WoodWeek – 9 June 2021

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Greetings from your favourite wood markets news source. This week in addition to our log export market updates, we have a range of updates on carbon credits both locally, where there is some frustration about how to gain credits for regenerating native forest to an international update on the role of carbon credits for preserving tropical forests which would otherwise only generate income through harvesting. Another local story brings a local solution that bridges the gap. Native forest barriers will be planted on the East Coast in a game-changing initiative to protect waterways against forestry slash and silt in future storms. East Coast landowner Aratu Forests has signed a 90-year agreement that gives environmental land use business eLandNZ the right to plant and manage areas that are no longer suitable for production forestry.

Next week we host over 330 local and international (virtual) guests for our timely Carbon Forestry Conference in Rotorua. Starting the conference, we have Dr Rod Carr, chair of the Climate Change Commission as our keynote speaker. He has indicated he plans to attend the full day of conference sessions as well. We will finish the day with another Rod – the well-known independent journalist, Rod Oram who writes and broadcasts regularly on corporate, economic and political issues. Alongside many delegates, he’ll be looking closely at today’s publicly released advice from the Commission to Government for the ‘Path to 2050’ for reducing our carbon emissions. Rod will also bring his independent analysis to the role of carbon forestry in this journey.

Back to log markets where, according to reporting from the Lesprom Network, New Zealand’s forestry product export prices rose 7% – New Zealand’s export prices for forestry products rose 7% in the March 2021 quarter. Within that category, prices for wood exports rose 9.1% over the quarter to reach the highest prices on record, slightly exceeding the previous peak in the June 2020 quarter.

Thanks to PF Olsen for their China log market update -- The price for A grade logs at the start of May was about 183 USD per JASm3. In mid-May the prices are now around 185 USD per JASm3. The rate of increase in log prices has slowed with some mills in China now struggling with the higher log prices. Chinese peeling factories are struggling to afford imported logs and are either changing to domestic eucalypt or poplar species, or in some cases smaller factories are shutting down production.

Softwood log inventory has stabilised at around 4.2-4.3m which is positive as many expected stocks to increase as China had the May Day holidays. Daily port off-take is around 70-80k m3 per day.

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Climate Commission advice now LIVE - see link below

(Newsroom) What to look out for in Climate Commission’s final advice - Newsroom senior political reporter Marc Daalder details some of the key potential changes to keep an eye out for in today's package of advice from the Climate Change Commission.

ANALYSIS: At noon today, the Government will table the final advice from the Climate Change Commission in Parliament.

This will be an updated version of the extensive package of recommendations the commission released on January 31, which called for "transformational and lasting change across society and the economy", suggested caps on the amount of greenhouse gases New Zealand can emit by 2035 and said the Government needed to significantly increase the ambition of its Paris target.

After a two-month consultation period and furore from environmentalists and fossil fuel lobbyists alike, the commission delivered its final advice to Climate Change Minister James Shaw in May.

The degree to which the commission might have bowed to pressure or remained confident in its advice is one of the key things to look out for when the details are revealed at noon.

The big question: Will the commission's budgets stay the same?

UPDATED: Here is the link to Climate Commission advice: https://www.climatecommission.govt.nz/our- work/advice-to-government-topic/inaia-tonu-nei-a-low-emissions-future-for-aotearoa

Source: Newsroom and Climate Commission

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Nine new career opportunities for forestry

More Career Opportunities As Forestry Scholarships Open For 2022 - Nine more New Zealanders can study for a career in forestry and wood processing with applications for the 2022 Ngā Karahipi Uru Rākau – Forestry Scholarships are now open.

“It is an exciting time to be studying and working in the forestry and wood processing sector and to open the 2022 scholarships to applicants across the country as a pathway to future careers,” says Debbie Ward, Te Uru Rākau – New Zealand Forest Service’s Director, Business and Spatial Intelligence.

Te Uru Rākau – New Zealand Forest Service is funding three new scholarships for the Diploma in Forest Management at Toi Ohomoi Institute of Technology in Rotorua. This is in addition to six scholarships for those enrolling in a Bachelor of Forestry Science or a Bachelor of Engineering (Hons) in Forest Engineering at the University of Canterbury.

