WoodWeek – 21 April 2021

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Greetings from your WoodWeek news team. Hot-off-the-press: An update from the Bay of Connections group earlier this week indicated a prospective buyer has appeared for the Whakatāne Mill after it was confirmed last month that it would close at the end of June. Discussions with the interested party are progressing.

Looking to our next big event in June, registrations are pouring in for our Carbon Forestry 2021 Conference in mid-June. Earlybird rates still apply, but we recommend you register before this event sells out. The pace of discussion on carbon forestry options and best practice is growing and will accelerate when the feedback comes from the first feedback round by the Climate Commission as they refine their planned advice to Government for action. Click here to register yourself or your team for our conference before time runs out.

Moving to the markets where rising costs are starting to have an impact. The cost of moving logs from New Zealand to China and Korea, our main markets, has doubled over the past year. It now costs as much as USD50/JASm3 to move logs to Asia, which accounts for about a third of the value of the product. A year ago shipping costs were closer to 20% of the total value. So far, the higher shipping costs are being absorbed by the importers, meaning returns at the wharf-gate level in NZ haven’t changed a lot. The lift in shipping costs is being driven by the general congestion in global shipping, which means it is taking longer for ships to get loaded and unloaded.

This week's SnapSTAT chart shows how reliant our businesses are on China for many of our primary industry exports. Thanks to our sponsors of this feature: the great team at Chainsaw & Outdoor Power (COP) and Oregon.

Looking a log supply from Germany, where practically all of the additional ten million m3 of annually harvested softwood roundwood the past three years was exported, either in the form of logs or domestically processed lumber. In 2020, the estimated log export volume was 11.5 million m3, up by 54% from the previous year and more than four times as much as 2016, according to Wood Resource Quarterly. With the dramatic increase in export volume, Germany has become a net exporter of logs (an estimated six million m3 in 2020), a reversal from having been a net importer of 4-6 million m3 annually during 2010-2018.




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China - Strong demand underpinning prices

Strong demand pushing up prices – International log prices are at record levels due to strong demand from China as other supply lines dry up. But the high in-market prices are being offset by expensive shipping, meaning returns at the wharf-gate have only lifted a tad. Domestic demand remains strong but some mills are struggling to run at a profit. Most don’t compete directly for logs as mills typically source high-grade pruned logs, while unpruned logs are exported. However, export prices do underpin the price that mills need to pay for logs. Supply differs by region, with some regions having few pruned logs available where forest owners have elected to focus on export markets rather than producing a higher- quality log.

High overseas prices eroded by costs – Returns at the wharf gate level for export-grade logs have lifted marginally. In-market prices are now at record highs but extremely high shipping prices mean little extra return to NZ exporters.

The cost of moving logs from New Zealand to China and Korea, our main markets, has doubled over the past year. It now costs as much as USD50/JASm3 to move logs to Asia, which accounts for about a third of the value of the product. A year ago shipping costs were closer to 20% of the total value.

So far, the higher shipping costs are being absorbed by the importers, meaning returns at the wharf-gate level in NZ haven’t changed a lot. The lift in shipping costs is being driven by the general congestion in global shipping, which means it is taking longer for ships to get loaded and unloaded.

MILLS STILL CLOSING - The milling industry in NZ has gradually declined over the past couple of decades as sawmills and paper mills have struggled to turn a profit. Despite demand for lumber in NZ being at an all- time high, mills are still closing.

Mills must compete with export markets for the supply of timber, but seem to struggle to pass on any cost increases to the buyers of paper, cardboard and lumber. Labour to run the mills is also becoming increasing difficult to source – and more expensive. Most sawmills have been able to source the timber they require, but in some regions the supply of logs is limited, particularly pruned logs.

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Source: ANZ AgriFocus





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Boom in Germany’s wood exports continues

Germany’s export value of logs and lumber has increased 63% the past five years, reaching 2.5 billion dollars in 2020 - The softwood timber harvest in Germany is likely to reach almost 50 million m3 in 2020, about ten million m3 more than a typical year before the spruce bark beetle-infestation in 2018. In addition, Germany has harvested 6-7 million m3 of hardwood species annually for the past five years. The total timber harvest in 2020 will be the highest since 2007, when the cyclone Kyrill swept in over Central Europe and damaged approximately 45 million m3 of timber.

