WoodWeek – 21 June 2017

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Greetings from your WoodWeek news team. New Zealand structural log prices have hit their highest level in more than two decades as local mills compete with the export market to secure supply to meet demand from the domestic market. This new plateau in log prices comes as the Ministry for Primary Industries used the Fieldays show last week at Mystery Creek to release their annual primary industries update report. The latest Ministry for Primary Industries’ Situation and Outlook for Primary Industries (SOPI) shows strong growth in the forestry sector.

“Forestry exports are expected to grow 6.4 per cent to $5.5 billion in 2017, before increasing further to $6.3 billion by 2021 as increased volumes of wood become available for harvest,” Associate Primary Industries Minister Louise Upston says.

News of our record log prices coincides with the biggest logging event of the year taking place this week in Rotorua – our FIEA “HarvestTECH” conference and associated logging innovation field trips. The sold out conference and tours have drawn well over 440 people from up and down the country and Australia as well. One of the speakers who made the biggest impact has been “Doctor Tom on a Mission”. Dr Tom's laughter-inducing inspirational presentation focused on the importance of the health and wellbeing of our people.

If your livelihood is in forestry, it’s no secret that China's financial well-being is critical to our continued log export earnings. Nothing would turn our fortunes around faster than a slowing of growth or a sudden reduction in China's industrial output. So, it's handy that ANZ have put together an easy to follow update on China's risk profile. Even better - it's in five simple charts. Enjoy!

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NZ structural log prices - 20 year high

NZ structural log prices hit highest level in more than two decades - New Zealand structural log prices have hit their highest level in more than two decades as local mills compete with the export market to secure supply to meet demand from the domestic market.

The price for structural S1 logs lifted to $124 a tonne this month from $123 a tonne last month and $114 a tonne at the same time last year, reaching the highest price for the grade since April 1994, according to AgriHQ's monthly survey of exporters, forest owners and saw millers.

"The New Zealand domestic log market has slowly but consistently risen this year, and the past month was no different," AgriHQ analyst Reece Brick said in his report. "Supply and demand fundamentals remain skewed in favour of sellers rather than buyers, squeezing even more returns out of harvested logs."

The market remains strong for most segments of the domestic industry, even as the volumes traded slowed when winter weather stymied construction activity, AgriHQ said, noting that local wood supply had been hampered due to difficulties harvesting in wet weather. While strength in the local housing market is helping stoke demand, the main driver behind higher domestic prices is that export markets are draining supplies out of New Zealand, the report said.

"Domestic mills are in a tug-of-war with export log traders for unpruned logs and are facing the prospect of further hikes in log procurement costs," Brick said. "A large portion of mills are still paying below the export market for logs. Log suppliers are currently attempting to gauge mills ability to absorb higher log prices.

"All signs suggest more increases are on the cards."

Prices in the log market are heavily reliant on Chinese demand, which is expected to hold in the medium term after the Chinese government introduced restrictions on logging native forests and reduced tariffs on imported logs to 11 percent from 13 percent to discourage the use of native wood, AgriHQ said. Other major markets including India, Japan and South Korea are also looking positive, the report said.

"The export log trade has only improved, though not drastically," Brick said. "Key components of the wharfgate log price either held their ground or improved through May and early June."

New Zealand exported 1,666,639 cubic metres of logs in April, up 3 percent on March volumes and 21 percent higher than a year earlier. Some 72 percent of the volume was exported to China.

"The volume exported in April is one of the largest amounts exported in the last 10 years and is only surpassed by August 2016," Brick said.

The value of log exports is expected to climb to $2.66 billion this year from $2.22 billion last year and reach $3.14 billion in 2021, according to the latest Situation and Outlook for Primary Industries published by the Ministry for Primary Industries last week.

Forest products are New Zealand's third-largest commodity export group behind dairy and meat products.

Source: BusinessDesk via Scoop

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MPI industry report: Global demand up

Global demand fuelling forestry export growth says MPI - Strong demand from key markets is driving up export growth in forestry products, Associate Primary Industries Minister Louise Upston says.

The latest Ministry for Primary Industries’ Situation and Outlook for Primary Industries (SOPI) shows strong growth in the forestry sector.

“Forestry exports are expected to grow 6.4 per cent to $5.5 billion in 2017, before increasing further to $6.3 billion by 2021 as increased volumes of wood become available for harvest,” Ms Upston says.

Strong demand for logs and sawn timber from key markets such as China and the US are keeping prices high while favourable exchange rates are also contributing to strong returns for exporters, the SOPI shows.

