WoodWeek 7 April 2021
Next week we have over 330 delegates registered for our combined HarvestTECH and Forest Safety & Technology Conference in Rotorua. On that note, it looks like the Canadians have the technology lead this time with Mosaic Forest Management is announcing its partnership with local Vancouver Island service provider, EcoWest Driven, to introduce several Tesla semi-trucks into log hauling. By the way we still have seats available for both the two-day HarvestTECH conference and the one-day Forest Safety & Technology event.
In harvesting-related news Komatsu plan to lift their sales in forestry equiepment by 40% in coming years. Part of their plans is to make a wider range of machines, including automated tree planters. On that subject we’ve just spotted recent reports suggesting the global market for forestry equipment is growing by 2% to 3% a year on average. This sector is now outpacing the construction machinery market, which rises at a roughly 1% clip.
Finally, last week we misquoted Z Energy in relation to biofuels. Here is the corrected version supplied by Z Energy:
What we have actually said is: [The CCC] should support a “more ambitious biofuels supply chain that delivers in the immediate term for those customers who are as yet unable to flip their fleet or have hard to decarbonise use cases, such as aviation.”
And we talk about the commercials of building a plant if we were to do so again, as follows: “We note the concern raised by the Commission that the volume required to meet the Commission’s biofuels target is 7x our Wiri plant (as per the Commission’s modelling), which will admittedly present challenges. However, the engineering capability has advanced considerably in New Zealand since Z first started construction of its plant. The capability now exists in New Zealand to overcome these challenges and, from a commercial perspective, we would not plan for 7x our current plant if we were to scale up local production capability – economies of scale would dictate a single plant of 100- 200ML capacity would be a better commercial option for example.”
Z Energy has no plans to build a 200ML plant.
We fully endorse the CCC’s intent to electrify the light passenger fleet, and our submission states: “Petrol vehicles are prime candidates for an electrification push, so it is our position that electrification (as well as public and active transport) should be the priority for that segment in order to achieve the best carbon reduction outcomes.”
If you’re interested in the substance of the Z Energy submission, click here.
This week we have for you:
Log export market updateLog export market graphics - This week we've got our monthly update from the Champion Freight team and some market commentary from PF Olsen.
The chart shows total log export values to China year-on-year to the end of February were down just 2 percent year-on-year contributing to overall log exports reducing by 3 percent across all markets.
Shipments to China to the end of February, month-on-month are up a whopping 59 percent driving overall log exports up by 48 percent.
Market Summary - March AWG prices remained the same as February prices. Increased shipping costs for logs to China was mostly covered by increased CFR sale prices. There was little movement in domestic log prices as we come to the end of Quarter 1. April AWG prices will be determined by the relative rises of log prices and shipping costs, while currency movement will also have an impact.
The PF Olsen Log Price Index remained at $130 in March due to the stable AWG prices. The index is currently $10 above the two-year average, $6 above the three-year average, and $6 above the five-year average.
China - The CFR prices for New Zealand pine logs in China has increased approximately 5 USD over the last month and is still increasing. The price for A grade logs is now around 158 USD per JASm3 and log exporters will continue to ask for increased pricing to compensate for increased shipping costs. Steady increases in log prices this year have been achievable to date as wholesales are still making a margin.
Softwood log inventory has climbed to 4.6m m3 as volume continued to arrive while China restarted after the Chinese New Year period. Daily port off-take is currently a healthy 70k and increasing weekly. The China Caixin Manufacturing PMI fell to 50.9 in February. This is a relatively neutral score which predicts minimal change in manufacturing. While output and new work eased the PMI was also affected by raw material shortages and transport delays increasing suppliers’ delivery times. (Suppliers’ delivery times makes up 15% of the PMI). Business sentiment strengthened with future output expectations jumping to the second highest since August 2014.
Source: Champion Freight and PF Olsen
Komatsu to grow forestry machine salesJapanese machinery maker aims to boost segment's revenue by 40% - Japanese equipment maker Komatsu hopes to generate 140 billion yen ($1.27 billion) in revenue from forest machinery after four years, which would mark a 40% increase, due to robust housing and material demand.
