WoodWeek 1 August 2018
"Positivity has permeated the industry, at least for those selling logs, for upwards of two years," AgriHQ analyst Reece Brick said in his latest monthly report on the forestry market. "However it’s getting a bit nervy all of the sudden. That’s not to say everyone’s panicking, but there are certainly more reasons to frown than we’ve seen for a long-while.”
Looking to forest safety and the latest technology in harvesting operations, we have over 300 people registered for the upcoming conference series for FIEA’s Forest Safety & Technology events in Rotorua and Melbourne over the next couple of weeks. It has been a busy time for all concerned and we are pleased to be working with a fantastic group of innovative speakers.
STOP PRESS: We have had a late addition to our conference and workshop programme! Dr Tom-on-a-Mission will be on site for both the conference day and the FISC workshop the following day in Rotorua. FREE HEALTH CHECKS will be available for all conference delegates – thanks to sponsorship of this service by the Forest Industry Safety Council and WorkSafe New Zealand.
Meanwhile back in the forest, an Invercargill City Council forestry company has been hit with settlement costs totalling $50,000 and issued with a warning. It came after the Overseas Investment Office (OIO) investigated the purchase of 13 blocks of forestry land in the Wairarapa region between April 2014 and May 2016 by Forest Growth Holdings.
Heading onto the rails now – all over the North Island, ports and KiwiRail are scrambling to deal with a 'wall of wood' that has tripled since 2008. They say they will need to invest heavily again if they are to cope with another potential doubling of the harvest in the coming years. High log prices courtesy of demand in China could trigger a further surge in woodflow to export.
On 28 August, our 3rd annual conference on engineered wood for commercial and multi-residential building is set to attract hundreds of early adopters as NZ moves fast to catch our Australian neighbours in sustainable commercial buildings.
A distinct advantage is speed. Wood buildings go up faster than concrete steel. The key is using new design and manufacturing software known as 'building information modelling' (BIM).
“Following trends in Australia and USA, the use of engineered wood is growing as BIM is more widely used by engineers and architects right through to the tradespeople,” says John Stulen, conference director for the 3rd Annual Changing Perceptions engineered wood conference on sustainable commercial building.
This week we have for you:
Analysts wary of trade change potentialNZ log market 'nervy' over US-China trade stoush, says AgriHQ - New Zealand's booming export log market is starting to catch the jitters as concerns mount about the impact of US President Donald Trump’s trade war.
Demand for New Zealand logs has been strong over recent years as local sawmills compete with the export market to source logs for local construction, at a time when demand in China has stepped up after Asia's largest economy clamped down on the harvesting of its own forests and reduced tariffs on imported logs to meet demand in its local market. However, trade tensions between the US and China are creating nervousness in the market, as traders fear tariffs will hurt economic growth and dampen demand.
"Positivity has permeated the industry, at least for those selling logs, for upwards of two years," AgriHQ analyst Reece Brick said in his latest monthly report on the forestry market. "However it’s getting a bit nervy all of the sudden. That’s not to say everyone’s panicking, but there are certainly more reasons to frown than we’ve seen for a long- while.
"The export scene, along with the rest of the world, is trying to figure out what the outcomes will be of the tiff between the US and China. Economic growth data, stock exchange indices and foreign exchange rates have all made unfavourable movements in the past month, and there’s little sign that the relations between the two countries is on the mend."
Brick's comments about nervousness in the log market echo similar concerns noted by industry watchers in the dairy and wool industries recently, where demand is said to have weakened as buyers are concerned that tariffs on end products will flow back to dent demand for New Zealand commodities.
"If there’s a common enemy for NZ log traders it’s President Trump," said AgriHQ's Brick. "Another month of the US and China passing tit-for-tat trade tariffs is creating global economic uncertainty, understandably causing some nerves given log values are highly reliant on macro-economic strength."
The US and China this month imposed tariffs of 25 percent on US$34 billion of each other's exports and US tariffs on an additional US$16 billion of Chinese goods are coming soon. The US government also said last week it was readying new tariffs on Chinese goods worth an additional US$200 billion.
