WoodWeek – 11 May 2022
Click to Subscribe - It's FREE! Wow, we’ve got a bumper issue for you today. Our wood news cup runneth over! Our best story is about a massive drone designed in Sweden to carry out production thinning using a 60kg harvesting tool! Next, we go to the markets or more specifically China with the latest commentary from PF Olsen.China - The total log demand in China has reduced since last year’s real estate and construction crisis in China due to Government crackdown on speculation and a tighter lending environment. Log supply has also reduced dramatically. Due to COVID-19 and Russia’s invasion of Ukraine is significantly affecting the supply chain, we are yet to see where the balance between supply and demand truly sits. With the Hawke's Bay and Gisborne regions receiving more record heavy rains a couple of times in March and April, this has resulted in continuing and massive clean ups. This time though, forestry wasn’t the major culprit in the downstream devastation. From industry comments in Friday Offcuts the local views are that our forest industry has learnt from its mistakes in recent years when east coast beaches were inundated with logs and forestry slash. Measures put in place by the forest industry after the Tologa Bay experience appeared to have largely mitigated the impacts of forestry debris being washed down the local waterways. This time, soil erosion and the resulting rivers of silt were the major issue for landowners – and the communities that were in the firing line along the coast. There was woody debris – but it wasn’t coming from forestry land. The Hawkes Bay Forestry Group this week commented on the March flooding and the forest industry’s concerted efforts made to best ensure logging slash and debris remained intact on the hill. As part of the upcoming Environmental Forestry 2022 conference on 28-29 June in Rotorua, some of the new operating practices, innovations and systems that have successfully been employed by forest companies to minimise soil disturbance and the loss of slash from roading and wood harvesting operations are going to be outlined to a much wider audience. Full details re the forest environmental programme content can be found on the event website. Technical innovation to revolutionise forestry: Precision Silviculture Program approved with joint Government and industry funding – An innovative high-tech approach to forestry management is set to transform New Zealand’s forestry industry, Forestry Minister Stuart Nash and Agriculture Minister Damien O’Connor announced last week. The Government is backing Precision Silviculture, a $25.5 million, seven-year programme led by Forest Growers Research. “The investment is part of the Government’s wider plan to provide economic security to workers and businesses, with higher skilled and high-wage jobs that support a low-emissions economy” said Stuart Nash. “Silviculture is about controlling the composition, structure, growth and quality of a forest. It is essential to manage and create value from our plantation forests however it has remained a highly manual and labour-intensive work practice. “We’re investing $10.2 million from the Ministry for Primary Industries’ Sustainable Food and Fibre Futures fund (SFF Futures) to enable the forestry industry to switch to the latest silviculture technology. “The programme will focus on developing mechanisation, automation, digital technology and robotics in the silviculture value chain. This will have a major impact on the key silvicultural areas of planting, pruning and thinning, as well as in-nursery activities.” Finally, the most recent ANZ Commodity Price Index update shows forestry once again bucking the trend as most of our main commodity prices showed signs of slipping while containerised shipping prices move around with China lockdowns the big factor. The forestry index lifted 4.8% in April, with prices for logs and wood pulp lifting. Log prices are now back to the level they were six months ago.
