WoodWeek 10 March 2021
Attention all loggers, truckers and foresters - Early-bird rates for our FIEA HarvestTECH 2021 Conference finish this Friday. One of the two days at this year’s HarvestTECH 2021 event has been set aside to review the significant advances that have been made on automated measurement, log scaling and tracking through the wood supply chain. As well as some very clever innovations on measuring truck loads and log piles, new electronic log docketing systems have been developed and are being used operationally. We have case studies from leading forestry and log haulage companies on how they’ve been integrated and used.
Looking at the future of logging in New Zealand, there appears to be some potential for carbon forestry to impact negatively on wood supply. What is becoming increasingly evident is the potential effect on NZ log supply with increased carbon returns. Carbon prices have skyrocketed in the past 12 months and now sit at around $39/NZU (carbon tonne) which is comparative with harvest returns on many forests. While carbon can only be sold once (i.e. you can’t sell carbon from successive rotations without paying back most of it at harvest), it does give forest owners a viable alternative to harvesting. Read more in today’s issue.
Moving to carbon markets, prices are hot and getting hotter. So is interest in our Carbon Forestry Conference coming in June. Given the current debate, bolstered by proposals to Government in the Climate Change Commission’s draft report, we expect a large local and international audience in June in Rotorua. We are working closely with all of the key agencies and industry professionals to bring you a world class conference. Both MPI and the Climate Change Commission are excellent partners and of course we have Dr Rod Carr as our keynote speaker. Click here to register now – don't miss out, interest is running high already.
Across the Tasman the China ban is still hurting. Australia’s log exports totalled 218k m3 in January 2021, down 9.5% on a year earlier as Chinese import bans continued to impact the trade. The result would have been even lower had it not been for shipments to India rising steeply in January.
This week we have for you:
China log export market updateChina market for softwood logs – CFR prices for New Zealand pine logs in China has continued to increase. The range for A grade logs was 130USD per JASm3 for early December shipments but is now 152-154USD per JASm3 for late February shipments.
Softwood log inventory in China has increased as expected over the Chinese New Year period to 4.5 million m3. The percentage of spruce within the total softwood inventory levels has increased. Approximately 1.5 million m3 of spruce arrived in January, but the China log buyers expect spruce supply to be constrained for the next few months due to a lack of containers, and heavy snowfalls in Europe.
There is also no indication the ban on Australian logs will be lifted. The increase in log supply from South America has filled the gap left by the Australian log volume. Suppliers of this volume, however, will suffer from the increase in ocean freight costs more than the New Zealand suppliers.
Daily log use in China had dropped to just over 60k prior to the Chinese New Year. Many Chinese were unable to travel for the Chinese New Year, so the disruption to productivity is likely to be less than normal, and we expect productivity to increase faster than usual after the Chinese New Year period.
The Bank of China’s Economic and Financial Outlook annual report bodes well for log demand in China. “Looking into 2021, infrastructure and real estate investment will keep growing fast to drive a continuous economic recovery. Driven by infrastructure and real estate investment, investment will continue to accelerate in 2021 and become the main engine of economic growth for the year”.
Log demand in China is expected to remain strong until productivity drops in their very hot summer period.
Basis of Index: This Index is based on prices in the table below weighted in proportions that represent a broad average of log grades produced from a typical pruned forest with an approximate mix of 40% domestic and 60% export supply.
Source: PF Olsen Wood Matters
Forest 360 Market Commentary(Marcus Musson Forest 360) - As we bid farewell to summer the foot is still firmly on the production throttle with March log pricing generally flat with February. Average A grade prices are around $145/m3 at wharf gate which is historically a short-lived price point before things turn to custard due to supply and demand imbalances.
This year appears to be different thanks to the Chinese import bans on Australian logs, low inventory levels in China and subdued supply from other log producing countries. The expected influx of volume from Europe has not manifested due to a large snowfall in January and issues with container freight.
The key head wind at the moment is the significant increase in ocean freight costs which will likely keep the lid on any further price increases. Global commodity demand and a resumption of a large grain export program from Australia has vessel owners rubbing their hands together.
To add to the vessel supply issue, the ban on Aussie grain into China has resulted in sales being diverted to Europe and the Middle East which is a considerably longer journey and effectively lessens the number of available vessels. This is not likely to correct itself in the short term unfortunately, however, to put it into perspective, shipping rates are around half of what they were pre GFC in 2007 when global commodities were in hot demand – then along came Fanny Mae and Freddy Mac which sorted that problem out.
What is becoming increasingly evident is the potential affect on NZ log supply with increased carbon returns. Carbon prices have skyrocketed in the past 12 months and now sit at around $39/NZU (carbon tonne) which is comparative with harvest returns on many forests. While Carbon can only be sold once (ie - you can’t sell carbon from successive rotations without paying back most of it at harvest) it does give forest owners a viable alternative to harvesting. Considering many forest owners will only experience one forest rotation in their investment life, carbon will give consistent revenues throughout the growth cycle of the forest.