Brick noted the latest set of economic data out of China indicates the trade war is already impacting China’s economy, with second-quarter growth slowing to 6.7 percent, its slowest rate of growth in almost two years, and expectations for a further decline in the third quarter.
"The consensus in the market place is that the trade tension between China and the United States could cause an economic downturn," Brick said. "The International Monetary Fund condemned President Trump’s trade policy and advised governments to bulk up savings. The escalating trade tension may hinder global growth and delay foreign investments worldwide.
"The main issue is the nervousness that is reverberating throughout the globe, slowly rippling into NZ. Sentiment within the NZ market is mixed – the more risk averse are preparing for a drop beyond the short-term, while quite a few others are thinking this is a temporary, storm-in-a-teacup situation. Either way, no-one can be certain."
Forest products are New Zealand's third-largest commodity export group behind dairy and meat products. AgriHQ's monthly survey of exporters, forest owners and saw millers showed the average price for structural S1 logs in the New Zealand market edged up to $136 a tonne this month, from $135 a tonne last month, and marking the highest level since 1993. The average price for New Zealand A-grade export logs held steady at a four-year high of US$145/JAS.
OIO breach: Warning and costs chargedAn Invercargill City Council forestry company has been hit with settlement costs totalling $50,000 and issued with a warning by the Overseas Investment Office.
The Overseas Investment Office sent a formal warning letter, in respect of a breach of the Overseas Investment Act, to three companies - including Forest Growth Holdings Limited, a subsidiary company of city council-owned Invercargill City Forests Limited.
The Overseas Investment Office had investigated the purchase of 13 blocks of forestry land in the Wairarapa region between April 2014 and May 2016 by Forest Growth Holdings.
The investigation related to whether Forest Growth Holdings was an associate of Wairarapa Estate Limited, an investment company managed by Australian fund manager New Forests Asset Management PTY Limited [New Forests].
The upshot was all three companies received a warning letter around acquiring sensitive land without prior consent by using a New Zealand associate to allow amalgamation of land and delay the need for consent.
The forestry block transactions followed a business agreement, or term sheet, agreed on by New Forests and Forest Growth Holdings in 2013.
The term sheet said New Forests would provide Forest Growth Holdings with information about its investment criteria; and that Forest Growth Holdings would acquire forest land and trees in the southern North Island and bundle the trees and sell them to Wairarapa Estate Limited at a price determined by an agreed valuation model.
The term sheet also said Wairarapa Estate Limited would pay rent to Forest Growth Holdings of a percentage of the value of land per annum, and, after Forest Growth Holdings had secured the land, Wairarapa Estate Limited would look to buy the land from Forest Growth Holdings for the amount set out by the land valuation, conditional on obtaining consent under the Overseas Investment Act at a later date.
Forest Growth Holdings and Wairarapa Estate Limited took legal advice before entering into the agreement, and Forest Growth Holdings went on to acquire the forestry blocks, the regulator said.
In the official warning letter to the three companies, Overseas Investment Office enforcement manager Kirsty Millard said: "We are formally warning you, as the parties involved in the arrangement, that overseas investors must obtain consent before acquiring sensitive land, and must not use associates to avoid or delay the need for consent."
The regulator's settlement agreement with Forest Growth Holdings involved the company being required to make a $20,000 contribution to the cost of the investigation and a $30,000 donation to the New Zealand Institute of Forestry Foundation to fund scholarships.
The regulator's settlement agreement with Wairarapa Estate Limited involved that company making a $20,000 contribution to the cost of the investigation, a $10,000 donation to the Tinui Parish ANZAC Trust and a $70,000 donation to the New Zealand Institute of Forestry Foundation to fund scholarships.
Source: Stuff news
Technology helps wood displace steel and concreteOn 28 August our 3rd annual conference on engineered wood for commercial and multi-residential building is set to attract hundreds of early adopters as NZ moves fast to catch up our Australian neighbours in sustainable commercial buildings.
A distinct advantage is speed. Wood buildings go up faster than concrete steel. The key is using new design and manufacturing software known as “building information modelling” (BIM).