This week we have for you:
PF Olsen: Log export market updateApril At Wharf Gate (AWG) prices for export logs decreased by $15-$18 per JASm3. This decrease in AWG price was caused by a spike in shipping costs as well as the NZD strengthening against the USD. Significantly reduced log supply into China has maintained log prices, but if Covid forced lockdowns in China continue, then log demand reductions may put pressure on CFR log prices in China.The PF Olsen Log Price Index dropped $8 to $120 which is $3 below the two-year average, $1 below the three year-average and $4 below the five-year average. Export Log Markets China - The total log demand in China has reduced since last year’s real estate and construction crisis in China due to Government crackdown on speculation and a tighter lending environment. Log supply has also reduced dramatically. Due to COVID-19 and Russia’s invasion of Ukraine significantly affecting the supply chain, we are yet to see where the balance between supply and demand truly sits. China imports of softwood logs in the first Quarter of 2022 was 44% down on Quarter 1 2021. New Zealand’s log supply was 25% down. Log supply will remain constrained. New Zealand is entering its winter months, and price instability has not encouraged a significant increase in harvest levels. Supply from Europe and North America will also remain lower than last year. Log vessels currently must wait an average of 10 days in Tauranga before berthing. Not because there are increased log volumes, but most log exporters from New Zealand did not sufficiently prepare for the change in fumigation rules. Many exporters are now queuing while they debark more logs. Reductions in log volume to start Quarter 2 has also been caused by COVID-19 disruptions to staff levels in New Zealand and storms in the East Coast region of NZ. India - Kandla port is forecast to be very busy with four log vessels arriving from Uruguay and Argentina as well as two from Australia at least one from USA arriving in May. There is however an expected three weeks berthing delay for these log vessels, due to priority berthing facility accorded to export wheat vessels. Wheat exports from India are increasing significantly due to the Russian invasion of Ukraine. More >> Source: PF Olsen Wood Matters Carbon Match: Carbon market update
NZUs steady as budgets tightened - NZUs are offered on Carbon Match at $76.50 today, as
Minister James Shaw announced New Zealand's first three emissions budgets covering the period from
2022 to 2035.These have been finalised / announced in principle at tighter levels than previously signalled by Government last year. The first budget instead now looks to be back in line with original recommendations made by the Climate Change Commission, with the following two budgets looking tougher than those proposed in last year's advice from the Commission. Cabinet has agreed that the first three emissions budgets will be: Emissions Budget 1 (2022–2025): 290 megatonnes of carbon dioxide equivalent greenhouse gasses (72.4 megatonnes per year) Emissions Budget 2 (2026–2030): 305 megatones (averages 61 megatonnes per year) [in principle] Emissions Budget 3 (2031–2035): 240 megatonnes (48 megatonnes per year) [in principle] Emissions budgets are to be met with domestic action alone. This announcement comes ahead of the Emissions Reduction Plan document to be released next Monday 16th, which in turn will precede the release of "Budget 2022", also to be released next week on Thursday, with climate change mitigation and adaptation expected to be a key theme. The most recent auction monitor report (in relation to the Q1 March auction) has also now been released, revealing that, on the face of it, 50% of volume sold at auction was to entities with a compliance obligation in their own right. Of interest is that the top five successful bidders took away 78% of the approx 10.5 m NZUs sold, with the top single buyer accounting for 35.4%, though of course all such buyers might well have been buying for a number of other entities. .jpg)
FGR and Minister announce Precision Silviculture Plans
Technical innovation to revolutionise forestry Precision Silviculture Program approved for joint
Government and industry funding – An innovative high-tech approach to forestry management is set to
transform New Zealand’s forestry industry, Forestry Minister Stuart Nash and Agriculture Minister Damien