Demand is expected to remain strong, as increased construction activity in China and the US, combined with China’s bans on harvesting native forest should ensure continued demand for New Zealand logs and sawn timber.

“With a bright outlook for forestry production and exports, the Government continues to invest in improved harvesting techniques. This investment is primarily through the Steepland Harvesting Primary Growth Partnership programme, which also encourages afforestation by allowing previously unsuitable land to be planted with production forestry,” Ms Upston says.

Planting is encouraged through other programmes such as the Afforestation Grants Scheme, the Erosion Control Funding Programme and the Sustainable Land Management and Climate Change research programme.

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China’s risk-profile shift in five charts

If your livelihood is in forestry it is no secret that China's financial well-being is critical to our continued log export earnings. Nothing would turn our fortunes around faster than a slowing of growth or a sudden reduction in China's industrial output.

So, it's handy that commentators on the ANZ Bank team have put together an easy to follow update on China's risk profile. Even better - it's in five simple charts. Enjoy!

New data show China’s price-driven recovery which came on the back of the commodity super rally in late 2016 is starting to lose steam.

A decline in new orders underpinned by falling input prices supports ANZ’s forecast for a softening of momentum in the rest of 2017.

Source: Raymond Yeung, Chief Economist Greater China, ANZ

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HarvestTECH draws excellent feedback

Today is the second day of conference sessions in our biennial series - the FIEA “HarvestTECH” 2017 conference and associated logging innovation field trips. The sold out conference and tours have drawn well over 440 people from up and down the country and Australia as well. One of the speakers who made the biggest impact has been “Doctor Tom on a Mission”- whose laughter-inducing inspirational presentation focused on the importance of the health and wellbeing of our people.

Dr Tom Mulholland, Emergency Department doctor, best-selling author, TV and Radio Talk Show host, former NZ Forest Service trainee & International Keynote Presenter. He also has a regular column in our major Sunday national newspaper.

Dr Tom’s session looked beyond shiny felling heads and harvesters to focus on growing healthy people within your forestry or contracting business. He also headlined our after- dinner presentation last night.

So, just who is Dr Tom? Dr Tom Mulholland is an emergency department doctor and GP with over 25 years’ experience in New Zealand. He has worked in Kaitaia Hospital in the North to Southland Hospital and the Sub Antarctic Islands as a doctor. He has worked in Tologa Bay, Chatham Islands, Papamoa in the east to Raglan, Taranaki and Greymouth in the west. He has hosted his own TV and Radio shows, written two internationally best-selling books and been a professional speaker to the likes of Google, Microsoft and Hilton for the last 10 years.

Dr Tom Mulholland, or ‘Dr Tom’ – has made it his personal crusade to save people from preventable chronic diseases. He’s been actively engaging with the forestry industry – out on site and parked up in his ambulance in small forestry towns. His mission, to offer free health checks to forestry workers. In the past 2 years of touring NZ in a retro Chevy V8 ambulance (and over 25 years as a Hospital Emergency Department Doctor and Rural GP), the rates of uncontrolled diabetes, high blood pressure and heart risk are the highest he has ever seen.

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WorkSafe focus on excavator safety

Communication is critical to excavator safety - The critical importance of following industry guidelines and adequately assessing hazards and risks in the workplace was highlighted in today’s judgement of a large drainage contractor after an employee was run over by an excavator.

Hydrotech Limited pleaded guilty to one charge under section 6 of the Health and Safety in Employment Act (1992) for failing to take all practicable steps to ensure the safety of its employees.

WorkSafe New Zealand’s investigation found that the company failed to carry out an adequate hazard and risk assessment for the task and did not identify appropriate control measures and communication systems, exclusion zones and a spotter.

Since the event the company has made some significant changes:
> the responsibility for filling in the on-site hazard register is now rotated through all staff, giving everyone a turn at identifying and mitigating risks on-site
> in-house training is run on a regular basis, ensuring their workers have continued education and staff are expected to present projects on the hazards and the controls that they identified.

“The company is to be applauded for the positive changes, but it should not have taken a life-changing incident to spur the company to change. Some very simple changes on the day would mean that the employee would have the full use of his legs today. Following industry guidelines would have removed the need for anyone to work close to the machine,” said WorkSafe Chief Inspector, Keith Stewart.

Notes:
Hydrotech Limited pleaded guilty to charges under s6 of the Health and Safety in Employment Act (1992). Note: the incident took place prior to the introduction of the Health and Safety at Work Act 2015.

Hydrotech Limited was fined $48,875.00.