“Following trends in Australia and USA the use of engineered wood is growing as BIM is more widely used by engineers and architects right through to the tradespeople,” says John Stulen, conference director for the 3rd Annual “Changing Perceptions” engineered wood conference on sustainable commercial building.
“The shorter project times have also caught the eye of all of leading trades contractors, especially when their people see BIM in action on a tall wood building project,” says Stulen. “This year we are delighted to have all 100% of our conference case studies outlining New Zealand wood projects,” he adds.
The “Changing Perceptions” Conference run on 28 Aug at the Distinction Hotel in Rotorua. An evening reception on 27 Aug. Register now at: https://connexevents.com/cpetc2018/
Walls of wood predictedAre we ready for the ‘Walls of Wood’? - Special Newsroom pro correspondent Gavin Evans finds log exports have tripled in the last decade and could at least double again over the next decade. He takes a detailed look at the wave of port, rail and road investment needed to cope with this 'wall of wood', let alone an even bigger one planned under the Government's 'Billion Trees' programme.
All over the North Island, ports and KiwiRail are scrambling to deal with a 'wall of wood' that has tripled since 2008. They say they will need to invest heavily again if they are to cope with another potential doubling of the harvest in the coming years. High log prices because of Chinese demand could easily trigger another surge in the 'wall'.
The ports of New Plymouth, Gisborne, Napier and Wellington are straining to keep up with the demand to move logs from forests to ports, and will have to work hand-in- hand with a capital constrained KiwiRail to avoid regional roads and highways being pounded into potholes by fleets of logging trucks.
For example, Port Taranaki is hoping a planned rail service from Whanganui will help it capture a bigger share of the wall of wood coming out of the lower North Island.
The company has been working with KiwiRail and foresters and says it is close to settling a new service that could deliver between 80,000 and 120,000 tonnes of logs to the port annually starting early next year.
Chief executive Guy Roper says the details of the cost and the share of the investment are still being worked through. But he says an improved supply chain would be more efficient and improve the return to forest owners.
“This is about growth – additional logs coming to Port Taranaki from the Whanganui area,” he says.
“Logs within a closer radius of the port are still likely to come on trucks. But logs will no longer be exclusively on trucks, which will help congestion, help reduce the amount of maintenance and upgrades required, and reduce carbon emissions.”
Taranaki handled 692,000 tonnes of logs in the year through June, 42 per cent more than a year earlier. But it is not alone trying to cater for the forestry boom. Many of the country’s ports have experienced 20 percent-plus annual volume growth in recent years as trees have reached harvest age and strong demand from China has delivered record prices.
Many ports have, or are, extending log yards and rationalising wharf space to cope. Others are planning dredging to cater for bigger vessels or paving yards and buying bigger loaders and higher book-ends – the massive steel frames logs are stacked within – to improve their use of space.
But some, such as Napier and Eastland at Gisborne, are also facing a step-change in investment to increase capacity and reduce congestion. The major berth expansions planned in coming years will cater not just for the expected logs growth, but also increasing cruise ship visits and growth in other export freight.
And the planning and commitment that entails should be on peoples’ radar if the country is to more double or almost triple its forest estate by 2050 – as recommended by the Productivity Commission – to help meet its climate change targets.
That extra 1.3 million to 2.8 million hectares of trees will most likely be planted in more marginal – and hard to get to - dry stock land in eastern Taranaki, Wanganui, Manawatu, southern Hawke’s Bay, Wairarapa and down the east coast of the South Island. And that will have big implications for the road and rail links in those areas – if they exist – to get those logs to port.
Log export statistics updateForest products export earnings continue strongly, although it's possible the Chinese market may be close to peaking. Our log export market graphics this week from the good folks at Champion Freight show total log export values to China to the end of June are still up over 33 percent year-on-year contributing to overall log exports growing 25 percent across all markets. To the end of June China shipments month-on-month are up 8 percent and overall log exports up 8 percent.
AKD grows with CHH acquisitionAKD set to acquire CHH’s NSW sawmilling business - Integrated Australian forestry and timber processing company, Associated Kiln Driers (AKD) is pleased to confirm that it has signed an agreement with Carter Holt Harvey (CHH) to acquire all of the shares of Carter Holt Harvey Timber Pty Ltd (CHHT).