O’Connor announced last week.The Government is backing Precision Silviculture, a $25.5 million, seven-year programme led by Forest Growers Research. “The investment is part of the Government’s wider plan to provide economic security to workers and businesses, with higher skilled and high-wage jobs that support a low- emissions economy” said Stuart Nash. “Silviculture is about controlling the composition, structure, growth and quality of a forest. It is essential to manage and create value from our plantation forests however it has remained a highly manual and labour-intensive work practice. “We’re investing $10.2 million from the Ministry for Primary Industries’ Sustainable Food and Fibre Futures fund (SFF Futures) to enable the forestry industry to switch to the latest silviculture technology. “The programme will focus on developing mechanisation, automation, digital technology and robotics in the silviculture value chain. This will have a major impact on the key silvicultural areas of planting, pruning and thinning, as well as in-nursery activities.” “The innovative use of technology offers multiple benefits for the forestry sector. It will make silviculture work safer, more productive and more attractive to workers. The programme includes re- training workers to match the transition into high-tech jobs. “It will also enable the forestry workforce to create higher-value products more efficiently. Advancements in mechanisation and precision automation will make the recovery of forest waste more financially viable. This will unlock potential to use biomass waste in new manufacturing chains. This could include biofuels and biodegradable alternatives to plastic products, such as disposable cups and packaging.” Agriculture Minister Damien O’Connor said the timing is right for this programme. “A large number of forests planted in the 1990s are due for harvesting in the mid-2020s, so it’s an ideal time for this overhaul,” Damien O’Connor said. “It’s estimated that in total the programme has the potential to deliver $530 million of value to the plantation forestry sector and $190 million worth of innovative technology sales between now and 2035. Other benefits will be an improved pruned log supply for domestic wood processors, and use of the technology in indigenous forest establishment. “This SFF Futures investment will enable the forestry industry to evolve at a pace that wouldn’t otherwise be possible. The programme fits with our Fit for a Better World roadmap for the food and fibre sector, which aims to boost sustainability, productivity and jobs over 10 years. The roadmap will help drive our economic recovery from COVID-19. “We look forward to working with FGR to build a sustainable, profitable and internationally competitive forestry sector that delivers higher economic returns for New Zealand,” Damien O’Connor said. The key workstreams are: 1. Nursery - creating value by improving efficiency 2. Planting - creating value by mechanisation 3. Pruning - creating value by mechanisation 4. Thinning - reduce reliance on manual labour. SnapStat: Long-term price trend for A-grade logs  Tigercat releases 635H Swing Boom Skidder
The ultimate skidder for extreme terrain and cable assisted logging operations. The capabilities of the six-wheel drive 635H in steep terrain and cable assist applications have been taken to the next level with the integration of a Tigercat designed and built swing boom system initially introduced on the 635G series skidder. The additional working envelope and ability to position the grapple well outside of the working track of the machine increases productivity in applications where skidder travel is restricted or limited by terrain characteristics. With the ability to lock the seat and operate the machine from any position with full drive controls, the Tigercat Turnaround® 220° seat is an important advantage for swing boom skidding applications. It allows the operator to position the seat at any rearward-facing angle to align the field of view to the working area of the grapple. The slew system at the base of the boom is field-proven, using components that are common to Tigercat track machines. In addition to the increased working envelope, the boom has a more powerful lifting capacity compared with a conventional dual function arch. For cable assisted applications, the skidder can be factory-equipped for tethering with optimally positioned frame lugs and through-the-blade cable routing. The lugs attach to the frame structure behind the front axle, closer to the payload. More >> Source: Tigercat .jpg) Wood trade set to change dramatically(Wood Resources International) Trade of logs and lumber in Europe will change dramatically in the coming years as timber harvests in Central Europe decline and the sanctions against Russia result in a plunge in forest products imports.Central European roundwood markets are at a turning point. Over the past four years, forests have suffered extensive damage from a spruce bark beetle outbreak in much of the region, leading to temporary increases in harvesting, lumber production, and log exportation. The infestation in the Czech Republic and Germany has resulted in record-high timber harvests over the past few years. As a result, from 2017 to 2021, annual roundwood removals were up 15% and at an unsustainable level. The amount of timber damaged by bark beetle peaked in 