“The scholarships are a pathway to higher-level study and students will gain the skills, expertise, and capabilities the forestry and wood processing sector needs now and into the future. Through partnering with industry, students are offered internships over summer so they can put their learning into action and gain practical, hands-on workplace experience,” says Debbie Ward.

”We are especially keen to hear from students who are Māori and/or identify as female, as a key focus for the programme is to increase diversity amongst students and the sector workforce.”

Two new videos have also been launched promoting the scholarship programme and high-level forestry study. “The videos include our current scholarship recipients talking about the programme and the value and benefits they are getting from studying forestry. People watching may be surprised at the wide and diverse range of career options, including science, production management, business and resource management, conservation, engineering, and technology."

“This is clearly demonstrated when the students talk about the different fields they are studying, their experiences during their internships, and their enthusiasm about what their future careers in forestry may bring."

“We're proud to be offering the scholarships for next year, as an investment in the future of our people, the forestry and wood processing sector, and our country’s long-term environmental and economic prosperity,” says Debbie Ward. Applications for all scholarships close on 15 August 2021.

To watch the new promotional videos and for more information about Ngā Karahipi Uru Rākau – Forestry Scholarships, please visit www.mpi.govt.nz/forestryscholarships or email: mpiforestryscholarships@mpi.go vt.nz, or phone 0800 00 83 33.
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China: Log imports from Germany rise

China: Rise in log and sawnwood imports from Germany - According to China Customs in the first quarter of 2021 log imports from Germany surged 90% to 3.28 million cubic metres and sawnwood imports from Germany grew 37% to 950 000 cubic metres.

In the first quarter of 2021 the total volume of China’s log imports rose 23% to 13.9 million cubic metres and the value of log imports grew 33% due to a rise in imports of high quality logs.

Source: ITTO TTM Report

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Aratu Forests signs long-term planting agreement

Native forest barriers will be planted on the East Coast in a game-changing initiative to protect waterways against forestry slash and silt in future storms. East Coast landowner Aratu Forests has signed a 90-year agreement that gives environmental land use business eLandNZ the right to plant and manage areas that are no longer suitable for production forestry.

It follows two years of research and negotiation after masses of forestry debris inundated Tolaga Bay during a storm in 2018. The Riparian Project will involve removing slash from hillsides and landings, with plans to one day turn these offcuts into a “valuable export”. The other element is to stabilise land that has been harvested by creating permanent forests within all riparian zones, steep and unstable areas and environmentally sensitive areas. eLandNZ will start planting permanent native forest barriers on approximately 180 hectares of Aratu estate inland of Tolaga Bay this year.

Aratu Forests chief executive Neil Woods said the company was “voluntarily investing” in the initiative because it was the right thing to do, and stood to deliver long-term benefits for the environment, the community “and our company”.

eLandNZ had a proven track record in sustainable land management, having successfully delivered a number of projects throughout New Zealand, he said.

eLandNZ managing director Sheldon Drummond said it was a “game-changer” for New Zealand's forestry industry. “It hasn't been done before. It hasn't been contemplated seriously by plantation forest owners in New Zealand.”

In a presentation to Gisborne District Councillors last week, Mr Drummond said they expected it to make “positive disruptive changes” to the industry.

More >>

Source: Gisborne Herald

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Log export market update - PF Olsen

(PFOlsen Wood Matters) - China market commentary - The price for A grade logs at the start of May was about 183 USD per JASm3. In mid-May the prices are now around 185 USD per JASm3. The rate of increase in log prices has slowed with some mills in China now struggling with the higher log prices. Chinese peeling factories are struggling to afford imported logs and are either changing to domestic eucalypt or poplar species, or in some cases smaller factories are shutting down production.

Softwood log inventory has stabilised at around 4.2-4.3m which is positive as many expected stocks to increase as China had the May Day holidays. Daily port off-take is around 70-80k m3 per day.