Practically all of the additional ten million m3 of annually harvested softwood roundwood the past three years was exported, either in the form of logs or domestically processed lumber. In 2020, the estimated log export volume was 11.5 million m3, up by 54% from the previous year and more than four times as much as 2016, according to Wood Resource Quarterly. With the dramatic increase in export volume, Germany has become a net exporter of logs (an estimated six million m3 in 2020), a reversal from having been a net importer of 4-6 million m3 annually during 2010-2018.

Lumber exports from Germany have also gone up due to the large volumes of beetle-killed and storm- damaged timber. However, the increase has been more modest than the spectacular rise in logs flowing out of the country. Lumber exports in 2020 reached an estimated 9.5 million m3, six percent higher than the previous year and 34% higher than in 2016.

The total value of German softwood log and lumber exports has surged by 63% the past five years from 1.5 billion Euros in 2016 to just over 2.5 billion Euros in 2020, reports the WRQ. The log export value has gone up more than three-fold since 2016, practically entirely driven by increased shipments to China. This destination has rapidly become the largest market for logs exported from Germany, surging from almost non-existent in 2017 to account for just over 65% of the total export value in 2020. Other significant destinations included neighbouring Austria (14% of total export value) and Belgium (5%).

Source: Wood Resources International



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Carbon Forestry: Introducing Nigel Brunel

Carbon Forestry Conference: Meet Our Presenters - Nigel Brunel (pictured), Director of Institutional Commodities, Jarden

Presentation: The Evolution of the Market - The New Zealand ETS has come a long way from an intensity based system with no cap on emissions and a price cap. Now we have a proper cap & trade scheme with a descending cap on emissions, regular auctioning and two very clear goals being Paris in 2030 and Net Zero by 2050.

The big questions are will we achieve these goals and what does the price of carbon need to be.

Profile - Nigel founded and leads Jarden’s institutional commodities business in New Zealand and Australia. He has a vast amount of cross-market experience, with a focus on renewable energy, dairy and equity futures. He has a special interest in carbon trading, particularly compliance and voluntary markets, and has been a leading adviser in the field since the inception of New Zealand’s emissions trading scheme.

Nigel was a founding member of Jarden’s FX, Futures and Equity Derivatives team in 1986. He went on to manage the equity derivative sales division at UBS Warburg in Sydney and ran his own trading company for nine years before returning to Jarden in 2007.

He loves the problem-solving aspects of his role and values integrity, honesty and hard work. He travels frequently throughout Asia and New Zealand to educate and advise corporates involved in emissions trading schemes and the dairy markets, and regularly provides expert commentary in the media.



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Nash sees bright future for forestry

Northland: Future bright for forestry, says Forestry Minister Stuart Nash (pictured) - Growing more trees and processing them in New Zealand is part of Forestry Minister Stuart Nash's vision for the future of the industry.

He was hosted by the Tai Tokerau Maori Forestry Collective at a meeting of forestry industry leaders on Friday in the Pakaraka Hall near Moerewa. Nash has worked in the forestry industry in New Zealand and Japan and has a postgraduate diploma in forestry and a masters degree in forestry management.

He told the meeting he wants the sector to focus on maximising the potential of the forests and to use innovation to enhance the economic potential of the wood produced.

"Overall, to be honest, I am disappointed that we are now the world's largest exporter of raw logs. This must change as I believe we have the capabilities and competencies to add significant value and to own far more of the value chain.''

Nash said New Zealand needs more trees in the ground and there is plenty of room on land that is not well suited to farming or other crops.

"We need to be smarter and plant trees in the best places. About 70 per cent of land is sub- optimal for farming and forestry has a role to play in that. Exotic trees, indigenous trees and mixed planting regimes all have a part to play in our forestry future,'' he said.

The Government's climate change response represents a huge opportunity for the forestry sector. "Forestry is, after all, this country's largest renewable resource. By embracing the economic and environmental benefits of this resource I am confident the future for this sector is extremely bright."

Forestry exports are expected to increase 8.1 per cent to $6 billion for the year ending June 2021 due to strong demand for logs from China and robust demand for sawn timber from the US. Growth in the Chinese construction industry and the US housing market is expected to support demand for New Zealand's key forestry products over the medium term. In addition, domestic timber demand is expected to remain strong due to increased residential construction.