Komatsu intends to fulfill its goal by offering a stronger lineup of equipment such as feller bunchers and forwarders for the North American market. The U.S. has the fourth largest distribution of forests in the world, in terms of area.
Up to now, Komatsu's forestry equipment has been compatible with the European logging process in which timber is carefully arranged on the spot before being hauled out. For North America, the company will also offer equipment that will carry timber as is to processing centres.
Komatsu will develop the Russian and Southeast Asian markets as well. Indonesia and Russia still rely heavily on chainsaws wielded by human hands. While Western logging industries have a 70-80% penetration of forestry machinery, Asia remains behind at roughly 20%. Komatsu's equipment will compensate for the labor shortage and improve on-site productivity.
In the interest of climate change, the manufacturer will also invest resources into promoting reforestation, selling bulldozer-like equipment for prepping the ground, along with automated tree planters.
Log prices spurring recovery in the regionsDairy may be the backbone of the economy, but forestry is helping power a recovery in regional New Zealand as log prices soar on the back of demand from China, strong domestic construction activity and tight global supply.
In the latest ASB Regional Scoreboard, the two top spots in the rankings were held by the forestry powerhouses of Northland and Gisborne. The NZ Regional Economic Scoreboard takes the latest quarterly regional statistics and ranks the economic performance of NZ’s 16 regional council areas.
Meanwhile, ASB Bank’s forestry indices lifted 5% in New Zealand dollar terms over Q4 2020 and then a further 6% over Q1 this year. The index is currently $10 above the two-year average, $6 above the three-year average, and $6 above the five-year average, it said.
More upside to come - Prices aren’t too far off the highs they hit back in 2018-19 and “we see further upside for log prices this year. China is the destination for more than 56% of forestry exports, so it will remain in the driver’s seat over the rest of 2021,” it said.
According to PF Olsen – a provider of independent professional forestry services – the PF Olsen Log Price Index remained at $130 in March due to the stable at wharf gate or AWG prices. The cost and freight prices for New Zealand pine logs in China has increased approximately US$5 over the last month and is still increasing, it said.
The price for A-grade logs is now around US$158 per Japanese Agricultural Standard (JAS) cubic metre and log exporters will continue to ask for increased pricing to compensate for increased shipping costs.
Mosaic trials electric log trucksMosaic Announces Trial of World’s First Electric Log Trucks in Partnership with EcoWest Driven - Mosaic Forest Management is announcing its partnership with local Vancouver Island service provider, EcoWest Driven, to introduce several Tesla semi-trucks into log hauling. There are currently no commercially available electric log truck solutions appropriate for the terrain on Vancouver Island.
The BC forest sector has a significant role to play in addressing climate change. The working forest captures carbon as it grows, and wood products keep that carbon locked-up for decades. New trees are planted and the renewable cycle repeats. However, forestry operations generate tailpipe emissions, including from log trucks. Electrifying the fleet is a particularly good approach in British Columbia where over 90% of power in the Province is generated from clean hydroelectric sources.
“We are committed to achieving carbon neutrality by 2035 and electrifying our log hauling fleet is a significant step in that direction” said Jeff Zweig, President and CEO of Mosaic Forest Management. “BC is a global centre of excellence in forestry, and we are proud to work with our local partner, EcoWest Driven, on this important project”.
“With our in-depth experience and knowledge of the forestry industry on Vancouver Island, we are excited to partner with Mosaic to utilize Tesla’s innovative electric semis into log haulers,” said Timber Johnson, Director and Co-Founder of EcoWest Driven. “We have begun the process of creating charging infrastructure and a new electric vehicle maintenance facility in Parksville, BC to accommodate this new demand for emission-free heavy haulers,” added Jarvis Shaver, Director and Co-Founder of EcoWest Driven.
Prime Minister opens new Innovation HubPrime Minister Opens Scion’s New Front Door - Te Whare Nui O Tuteata - Last Wednesday, Scion’s striking innovation building, Te Whare Nui o Tuteata, was officially opened by the Prime Minister, Rt Hon Jacinda Ardern, Minister of Research, Science & Innovation, Hon Dr Megan Woods and 500 guests, heralding a new era in Scion’s evolution.