2019, falling by 5% in 2020 and 24% in 2021. The volume of damaged wood is expected to fall at 10-20% per year, reverting to close to long-term average levels by 2025. A new Focus Report, Central Europe Roundwood Markets – Softwood supply outlook provides oversights on how Central European timber supply will evolve through 2030. It also covers implications for forest industries in the region and the likely impact on global softwood log and lumber markets. The surge in wood supply has been absorbed by domestic sawmills (~60%) and increased export of sawlogs and pulplogs (~40%). Additional wood supply at competitive prices has helped the Central European sawmill industry expand, taking advantage of strong lumber markets in Europe and globally in 2020-21. Also, increased sawdust and woodchip supplies from sawmills have enabled wood pellets and panels production growth. With the timber harvests having peaked, exporters and consumers of logs will need to adjust to a reduced supply of softwood logs in the coming years. Central European lumber production will decline from current record levels, and the region may shift from being a net log exporter to becoming a net importer again. Furthermore, Russia's invasion of Ukraine has resulted in sanctions in the importation of practically all forest products from Russia and Belarus to Europe, which included almost six million m3 of logs and nine million m3 of softwood lumber in 2021. The reduced timber supply in Central Europe and Russia's invasion of Ukraine will impact European industry production, trade flows, and forest products prices for many years to come. Sawmills will need to renew focus on conversion yield and small-diameter sawing capabilities, fiber industries should consider alternative species and wood fiber sources, and forest owners would benefit from more intensive forest management. In addition, international markets will need to adjust to the reduced supply of European softwood log and lumber exports. More >> Source: Wood Resources International MyKomatsu brings visual data to contractors
With Komatsu’s new digital hub, My Komatsu, contractors can get easy-to-interpret visual analyses of
data collected from numerous sources displayed on easy-to-read dashboards. It’s designed to collect,
visualize and monitor telematics data from Komatsu and non-Komatsu machines.Customers can get the most important telematics data, such as location, hours, fuel consumption, idle ratio and production, from My Komatsu for many of the other brands of equipment they may operate. If they enter the ISO 15143-3 API credentials for those brands into My Komatsu, they will no longer need to log into each OEM’s system separately each day. The system has been designed to make it easy to collect, visualize and monitor telematics data from both Komatsu and non-Komatsu machines.
More >> .jpg) Sweden: Airforestry electric drone for forest thinning
(Sweden)Airforestry has been in stealth mode since the start of 2020 - But now they finally reveal
their pioneering technology for forest management.“We have been working in secret for almost two years and already have paying customers among Europe’s largest forest owners. But now it’s time for our public launch. We want to tell you about our concept, which is to thin trees from the air with electric drones “, says Caroline Walerud, who is co-founder and chairman of Airforestry, which has 13 employees in Uppsala. There are several advantages of the technology – and its 6 meter wide drones – she says. “You reduce the climate footprint, avoid back roads and heavy machinery, and get healthier, more vital forests. The forest’s carbon dioxide uptake is increased. In addition, you get rid of half as much energy per thinned tree “, she says. Caroline Walerud is also a partner at Walerud Ventures, which accounted for half of the approximately SEK 9 million in venture capital that Airforestry has raised so far. The rest come from a number of well-known business angels: Alfred Ruth, who co-founded Videoplaza, Malin Carlström, who is venture manager at ABB Electrification, Anders Ösund, who is head of technology and innovation at Combient in the Wallenbergsfären and Andy Johnston, who is a partner at Brightly Ventures. Airforestry has also received SEK 12 million in grants from Vinnova within the framework of a project with a total budget of SEK 30 million. The drone - Their high- capacity drone is 6.2 meters in diameter. With it, we are building the forestry of the future. With the drone, trees can be thinned from the air and then transported to the nearest road. We design according to a development process that includes traceability. It has a specially designed structure in carbon fiber and angled rotors, to achieve the precision flying necessary to carry the tool and tree. Here you see the drone together with the team that put it together for the first time in October 2021. The harvesting tool A 60 kilo light harvesting tool is carried by the drone to the selected tree. Once in place, the tool grabs the top of the tree, hugs it, prunes off the branches on the way down and then saws off the trunk. Thereafter, the tool secures the tree so that the drone can carry it all the way to the nearest road. This is a completely new way of thinning forest. More >> Source: Airforestry -revised-dates-July_(1).jpg) BMO: Update and reporting on Rayonier Q1