"We know there are challenges but the post Covid-19 economic forecasts for forestry are looking good." Nash said in order to meet New Zealand's obligations around climate change, many more trees needed to be planted.

"The whole forestry system will be key in our climate change response – planting trees, and how we use the resource they produce. For Māori, we see huge potential across the whole system – as landowners, community leaders, guardians of our environment, investors – we want to support you to meet your aspirations through trees."

The Government wanted to encourage landowners to take land that is not productive and plant trees there to prevent erosion, and at the same time claim Emissions Trading Scheme carbon credits.

"We want to see greater use of indigenous timber and I understand the totara project running up here is looking really promising. Whether native or exotic trees are planted, there is huge potential here for a nursery in Northland instead of buying trees from down south.''

Nash said doing more to make better use of the wood grown in New Zealand could include more wood processing plants and mills, which would create more jobs and further support rural communities. However, attracting large-scale processing companies needed a guarantee of wood supply for at least 40 years ahead.

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Source: NZHerald


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SnapSTAT - Our primary industry export trends: China







Source: ANZ Research



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John Deere enhances dozer lineup

John Deere unveils numerous changes to its largest dozers, the 950K and 1050K models - Delivering improved ride quality and increased productivity on the industry’s toughest and most challenging job sites, John Deere announces enhancements to its largest dozers, the 950K and 1050K models. Enhanced with the customer in mind, the updates improve productivity, durability, and operator satisfaction. Including a suspended double-bogie undercarriage, new Extended Life undercarriage options and updated blade offerings, the upgraded 950K and 1050K models add to the already strong history of productivity and innovation in the John Deere dozer lineup.

“Our time spent on customer sites has allowed us to confidently design an undercarriage for the 1050K that drastically improves operability and productivity on rough terrain,” said Matt Goedert, solutions marketing manager, John Deere. “With the updates to the 950K and 1050K machines, such as the Extended Life undercarriage life option, we’re delivering increased machine uptime while also significantly enhancing the operator experience.”

The suspended double-bogie track frame on the 1050K improves ride quality. Featuring a second layer of bogies, new isolators and refined geometry, the 1050K delivers increased durability and a smoother ride that reduces fatigue for operators on long shifts.

Another update for both the 950K and 1050K models is the Extended Life undercarriage option. A successful option on the smaller dozer models, the Extended Life undercarriage features the John Deere- exclusive SC-2™-coated track chain bushings. Produced using a proprietary coating that forms a hard shell, the SC-2-coated bushings deliver up to twice the wear life of standard bushings, significantly increasing machine uptime.

Also, the 1050K Semi-U blade now features a more productive profile. The new profile delivers several benefits, including increased capacity with improved roll performance and standard cast end bits. As a result, the Semi-U blade reduces material plugging and carries more dirt where it needs to go with every pass, boosting machine productivity.

Other updates include a 950K stockpiling configuration addition and exterior hose upgrades. Intended for coal handling and wood chip applications, the new factory stockpiling configuration for the 950K provides specialized sheet metal guarding to increase protection from material spilling over the blade and falling through the horizontal hood perforations and grille. This configuration also includes a special high-debris cooling package. Finally, the exterior hoses on both machines have been upgraded, offering improved flexibility and extended durability in cold-weather environments.

To learn more about the improved 950K and 1050K, as well as the full line of John Deere construction equipment, visit www.johndeere.com or contact your local dealer.



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Potential buyer for Whakatane Mill

The owner of the Whakatāne Mill is in discussions with a potential buyer - The Whakatane Beacon reported last week that SIG Combibloc (SIG) confirmed it had received a proposal from an interested party to investigate the possibility of continuing operations at the mill.

It said discussions were still at an early stage, and it was too soon to determine whether this proposal would be progressed further.

The Beacon reported it was understood there were two parties potentially interested.

SIG reiterated its commitment to continuing to support management and staff at the mill through this period of uncertainty and has put in place numerous measures including full HR and Employee Assistance Programme (EAP) services.

The mill is Whakatāne's largest private employer and has, for more than 80 years, produced paper and packaging products, mostly for export.

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Source: Whakatane Beacon


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MPI Plant Exports Forestry ICPR Update China

(MPI) The Forestry ICPR for China has been updated with the following changes: - On 15 April the update added clarification to the phosphine fumigation rate under Fumigation section for Logs. If you need any further clarification please contact your Independent Verification Agency in the first instance.

