 Forest Industry Safety & Technology conference will include sessions based around:
  • Reaching the optimal safety in the forest: are we there yet?
  • What areas of safety prevention have the greatest effect inside and outside the forest gate
  • Technology developments: what’s new and working well?
  • Techniques and cultural factors delivering results in improved safety performance

If you are interested in being considered as a speaker, or would like to recommend an early adopter, case study or international expert, please contact John Stulen in the FIEA Rotorua office.

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Southland foresters positive on markets

With log export prices nearing a 25-year high, southern industry insiders are optimistic longer-term gains can be sustained.

As of December 17, key indicator the At Wharf Gate price for A-grade logs 30cm or more at the small end, stood at $148 per export cubic metre, according to the latest available data from PF Olsen.

Invercargill-based Log Marketing NZ Ltd general manager Greg Lindsay said that put average prices at their highest since August 1993. The peak had been driven by strong demand from Chinese and Indian markets.

"China has had environmental constraints applied reducing domestic log production, which has contributed to increased export demand. Shipping rates are also relatively competitive currently."

Allied with strong domestic and Australian demand during recent years, typical seasonal price peaks and troughs were also diminishing, Lindsay said.

Southern Wood Council chairman Grant Dodson said market indicators suggested current good prices would be sustained.

"We expect some volatility with price up and downs across the year. This is business as usual for forestry but fundamental demand and market conditions remain strong."

Although council members across the region were "very positive" about industry prospects, Dodson highlighted possible concerns on the horizon.

"The impact of the recent share market correction is yet to play out. There may be some impact depending on how significant the correction ends up," he said.

"Additionally, although local log demand is strong, local mills are having to compete with export log prices, which is causing some discomfort while markets adjust. But forest owners and mills are simply working through this as they have many times in the past. It's great to see strong returns from forestry and lots of busy domestic mills."

Rayonier Matariki Forests managing director Paul Nicholls was also positive, while urging perspective over current prices.

"Log prices peaked in 1993 but, when adjusted for inflation, there have been several other price peaks higher than today," he said.

More >>

Source: Southland Times

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Log Price Outlook: Invitation to participate

Many dynamics are currently playing out in the New Zealand forestry industry. The Chinese New Year (Year of the Dog) is underway, shipping rates are down, international log prices remain high, volumes are high and price trends are causing significant influences on the domestic log markets.

During the 2nd half of February, Scion will be running its 13th quarterly log price outlook. This month we will also assess how positive and/or negative sentiments in different segments of the industry are.

We plan to have an equivalent survey running concurrently in the Nordic countries. During March this information will be shared exclusively with outlook participants.

Tp participate in the Log Price Outlook click on the link: https://www.surveymonkey.com/r/LPO-Link

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Juken confirms downsizing decision

Juken New Zealand Limited Confirms production changes - Forest and wood products company, Juken New Zealand has confirmed on Monday it is going ahead with changes to the products made at its East Coast Mill in Gisborne to return the plant to profitability and secure its long-term future.

The company told staff on January 23 that is was considering stopping production of plywood and laminated veneer lumber (LVL) products and reducing the manufacture of structural laminated veneer lumber (SLVL) at it's East Coast mill because those parts of the business had been operating at significant losses for a number of years. The mill will continue to make high-value solid wood products used for high-end residential and commercial interior cabinetry, furniture, solid doors and feature walls. Over time this side of the business will expand.

Juken General Manager, Dave Hilliard said that the final number of roles to go at the Mill as a result of the changes wouldn’t be known for another two weeks. “Now that we have made the decision to go ahead with these changes, we will be working through a process to confirm exactly which roles and how many will go as result,” said Hilliard.

“This is a tough time for our people and their families. We’re a major wood- processing and forestry employer in Gisborne so a decision like this that cuts local jobs is difficult. But for local companies like us, it’s even more critical for the future of our communities that we consolidate into a sustainable business. We can only do this by making high-value products where we have a competitive advantage, so that we can keep growing job opportunities here into the future.”

“There are around 100 roles impacted by the changes, but we anticipate that the final number of redundancies will be less than this, as a number of staff have applied to take voluntary severance and we also have some roles in our sawmilling side of the business that we’ll look to redeploy people into.”

“All staff have redundancy pay provisions in their contracts. Part of the extra assistance we’ll be putting in place is to give a minimum of six weeks pay and four weeks notice for those who have been here for less than a year.”

The company has spent the past two weeks consulting staff and unions about the changes, which follow a decline in demand from Japan, the mills’ main Plywood market. The company’s plywood products are increasingly unable to compete in the domestic and international markets against product out of large-scale wood processing plants from the likes of China and South America.