As an example, if you had a forest planted in 1995 in the Southern North Island that had been registered in the NZETS since 2008, you would be sitting on $18,000 of carbon per hectare as of today. Over the next 28 years this forest will continue to grow and you will receive another $32,000 based on today’s prices. Obviously you would end up with a 54 year old forest which may have marginal crop value but by that time most investors would be in their 90’s and probably not too concerned.
Where carbon prices will head to in the next few years is anyone’s guess but it would be fair to say a reduction is extremely unlikely. A report by the Productivity Commission in 2018 stated that ‘All evidence points to the prospect that emissions prices may need to rise to at least $75 a tonne, and possibly, if new emissions-reducing technologies are slow to emerge, to more than $200 a tonne, over the next three decades.
So let’s assume we get really good, really quickly at reducing emissions and carbon is at $75/tonne, that’s $62,000 per hectare over the next 28 years in the above example – not too bad really and very unlikely that harvest returns on forests a reasonable distance from the port will be able to match or even come close to.
Australian logs to China still downAustralian log exports hit hard by China ban - Australia’s log exports totalled 218 km3 in January 2021, down 9.5% on a year earlier as Chinese import bans continued to impact the trade. The result would have been even lower had it not been for shipments to India rising steeply in January. However, trade with India comes at a cost, evidenced by the average export price plunging 16% compared with the prior month, falling to USDFob120/m3.
January is always a soft month for exports, but as the chart below shows, like December before it, exports in January were particularly soft. The other feature is the fast-diminishing role of exports to China, and the significance of the rise in exports to India.
Since the beginning of the challenges with the China trade, there has been speculation that resource hungry China would turn to New Zealand – already a massive supplier of logs to China. The chart here shows some uplift in New Zealand’s exports, but probably not sufficient to replace all the volume typically supplied by Australia.
Tim Woods, IndustryEdge’s Managing Director said of these developments, “The decline in Australia’s log exports is well beyond the typical seasonal downturn. Until recently, the only export market of any size was China. When they look at the latest data in Wood Market Edge online, our clients can see why, with average export prices plunging as other markets take up only some of the slack.
“Industry is racing to identify alternative markets, but the reality is that the long-term future must lie in increased local processing. That is more complex to achieve than to say, but it is clear there are few really sustainable alternatives. “What is most important is that Australia is increasingly reliant on imported sawnwood during periods of peak demand – like right now. We need to get past that and ensure we are self- sufficient for our future built environment needs.”
About IndustryEdge: Subscribers to Wood Market Edge online have 24/7 access to extensive and comprehensive data visualizations for all of Australia and New Zealand’s trade in wood resources and products, including a library of detailed, downloadable data files.
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ANZ Commodity IndexThe ANZ Commodity Index showed the forestry index gained 3.2% in February. Log prices have lifted 21.3% in the past year while wood pulp pricing has softened slightly. New Zealand logs continue to head to China. Demand slowed during the Chinese New Year holiday period but stocks were relatively low ahead of the holiday break, indicating demand for imported logs should lift again relatively quickly.
Source: ANZ Commodity Index
MPI strengthening future of forestryForestry futures strengthened through training and jobs - The forestry sector continues to provide career opportunities for New Zealanders, with Te Uru Rākau delivering $1.5 million into training and employment projects to help the sector meet labour and skills gaps.
Acting Deputy Director General Henry Weston says the Forestry and Wood Processing Workforce Action Plan, developed in partnership with the sector, identified up to 5000 more forestry and wood processing workers would be required by 2025.
“The food and fibre sectors are a key driver for the New Zealand economy and it’s a priority for the Ministry of Primary Industries to invest in projects that attract people to the sector. As New Zealand continues to recover from the economic impacts of Covid-19, we need people taking up careers in this important sector. The forestry and wood processing sectors already bring in between $6 and $7 billion each year, employ 35,000 people, and we want to keep helping New Zealanders find exciting and rewarding training and career opportunities.”
“It was great to see ten trainees graduate from a 17-week Taranaki-based course at the end of 2020 and go straight into jobs. The training built the silviculture skills of young people, enabling them to work within the iwi land development program and within the wider Taranaki region.”
The course, run by Treemachine Services for rangatahi from Ngāti Maru and other Taranaki iwi, was funded by Te Uru Rākau with support from North Tec, Taranaki Regional Council, Department of Conservation and Ministry of Social Development and forestry companies.
In Masterton, KTM Silviculture Limited ran a programme for 24 trainees to gain Level 3 NZQA silviculture training qualifications.
“This will help address a labour/skills gap in Wairarapa, which is currently holding back forestry activities in the region,” Mr Weston says. ”Funding provided to Tāne Mahuta in the Bay of Plenty enables 20 tairua (students) to do an eight-week Te Whakatō Rākau training programme, and we are also supporting a programme for 12 local rangitahi aged 18-29 run by Mohaka Kingz Contracting Ltd for their E Tu Kahikatoa project in Wairoa. The students will not only gain NZQA Level 2 and Level 3 forestry credits, they will get work experience in a commercial planting environment, nutrition advice and kaihautū mentor support within a kaupapa Māori framework.”