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Source: MPI


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Who Knew - Trees absorb metals

How 'agromining' ... farming plants that contain metal ... could help power the future - When scientist Alan Baker made a cut in the side of an exotic plant in the Philippines jungle, the sap that bled out had a jade-green glow.

The shrub was a newly discovered species, soon to be known as Phyllanthus Balgooyi, one of a rare variety of plants that naturally suck high amounts of metallic elements from the soil.

The fluorescent sap turned out to be nine per cent nickel. It was a welcome finding, but not a surprise, as Professor Baker's research into so-called "hyperaccumulators" had already uncovered species that seemed to thrive on everything from cobalt to zinc, and even gold.

"These are plants which can take up elements from the soil [at rates] orders of magnitude higher than normal plants," Professor Baker says. Scientists are now on a quest to discover whether farming these plants could provide an alternative to environmentally-destructive mining, while also helping to rehabilitate former mine sites.

Commercial potential - University of Queensland plant specialist, Dr Antony van der Ent calls it "agromining", but it's also known by the term "phytomining". In his chemical analysis laboratory in suburban Brisbane he's currently doing tests on perhaps the most well-known hyperaccumulator of them all – the Macadamia tree.

Its leaves and sap, but not the nut, are rich in manganese. In recent years he's traversed the globe searching for new species of hyperaccumulators, but COVID-19 has temporarily put that research on hold. He says the plants are most common in countries around the equator.

"We have found them in Southeast Asia, as well as New Caledonia, and in Cuba and Brazil," Dr van der Ent says. He estimates that of the 300,000 known plant species on Earth only around 700 have hyperaccumulating properties.

Of those, about two-thirds feed exclusively on nickel, including three species in New Caledonia where the concentration of nickel in their sap is around 25 per cent.

A tool for rehabilitation - Exactly why these plants developed the ability to absorb large amounts of metal is still a cause of speculation. All plants need some trace elements to grow, but the levels found in hyperaccumulators would normally be toxic for plant life.

The University of Melbourne's Professor Baker says it may be an evolutionary defense mechanism. "There are a number of theories that have been put out but the most plausible one is that they do provide some protection against grazing insects and grazing animals," he says.

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Source: ABC News


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Buy and Sell



... and finally ... something funny, work it out

I never wanted to believe that my Dad was stealing from his job as a road worker. But when I got home, all the signs were there.

A priest, a Pastor and a Rabbit entered a clinic to give blood. The nurse asked the Rabbit for his blood type. "I'm probably a type O" replied the rabbit.

I hate it when people act all intellectual and talk about Mozart while they've never even seen one of his paintings.

Told my mum I was opening a theatre she said "you're having me on", and I said, "well not necessarily, but we 'll give you an audition!"

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We are nearing the end of the BBQ season here. So lets refresh your memory on the etiquette of this sublime outdoor cooking activity. When a man volunteers to do the BBQ the following chain of events are put into motion:

(1) The woman buys the food.
(2) The woman makes the salad, prepares the vegetables, and makes dessert.
(3) The woman prepares the meat for cooking, places it on a tray along with the necessary cooking utensils and sauces, and takes it to the man who is lounging beside the grill - beer in hand.

(4) The woman remains outside the compulsory three-metre exclusion zone where the exuberance of testosterone and other manly bonding activities can take place without the interference of the woman.

Here comes the important part:
(5) THE MAN PLACES THE MEAT ON THE GRILL.
(6) The woman goes inside to organise the plates and cutlery.
(7) The woman comes out to tell the man that the meat is looking great. He thanks her and asks if she will bring another beer while he flips the meat Important again:
(8) THE MAN TAKES THE MEAT OFF THE GRILL AND HANDS IT TO THE WOMAN.

(9) The woman prepares the plates, salad, bread, utensils, napkins, sauces, and brings them to the table.
(10) After eating, the woman clears the table and does the dishes And most important of all:
(11) Everyone PRAISES the MAN and THANKS HIM for his cooking efforts.
(12) The man asks the woman how she enjoyed ' her night off ', and, upon seeing her annoyed reaction, concludes that there's just no pleasing some women.



Thanks for keeping up with the latest wood news with us!
Have a safe and productive week.

John Stulen, Editor
Innovatek

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