Scion, a Crown Research Institute, has been the centre of New Zealand’s forestry sector for over 70 years. The opening of Te Whare Nui o Tuteata today is the next step in Scion’s growth, as the organisation steps forward to support New Zealand to solve some of its most pressing issues through innovation in manufacturing, energy and sustainable land-use.
Scion Chair Dr Helen Anderson says the opening is key to the institute’s re-development: “We are at a defining point for New Zealand, with the potential for forestry to fuel a bio-based and sustainable economy. Scion’s work has the potential to power the transformation that New Zealand is making as we look to meet our climate change commitments, build our economy back better, and improve environmental and social outcomes.
Te Whare Nui o Tuteata is the new ‘front door’ to Scion’s campus – Te Papa Tipu Innovation Park – which is already home to more than 30 different organisations and companies.
The building name “Te Whare Nui o Tuteata” was gifted by Ngā Hapū e Toru who hold mana over the whenua. The name acknowledges the mana of the tupuna Tuteata, from whom Ngā Hapū e Toru descend and the connection to the whenua, Tītokorangi.
Scion Chief Executive Dr Julian Elder says “Te Whare Nui o Tuteata is an example of timber technology and innovative design and construction that has been created through collaboration with New Zealand designers, wood processors and construction firms. This building is a symbol of the powerful connections we foster between Scion, local iwi, government, industry and the local community.”
Te Whare Nui o Tuteata showcases innovative technologies for large buildings in timber – that are climate- friendly, earthquake-resilient, fast and cost effective. The building stores approximately 418 tonnes of CO2- eqv for the life of the building. This is equivalent to the emissions from 160 return flights from Auckland to London. New Zealand’s radiata pine forests can regrow this amount of wood in just 35 minutes – making it truly sustainable.
SnapSTAT - Sponsored by COP
Source: Champion Freight
Caterpillar introduces next generation machineCaterpillar has introduced its first forestry machine incorporating the manufacturer’s next generation platform - The new Cat next generation 538 Forest Machine is more productive, more comfortable and costs less to maintain than its predecessor.
“This machine introduction builds on about 40 years of experience and development with forest machines at Cat,” said Mike Dickenson, Caterpillar’s product specialist for forestry excavators. “It’s really exciting to be able to integrate this into the fold and to move forward with a brand-new platform.”
Alongside the next gen platform, which boosts operator and fuel efficiency while reducing maintenance costs, Caterpillar worked with customers, operators, mechanics and dealers to design the machine.
Source: Equipment Journal and Cat
Shortage due to mill closures, not exportsThe root cause of supply restrictions of structural timber relates to chronic, long term underinvestment in wood processing rather than a shortage of trees, forestry sector players say.
Grant Dodson, chief executive of City Forests and chair of the Southern Wood Council, said while demand in Asian and other markets for New Zealand logs remained solid, domestic mills were now “flat out” due to escalated building sector demand.
In contrast to complaints by producers that the current supply issue stems from China’s inflated and subsidised prices for NZ logs, Dodson said domestic use still represented about 43% of its market.
“So, this really starts with processors, who are limited by a lack of capacity,” he said. Dodson said the closure of up to 15 mills by the country’s largest structural timber supplier Carter Holt Harvey (CHH) in recent years, hadn’t done the industry any favours.
After announcing the closure of its Whangarei operation last year, CHH admitted it had been having production issues with its newly expanded Kawerau sawmill operations.
That saw CHH surprise the market last week by shutting down supply to its smaller customers and prioritising Placemakers, owned by Fletcher Building, and Carters Building Supplies. The latter, like CHH, is part-owned by Kiwi billionaire Graeme Hart’s Rank Group.
That move left building supplies cooperative ITM and Mitre10 scrambling for alternative supplies on the back of a residential building boom that saw building consents track up 5% to a record 39,725 dwellings for the year to February. This was pushed by record Auckland consents for terrace housing. The CHH move has sparked a Commerce Commission enquiry.
Chinese exports - James Treadwell, president of the NZ Institute of Forestry, agreed it’s not an export-related issue “as about 90% of logs that are exported don’t meet the structural specification for domestic mills anyway”.
“What we’re exporting is what the domestic mills don’t want in general,” he said.