Dave Hilliard said the consultation sought alternative proposals to mothballing the plywood production line and reducing the production of SLVL (veneer) products.

“We’ve carefully considered the feedback received, including a suggestion to start producing plywood for affordable housing in New Zealand. However, given the age of the machinery and the investment required to upgrade it to produce different plywood products these proposals don’t give us a viable solution to the issues we’re facing. The proposal asked for the decision to be delayed. However, we can’t continue sustaining these losses. Delaying the decision does not change the fact that the machinery cannot economically make product suitable for the low- cost housing market.”

“We have started work onsite with staff, unions, WINZ, Ministry for Social Development, local MPs, iwi, community and business representatives to support our people through this difficult process and to make sure they are supported into new jobs or re-training if their roles go. We are also working with a number of local employers, including Far East Sawmill who have come forward to offer our people new jobs.”

We’d like to thank them all for their hard work and support. We are also engaging with the Government on how we are investing to get the most value for the local industry out of our forestry resource through the manufacture of high-value products and how we are adapting to keep local processing and manufacturing competitive in the international market place.

The Juken mill at Matawhero opened in 1994 and employs around 200 full time employees. The mill processes Radiata Pine from the company’s East Coast forests to produce a range of solid wood and engineered wood products like Plywood, LVL and SLVL, mainly for the Japanese housing market.

Source: BusinessDesk via Scoop News

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Nominations open for Eastland Awards

A reminder it is just THREE weeks to get your nominations in for the 2018 Eastland Wood Council Forestry Awards in. The organisers are grateful to all the sponsors that have come back on board to support this popular ceremony.

The Eastland Wood Council has an on-line entry for nominations this year which you can find at: http://eastlandwood.co.nz/events/efa-awards/nomination-form/

Also note EWC have introduced two new categories for 2018 focusing on Roading Contractors – Pavement Excellence & Construction Excellence.

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Agritech changing rapidly

Industries rise, fall and evolve with the constant development of new innovations and technologies. Refrigeration changed how food was supplied, the lightbulb gave us more hours in the day, the telephone connected people easier and the internet made information far more accessible and faster than ever before.

A new a wave of digital technologies is here. Artificial intelligence, machine learning, the Internet of Things (IoTs), blockchain, big data, robotics and automation are just some of the technologies currently impacting business. No matter whether it’s banking, engineering, retail or agriculture, these innovations are changing how each sector operates.

Humans have been around a while but we seem to think innovation, technology and disruption are just new. They’re not. But the speed of change and disruption perhaps is.

“New Zealand has a deserved reputation for being world leading in agriculture. But the world is moving fast. Are we living on the past?” said Conor English, Chairman of Agribusiness New Zealand and former CEO of Federated Farmers.

Mr English is the opening keynote presenter at this year’s agritech event, MobileTECH 2018. His presentation will outline what this means for this country’s primary sector, including forestry, and whether it is time for a change in mindset.

MobileTECH has, for the last six years, been the annual gathering for New Zealand’s agritech community. “The focus has been on showcasing new digital technologies and how they are, and will be, integrated into the day-to-day running of businesses throughout the agricultural, horticultural and forestry industries,” said Ken Wilson, MobileTECH Programme Manager.

“While we are really excited about where technologies like artificial intelligence and machine learning are headed, this year the focus is on industry collaboration and hearing from early adopters within the sector,” said Mr Wilson. “It’s a unique opportunity in New Zealand for the tech developers from an array of primary industries to get together under the one roof, to learn from each other and to make key contacts and set up alliances that will assist them in their business”.

At last year’s event a lot of new technology was presented. But one of the best questions asked was, “Is technology looking for a problem? Someone still needs to listen to my problems, understand my business and then look at the technology to help me go forward.” In the race to innovate, is technology solving a problem or looking for one?

MobileTECH 2018 will be running on 27-28 March 2018 in Rotorua, New Zealand. Further details can be found on the event website, www.mobiletech.events.

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ANZ Commodity Price Index

The ANZ Commodity Price Index rose 0.7% m/m in January, a welcome change in direction following a 3-month slide.1 The lift was broad-based with meat, dairy, forestry and aluminium prices all lifting; the only fall was seen in milkfat products. The NZD continued to squeeze higher against major trading partners in January (NZD TWI up 1.8% m/m), pushing the NZD commodity price index down 2.9% m/m. Only aluminium prices managed to increase in local currency terms.

There were contrasting moves in dairy prices in January. Milk powder prices rose with WMP (+5.1% m/m) leading the charge, followed by SMP (+3.2% m/m). The main driver was dry conditions slowing NZ milk supply. However, the drop in the USD and dip in prices during December supported demand from more price-sensitive markets too. In contrast there was a fall in butter (-5.6% m/m), cheese (-5.0% m/m) and casein (-3.5% m/m). This was due largely to increased European and US milk flow, in the case of butter, lower seasonal demand, and building cheese stocks.