Te Uru Rākau is also supporting the education of younger students and a grant has been provided to the Southern North Island Wood Council to deliver the Wood is Good education programme. This programme teaches rural primary school students about logging truck safety and introduces aspects of the forestry through in class activities.
Mr Weston says these training investments are part of Te Uru Rākau’s broad programme that is assisting the industry to meet its training and employment needs in coming years.
“We encourage anyone interested in the wide range of career opportunities in forestry to find out more at forestrycareers.nz or the Opportunity Grows Here website at opportunitygrowshere.nz/forestry.”
Source: Te Uru Rakau
Modelling for forest operation improvementThrough a combination of predictive algorithms, prescriptive optimization-based modelling, and a live operational planning system, artificial intelligence (AI) can enable continuous improvement throughout the forestry supply chain and provide real competitive advantage in fast-changing markets.
Global industries are benefiting from a confluence of improved data acquisition and management platforms and advancements in artificial intelligence (AI) technology. For the forest industry, this provides an exciting and transformational opportunity.
As more data comes in from systems at many points in the supply chain, forest companies can mine this information for valuable insights into their operations and use it to improve their planning processes and assumptions by learning from what is actually happening in the field. This is where predictive analytics and prescriptive modeling can work together to provide continuous improvement in forest planning and allow forest companies to make faster, smarter and more precise decisions based on continuously updated data.
Pit stops of NZ you've likely never seenNew Zealand’s Eight Best Road Trip Pit Stops - New Zealand has always been home to keen road trippers but now, with international boarders closed, more people than ever before are hitting the road at every opportunity to discover the best their country has to offer.
But as Kiwis flock to the nation’s motorways, spending hours in the car en route to your destination can often mean taking a bathroom break in some less than inspiring locations.
However, did you know that in addition to beautiful scenery and areas of outstanding natural beauty, New Zealand is also home to some of the most unusual pit stops going! So, with that in mind, we've pulled together New Zealand’s top eight public toilets worth holding out for when you’re next on the road and busting!
KAWAKAWA - First up is KawaKawa, a small Northland town that has become a tourist attraction thanks to its unusual public toilets. Designed by Austrian artist, Friedensreich Regentag Dunkelbunt Hundertwasser, these toilets are the only place in the Southern Hemisphere where you can experience Hundertwasser’s unique art. Made mostly out of recycled materials and built around a living tree with a rooftop garden, this unique bathroom is a free artistic experience and environmentally friendly.
MATAKANA - On your way down to the coast? Make sure you stop in at the Matakana Public Toilets, 163 kilometres south near Auckland. After winning a design competition, Auckland student Steffan de Haan’s work was brought to life. The sculpted toilets took seven years to complete costing $400,000 but are unique enough to encourage tourists to stop off and enjoy the artwork and a bite to eat at the Matakana markets.
GORDONTON - Gordonton is a place to stop and smell the roses. Their small public toilet facility is filled with roses and cherry blossoms and even has a visitors’ book for people to sign on their pitstop. One wall is painted bright yellow, making it a joyful experience for travellers passing by. The facilities are also wheelchair friendly.
REDWOODS - The Whakarewarewa Forest in Rotorua is home to a range of exotic trees and bathrooms out of a fairy-tale. The design of the cylinder toilets replicates the surrounding California Redwoods and are even more stunning at night where they are lit up to display intricate stencils of local flora and fauna.
TOKOROA - The toilets in Tokoroa were uniquely designed to represent the Southern Cross constellation, a symbol of the different ethnicities and cultures that have used this navigation tool throughout history. Five individual toilets are placed in the area and are joined by a covered walkway for shelter, they also vary in height, a nod to the sizes in the constellation while creating an eye-catching sculpture.
MANGATAINOKA - Mangatainoka is a small settlement in the Tararua District in the North Island. It’s in this small town at the Tui Brewery that beer kegs have been recycled into seats and urinals. Seems like a fitting feature to have at a Brewery.
WELLINGTON - The Wellington waterfront toilets, otherwise known as “lobster loos” or “crayfish crappers”, opened in 2011 and soon became a big tourist attraction. The toilets came third in the world’s best toilets in 2015, and were designed by Architect Bret Thurston creating bathrooms that were both functional and creative while fitting in with the surrounding heritage buildings.
INVERCARGILL - Invercargill is home to Transport World, which also happens to include a unique men’s bathroom. Fuel station inspired, water is dispersed by Shell oil pumps, door handles are made of fuel pumps, and while you’re taking care of business, you can look out a one-way mirror to the showroom full of vehicles.
Source: Budget Rental Cars
Buy and Sell
... and finally ... a million laughs; at least
Why is it unwise to share your secrets with a clock? Well, time will tell.
What began as a joke video for a friend about to have a baby ended up transforming Jordan Watson's life. In 2015 Watson filmed his infant daughter Alba in various comical poses for a short video called How To Hold a Baby, and uploaded it to his friend's FB page.
Here he is explaining some of our favourite Kiwi cuisine:
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