CHHT owns CHH’s New South Wales sawmilling business. The major assets of the business comprise the Tumut sawmill and Gilmore treatment facility in Tumut, a 50% interest in the Highland Pine Products (HPP) joint venture in Oberon and a distribution centre in Berkeley Vale.
The Tumut sawmill processes approximately 565,000 m3 of sawlogs and produces a range of predominantly structural products primarily for supply in NSW. The Gilmore treatment facility is a value adding site located in close proximity to the Tumut sawmill. HPP processes approximately 600,000 m3 of sawlog, producing a range of timber products.
AKD currently processes over 1,000,000 m3 of sawlog across its Colac, Caboolture and Yarram sawmills and has over 600 employees.
Commenting on the proposed acquisition, AKD’s Chief Executive Officer, Shane Vicary said, “the acquisition represents an excellent fit with AKD’s existing operations in Victoria and Queensland and is consistent with AKD’s strategy of operating high quality, well-located sawmills.
We are very enthusiastic about the acquisition and look forward to working with the existing CHHT employees and providing all AKD employees with enhanced opportunities across the wider AKD group as a result of this transaction. The acquisition enhances our ability to efficiently service both existing and new customers and we look forward to building strong relationships with all suppliers to the NSW operations.”
The proposed acquisition continues AKD’s approach of growth through strategic acquisition and capital investment and further highlights AKD’s propensity to invest in the industry over the long term. Completion of the transaction is expected to occur in the fourth quarter of 2018.
Wood is good: Michelin thinks soWooden tyres don't have the best ring to them, but Michelin firmly believes they'll be a reality in 2020 - The French tire maker told Motoring in a report published this month of its plans to introduce wood into tyres, and it's all about moving away from oil.
Cyrille Roget, Michelin's worldwide director of scientific and innovation communication, said the plan is to create more sustainable tyres in the future, and experiments with wood waste have provided a solution. The tire maker will incorporate elastomers from wood chips to replace a tire's oil content. Today, 80 percent of materials found in tyres come from oil. In the future, that percentage will drop to 20 percent by 2048, Michelin believes. And rubber will also be included, which Roget said is also sustainable.
"Trees grow everywhere. So you re-distribute the opportunity for everyone to have local sourcing. And they are renewable," Roget added.
“We believe it is a good solution for the future,” said Roget, “it’s not a dream. We should have the first industry machine in 2020. And then the industry will ramp up from there … we hope in 2020 we will be able to show the first tire made of wood.”
Much further into the future, Michelin not only foresees tyres made from wood, but also a single set of tyres for a car's lifetime. The company believes one day that 3D printing will revolutionize the tire process. Where today drivers must physically change tyres after the tread wears down, 3D printers could conceivably "recharge" tread. In layman terms, a 3D printer would print new tread when the tread eroded to an unsafe level. Roget even pictured a day when an electric car charging station also includes a 3D printer to "recharge" tire tread.
3D-printed tyres are further down the line, perhaps 15 years at minimum, Roget said, but Michelin hopes to show its first tire made from wood in less than two years.
... and finally ... funny thoughts ...
Are you in the WRONG JOB - (see picture at right). Don't stress, you've come to
the right place to find a new one. See today's classified ads.
I wasn't going to get a brain transplant but then I changed my mind.
Have you ever tried to eat a clock? It’s very time consuming.
I’m reading a book about anti-gravity. I can’t put it down.
It’s a lengthy article about ancient Japanese sword fighters but I can Sumurais it for you.
So what if I don’t know the meaning of the word ‘apocalypse’? It’s not the end of the world.
The other day I held the door open for a clown. I thought it was a nice jester...
No one ever says "It's only a game" when their team is winning.
I've reached the age where 'happy hour' is a nap.
The trouble with bucket seats is that not everybody has the same size bucket.
Money can't buy happiness but somehow it's more comfortable to cry in a Jaguar than in a Ford.
Always be yourself because the people that matter don't mind and the ones that mind don't matter.
Life isn't tied with a bow but it's still a gift.
Thanks for keeping up with the latest wood news with us!
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