There was some small upward movement in meat and fibre prices in January (+0.6% m/m). Lamb and venison prices held at recent historical highs. Australasian sheepmeat supply has remained tight. Locally early January rainfall tightened North Island lamb supply, driving procurement pressure to meet chilled demand for the Easter period. Farm- gate pricing will moderate in February/March as local supply picks up and this season’s speciality occasion window shuts. However, a lower NZD/Euro/GBP, low frozen inventories and solid demand should provide a cushion of support. Beef prices improved on the back of tight local supply and good inter-market competition between the US and major Asian markets. Coarse-breed wool prices continue to struggle at low levels as seasonal supply increases (+0.8% m/m).

Seafood prices were stable. Horticultural products are in hibernation for the off- season.

Forestry prices maintained positive momentum. Log export prices rose another 2% m/m with solid offtake in China (i.e. high end-demand) and seasonally low inventories. Wood pulp prices rose a further 1% m/m after a stellar year, which saw prices rise 45% y/y. Momentum is slowing due to normal seasonal slowdown in China, which will see the global market rebalance somewhat. That said, producer inventories remain seasonally tight.

Aluminium prices rose 6.2% m/m as production outside of China flat- lined and demand was solid with a synchronised uplift in global manufacturing activity taking place. This led to a drawdown in global inventory levels, supporting prices. Uncertainty around Chinese production due to forced local capacity cuts on the back of environmental concerns makes for a cloudy future where price volatility is the likely outcome.

Source: ANZ

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Carbon Market: Update from Carbon Match

NZUs softened just a touch over the course of Monday, from $21.55 on the open to a last trade of $21.50, best bid yesterday $21.45.

Yesterday saw some sellers hit bids rather than trying to haggle. But many say they’re in no rush and are interested to see the outcome of consultation that is expected on a “different” price ceiling.

In the Regulatory Impact Statement released in December last year the Government clearly identified the current fixed price option of $25 as being problematic. In short it’s a free but valuable option being offered to emitters, but nobody is offering the New Zealand Government the same and international carbon prices in the 2020s could well surpass this level.

Four potential solutions were identified, 3 of which contemplated increasing the value of the safeguard, and one of which would see the safeguard removed altogether.

That document noted that each of the four options would require amendment to the Climate Change Response Act, and timelines made public appear to indicate that such legislative change might take place sometime in 2019.

But that’s not that far away. Emitters wanting certainty might want to get out there and create it for themselves.

Source: Carbon Match

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Japan: Nail laminated timber tested

NLT Char Margin Test Successful - Increased attention is being paid to Nail Laminated Timber (NLT) in wooden building industry in Japan. As opposed to fire resistive PFC buildings, where wooden structures are cladded with gypsum boards, NLT presents an opportunity to visually expose wood. In particular, designers prefer NLT in floor applications because the occupant downstairs can appreciate the wooden ceiling surface above. Those applications are usually in large-scale buildings where fire resistive or quasi-fire resistive performance is required. NLT can be used in quasi-fire resistive structures if a fire test shows that the remaining cross section can be structurally safe after burning. This approach is defined as the “char margin” or “sacrificial layer” design method.

In December 2017, COFI and the Japan 2×4 Home Builders Association collaboratively conducted the fire test to the NLT with Canadian SPF 2x10s nail laminated edgewise. The specimen was burnt in the horizontal furnace at the Tsukuba laboratory of Center for Better Living, one of the MLIT-designated performance evaluation bodies.

After one-hour burning, the surviving cross section of the NLT showed sufficient load bearing capacity against the dead loads applied vertically to the specimen.

This was the preliminary test for the Canada Wood next fiscal year project, seeking the quasi fire resistive ministerial approval jointly with Japan 2×4 Home Builders Association.

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Buy and Sell

... and finally ... jokes about her ...

Marriage is a relationship in which one person is always right and the other is a husband.

My wife and I always compromise; I admit I'm wrong and she agrees with me.

It doesn't matter how often a married man changes his job, he still ends up with the same boss.

They call our language the mother tongue because the father seldom gets to speak.

Married life is very frustrating. In the first year of marriage, the man speaks and the woman listens. In the second year, the woman speaks and the man listens. In the third year, they both speak and the neighbors listen.

Marriage is when a man and woman become as one; the trouble starts when they try to decide which one.

Marriages are made in heaven. But then again, so are thunder and lightning.

If you want your wife to listen and pay strict attention to every word you say, talk in your sleep.


And today as we celebrate St Valentine's Day, here are a few considerations...

That's all for this week's wood news.

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John Stulen
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

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