New bank loans in China fell more than expected in April and money supply growth slowed to a 21- month low. The State Council (China’s cabinet) announced on 12th May that it would monitor changes in overseas and domestic markets and effectively cope with the fast increases in commodity prices. China will step up coordination between monetary and other policies to maintain stable economic operations.

While the heat may be taken out of the log market there is unlikely to be a crash in log prices as supply is still constrained. There is unlikely to be an increase in log supply from Europe until more containers become available. North America is in a building boom and has it’s own shortage of logs and sawn timber.

In the short-to-medium term, there is little chance of supply relief from Australia following their recent withdrawal from the Belt and Road deal with China. That deal was intended to (amongst other things) encourage Chinese infrastructure companies to invest in Australia. The withdrawal will further damage an already fractured relationship.

Construction activity generally slows down in China from June as they enter the hotter months. This will be partially offset with reduced harvest volumes in the New Zealand winter. Eastland Port will also undertake extensive port maintenance during June that will reduce port loading hours by about 20%.

Graph timescale: March 2010 - March 2021

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World Economic Forum on carbon credits

(World Economic Forum) How to save the world's forests with carbon credits - A decade ago, a stretch of land in Kenya became the foundation for a new source of finance with the potential to save the world’s forests: carbon credits.

The premise is simple. Forest countries and communities have historically faced intense economic and political pressure to cut down trees for logging, mining and industrial agriculture, releasing millions of tonnes of CO2 into the atmosphere in the process. They need an alternative – more specifically, a tangible incentive – to preserve and restore their forests instead of cutting them down.

Enter the Verified Carbon Standard (VCS). Under the VCS, proponents can propose and implement a project to protect a forest: for example, hiring community members to patrol it, building fire lines to prevent the spread of wildfires, and working with farmers to enhance agricultural productivity, which reduces pressure on the forest. The impact is compared against what would have happened in the absence of the project, and carbon credits are issued: one for every tonne of CO2 that would have otherwise been released.

> The Verified Carbon Standard can unlock the power of carbon credits to halt deforestation.

> By the end of last year, 185 million carbon credits had been issued under this programme for forest preservation.

> Now we need to scale this up – and that will require investment from the public and private sectors.

These carbon credits can be sold to governments, companies or individuals seeking to complement their internal emission reductions and to further decrease their carbon footprints. Finance from the sales is channeled to forest countries and communities, providing alternative livelihoods for people who until then had relied on depleting the forest cover. This finance also supports new jobs, wildlife protection, education, clean water and other initiatives that seek to transform the local economy away from reliance on the forest.

The results speak for themselves. Keeping carbon in the forest becomes an economically attractive option. By the end of 2020, 77 projects for “reducing emissions from deforestation and forest degradation” (REDD) were registered under the VCS and 185 million credits were issued.

More from the World Economic Forum >>

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Trust: Rules stop native forests gaining credits

Buy the hill: 'Depressing and farcical' rules prevent native forest gaining carbon credits - Carbon credits probably won’t help the Rod Donald Trust establish a native forest on the Te Ahu Pātiki land it is buying above Canterbury's Orton Bradley Park. The trust would be much better off financially if it planted a radiata pine forest and started selling carbon credits fairly soon, then felled the plantation in 25 to 30 years.

But that was not the trust’s vision for the 500 hectares overlooking Lyttelton Harbour Whakaraupō, trust manager Suky Thompson said.​ Instead, they would allow a native forest to gradually establish from seeds spread naturally by wind, birds and the like. They did not envisage much, if any, native tree planting at this stage, she said.

This style of reforestation did not sit easily within the recently reformed Emissions Trading Scheme (ETS), Thompson and others wrote in a submission to the Climate Change Commission in late March. The ETS rules made it “almost impossible to register naturally regenerating land”, they wrote.

“Even where there are vast areas of regeneration, in the best cases, landowners have been able to register only a few hectares after expensive, intensive and back-breaking work,” wrote Thompson and representatives of the Christchurch City Council, Environment Canterbury, lines company Orion, Landcare Research,​ Hinewai Reserve,​ Di Lucas​ of Lucas Associates​ and others.