BMO on Rayonier New Zealand (NZ). Disappointing. Adj. EBITDA $10.4mm; BMO at $16.3mm. 1Q harvest vols -14% y/y (export -14.4%, domestic -13.6%) due to Chinese port congestion/high inventories. Chinese COVID lockdown also a factor. Chinese inventories remain above normal. Weighted avg. prices were below expectations at $96.59. Source: BMO Capital Markets, Canada, Mark Wilde, PhD • Timber & Wood Products) Tasmania for forest R&D national instituteThe University of Tasmania in Launceston will be home to a trailblazing new National Institute for Forest Products Innovation (NIFPI) that will position Australia as a world leader in timber and wood fibre R&D after the Federal Labor Party matched the Coalition’s $100 million pledge.Prime Minister Scott Morrison, Assistant Minister for Forestry and Fisheries, The Hon Jonno Duniam, and Member for Bass Bridget Archer came out first three weeks ago, announcing that a re-elected Coalition Government will deliver $100 million over five years for the NIFPI, to be headquartered at the University of Tasmania in Launceston. The announcement followed a detailed feasibility study by the Federal Government through the latter half of last year. Last week at the Australian Forest Products Association’s (AFPA’s) National Forest Industries Election Forum, Shadow Minister for Agriculture, The Hon Julie Collins confirmed that Federal Labor would also back the NIFPI with a $100 million commitment over five years. University of Tasmania Vice-Chancellor Professor Rufus Black said the NIFPI would support a future where forestry can make its critical contribution to meeting the challenges of climate change. “It will enable us to build buildings that are carbon sinks and create products from wood fibre that are sustainable and circular. As evidenced by our number one ranking for Climate Action in the Times Higher Education Impact Rankings for 2022, our university is deeply committed to a sustainable and circular society and economy and wood has a big part in that future.” AFPA Chief Executive Officer Ross Hampton said the new NIFPI will be the biggest boost in forest industries research and development in decades, with industry to provide additional funding and in-kind support on top of the $100 million. The new NIFPI will build on the success of three pilot NIFPI centres – in Launceston, Mount Gambier in South Australia and in Victoria’s Gippsland – which were jointly funded by the Federal Government, state governments and industry. More >> Source: University of Tasmania RTG: How big is BIG in the lumber business(Russ Taylor Global) British Columbia, Canada can boast some of the largest lumber companies in the world - In fact, the two largest players West Fraser and Canfor are neck-and-neck for top spot in the world, each with over 7 billion bf (11.2 million m3, net) of capacity. Of the top 14 North American companies that have over 1 billion bf of capacity, eight of these are based in Canada and five are headquartered in BC: West Fraser, Canfor, Interfor, Tolko, and Western FP; and all have operations in the US. Lurking below the 1 billion board foot threshold is Teal- Jones; I expect that they will make the list in a couple of years when their five US South sawmills are all in operation.In terms of lumber companies outside of North America, there are 12 companies that also have capacity greater than 1 billion board feet (1.6 million m3, net). The four largest are: Stora Enso, Finland (4.9 million m3); binderholz, Austria (4.8 million m3 includes Klausner USA & BSW); Segezha Group, Russia (3 million m3; includes IFR); and Mayr-Melnhof Holz, Austria (2.9 million m3; including Bergkvist). There is one clear trend in the lumber business: consolidation is continuing, and the big companies continue to grow and expand almost exclusively in their own continents. And with higher prices, lumber companies’ war chests will continue to grow even faster to take on more acquisitions and/or capital investments. More >> Source: Russ Taylor Global 1.jpg)
... and finally ... a little subtle humour for you
So I'm heading to Greenwich later tonight. That's all for our mid-week wood news roundup. We welcome comments and contributions on WoodWeek. For details on advertising for positions within the forest products industry or for products and services, either within the weekly newsletter or on this web page, please contact us.
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