Aratu Forests introduces riparian schemeAratu Forests introduces riparian scheme – Aratu Forests, one of New Zealand’s ten largest freehold forest plantations, has today announced an industry-first, 90-year ‘right to plant’ land management agreement with sustainable land-use company, eLandNZ – with the backing of the Gisborne District Council.
The scheme has been under development for two years and is set to create a permanent native forest buffer alongside waterways within Aratu Forests. In May ground will be broken as part of a community launch event involving Iwi, community groups and the Gisborne District Council.
eLandNZ’s Managing Director, Sheldon Drummond, says: “The 90-year agreement for mixed land use within Aratu Forests will see eLandNZ progressively manage revegetation of streamside buffers within the Aratu Forests estate that are unsuitable for timber plantation.
“In the first 25-years the project will establish a permanent streamside native forest with primary species planted including manuka, belts of larger native trees in higher areas and flax in flood zones. “The specific environmental improvements will include greater biodiversity, improved water quality and reduce offsite wood debris movement during any future flood event,” says Drummond.
“Community expectation on improved environmental management of our land and waterways requires the forest industry to be thinking long-term while also taking action today. We are confident this project will pioneer a new standard for sustainable forestry practices, which can be replicated across other fragile forestry environments,” he adds.
In the first year of the agreement approximately 170 hectares of the Aratu Forests estate will be prepared for planting, which will kick start from May.
Aratu Forests Chief Executive, Neil Woods, says: “With the full support of our Board, we are voluntarily investing in this initiative because it is the right thing to do, and stands to deliver long-term benefits for the environment, the community and our company.
“eLandNZ has a proven track record in sustainable land management, having successfully delivered a number of projects throughout New Zealand. We like how the partnership has been established to this point – patiently, openly and collaboratively.
Ūawanui Environmental Sustainability Project spokesperson, Victor Walker, says: “Our iwi and community, including our schools have been facilitating meetings to discuss environmental remediation and the impacts of the woody debris and flooding on our community in numerous forums for over a decade. These have been challenging times. The community hui at Reynolds Hall in Uawa, after the floods in 2018, was a touchstone for a highly connected approach to explore proactive solutions for what was required to keep our waterways and coastlines pristine and our community safe.
“The pilot riparian native forest scheme is another touchstone in the journey towards future proofing the ‘kaitiekitanga (custodianship)’ of our catchment and the legacy of environmental sustainability that we will leave behind for our mokopuna. Ūawanui acknowledges the training and employment pathways that the industry provides and is optimistic that the project will also help build relationships to create opportunities for increased intergenerational wellness and prosperity.
Tara Strand, General Manager Forest and Landscapes at Scion says: “Scion is excited to support this long -term initiative to bring the health and wellbeing (the mauri) back to the forest and community. Establishment of these permanent forests enables us to better understand how forests help to mitigate flooding, lock soil and improve water quality, biodiversity, soil health and ultimately the wellbeing of the people.”
Mr Woods adds: “As more forestry owners become more proactive in activities that facilitate the environmental remediation of streamside land it will reduce costs to local and regional councils, while also assisting the Government in meeting its Paris Accord commitments through additional permanent forestry and carbon sequestration.
“This is a commercial solution to an environmental problem and there are going to be a lot of learnings for the industry as this project develops,” Woods says, “This project stands to bring our communities together and there will be opportunities for other partners to participate in the future, including to involve other forests in the region and, ultimately, across New Zealand,” he says.
To register to receive ongoing updates: www.elandnz.com/araturiparians
Buy and Sell
... and finally ... something funny with VW
Volkswagen or Voltswagen - In the "land of the free and the home of the gullible" (USA) VW
turn an April Fools prank into a week-long motoring media stunt.
It began with a tweet (pictured) on March 31 in USA, marking the release of an electric car; an SUV model ID.4. With the new model release the company, in an unusual release (not done in it's usual Euro-first; USA second order) suggesting that, in order to focus motorists on their future models the company would be changing its name from Volkswagen to Voltswagen. Over the course of 5 working days it became clear the intent was simply an April Fools Day prank of the highest order.
On one hand it all seems like a waste of time for the average punter scanning the motoring news, but as they say in the trade; all publicity is good publicity (and this outing was far less scandalous than the emissions scandal of 2015 which was a long-running public relations disaster, not to mention a massive drop in sales.)
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