The Rod Donald Banks Peninsula Trust wants to regenerate native forest on gorse- covered farmland. “It is depressing and farcical to see so much carbon being sequestered in regenerating native forest, with all the biodiversity benefits this brings, being rejected by the Emissions Trading System in favour of pine blocks,” they submitted.

There has been real money in selling carbon credits. Hinewai Reserve on Banks Peninsula has earned more than $1 million selling carbon credits under a previous version of the ETS.

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ANZ log export commodities

ANZ commodity tracking shows the forestry index gained another 3.3% in May to extend the record prices this sector is achieving. Log prices have increased by approximately 25% y/y, with this lift being driven by strong demand from China as well as reduced supply from some of the other major supply regions such as Russia and North America.

Source: ANZ Research, ANZ Commodity Price Index Report

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Centreport to pay dividend

CentrePort is paying its shareholders a special dividend of $15 million as the company continues to progress its regeneration.

Chairman Lachie Johnstone says with CentrePort’s strong balance sheet and having successfully finalised the Kaikoura Earthquake claims in 2019, the company is in the position to pay the special dividend to its shareholders – Greater Wellington Regional Council and Horizons Regional Council.*

The impact of the 2016 Kaikoura earthquake meant CentrePort paid lower than planned dividends totalling $11.7m during the financial years spanning 2017-2020.

“The $15 million restores the dividend pay-out to 50 percent of underlying Net Profit After Tax (NPAT) over that period (i.e., $26.7 million).

“CentrePort has performed strongly since the Kaikoura quake in 2016, and despite the headwinds because of COVID, CentrePort’s trades have been growing. Cruise remains on hold while the Government ban on international arrivals remains in place.

“The company is investing in infrastructure to benefit customers, the community, the environment and its shareholders. CentrePort’s regeneration is progressing well to deliver a resilient 21st century logistics supply chain asset vital for the prosperity of central New Zealand,” said Johnstone.

Regeneration progress in the past year includes:
> The return of container cargo by rail onto port after four years with the reinstatement of rail infrastructure damaged by the Kaikoura earthquake.
> Progress on the $38.6 million Thorndon Container Wharf reinstatement project that will double the operational width of the gantry cranes to increase operational capacity to meet customer requirements.
> The arrival and impending commissioning of 100 percent electric tractor and trailer units for the container service operations that will lower carbon emissions and improve operational efficiency.
> Expansion of the Waingawa log yard capacity from 9,000 tonnes to 16,000 tonnes and procurement of additional land for further expansion.
> Ground resilience improvements throughout the port including installation of more than 1000 stone columns, and continued demolition of damaged / redundant structures creating thousands of square metres of additional operational space.

Source: Scoop news

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RTG: No shortage of lumber

"There is never shortage of lumber, there is just shortage of lumber at cheap prices" - Russ Taylor, President of British Columbia based Russ Taylor Global, says that “high prices cure high prices.” High lumber prices will eventually reduce demand and increase supply – high prices scare people away. He is confident the prices for lumber will start to settle down, but at higher levels than we have ever seen before.

There will be a new “base level” price to result over time. Supply and demand will always balance, but we just do not have the trees anymore in North America to allow for more sawmill construction except in the U.S. South, he notes in an exclusive interview for Lesprom Network.

More >>

Source: Russ Taylor Global

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Buy and Sell

... and finally ... But, wait there's more!

A group of seniors were sitting around talking about all of their ailments at the local coffee shop.
"My arms have got so weak I can hardly lift my cup of coffee," said one.
"Yes, I know," said another. "My cataracts are so bad; I really can't even see my coffee."

"I couldn't even mark an "X" at election time because my hands are so crippled," volunteered a third.
"What? Speak up! What? I can't hear you, said one elderly lady!"

“I can hardly turn my head because of the arthritis in my neck," said one, to which several nodded weakly in agreement.
"My blood pressure pills make me so dizzy!" exclaimed another.
"I forget where I am, and where I'm going," said another.

"I guess that's the price we pay for getting old," winced an old man as he slowly shook his head.

The others nodded in agreement.
"Well, we all count our blessings," said a woman cheerfully, "Thank God we can all still drive."

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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