The company had agreed to pay $50,000 in reparations to the victim at an earlier restorative justice hearing. The company also paid a further $3,500 as a debt clearance payment and paid 20 percent of his pre-incident earnings to top up his ACC payments.

The company has also undertaken to retrain the victim to enable him back into full employment with the company.



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Deere introduces narrower stick booms

John Deere introduces Narrower Stick Booms for M-Series Tracked Harvesters - To help loggers maximise timber quality, John Deere has upgraded its harvester stick boom attachment across all 800MH- and 900MH- Series tracked harvesters. The new stick boom geometry delivers the same high level of boom envelope performance, but with a narrower design to help operators minimise damage to harvested trees.

"Avoiding unnecessary damage to harvested trees while operating out in the field has always been a major concern for the industry. When tree damage occurs, it greatly reduces the value of the logs," said Brandon O'Neal, Global Product Marketing Manager, John Deere. "The narrower boom allows loggers to significantly reduce boom to tree contact, resulting in higher quality logs and a better bottom line."

The new boom stick is 122mm (4.8 inches) narrower at the attachment end than the existing booms, reducing contact with the harvested tree. This narrower boom uses the standard Waratah supplied dog bone adapter for traditional external hose routing. A new, narrower cradle supplied by Waratah will continue to offer customers with an optional through-the-nose plumbing solution.

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OneFortyOne nursery continues growing

Growing nearly 8 million trees for one season’s planting program is no mean feat, and staff and local contractor workers at OneFortyOne’s Glencoe Nursery in Victoria, Australia have been working hard to deliver that amount of trees.

Over the past 12 months, OneFortyOne has invested in both equipment and infrastructure at its Glencoe Nursery to improve safety for all workers on site. However, this investment has not only improved safety, but productivity too. It has enabled OneFortyOne’s staff to grow more than 5.2 million pine trees ready for planting on its own forests, and more than 2.6 million pine trees for other forest owners this year.

This will be the third year in a row that OneFortyOne Plantations has grown such large numbers of trees to be used across its Green Triangle forests. By the end of this year’s planting season, OneFortyOne’s highly experienced Estate team and contractor partners will have planted more than 10,000 hectares of pine plantation in the region. This year’s program is estimated to be just over 3,100 hectares at 31 different areas ranging from Noolook in the north through to Donovans in the south.

OneFortyOne’s Estate Manager, Justin Jagger, said “Our re-establishment process is vital to the sustainability of the forestry industry in this region, supporting jobs directly and indirectly in all areas from the growing, harvesting, and transporting through to the processing of the end product. Staff on the ground are feeling excited and energised about the winter work to be done."

OneFortyOne’s Area Forester, Terry Higgins, said “We do have another big planting program ahead of us for the next few months, but we are proud of what our team has achieved over the past 12 months to get the sites ready for this year’s planting. A lot of hard work goes in to re-establishment, but it is worth it when we see how important it is for the sustainability of our industry and region."

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Tallest US timber building gets the tick

Tallest Mass-Timber Building in US Receives Approval for Construction - Last week Today, the Framework Project has received approval for a building permit, allowing construction to begin on the tallest wood high-rise structure in the United States. Portland-based LEVER Architecture designed the 145-foot- tall tower, which Portland mayor Ted Wheeler called “a true technological and entrepreneurial achievement.”

The mixed-use building will contain office space, street level retail, and sixty units of affordable housing. A collaboration between developer project^, Home Forward, Albina Community Bank, and Beneficial State Bank, Framework aims to promote economic opportunity through sustainable building practices. Governor Kate Brown praised the project for demonstrating how timber construction can create jobs in rural economies. “Oregon’s forests are a tried and true resource that may again be the key to economic stability for rural Oregon,” she said in a statement.

The 12-story tower was one of two projects that split the $3 million U.S. Tall Wood Building Prize, sponsored by the U.S. Department of Agriculture, the Softwood Lumber Board, and the Binational Softwood Lumber Council. The building permit was approved following a series of stringent fire, acoustic, and structural tests that validated the resilient structural design meets fire life-safety standards.

Constructed with cross-laminated and glue-laminated timber, Framework also contains so-called “rocking wall”—an innovative core system of vertical CLT panels and post-tensioned cables that allows the building to withstand an earthquake with minimal damage.

Construction on Framework is planned to begin in mid 2017 and be completed by late 2018.

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Open source wood initiative to grow market

Metsa Wood Launches 'Open Source Wood' - A pioneering open innovation project to accelerate growth in large scale wood construction.

Metsa Wood's Open Source Wood initiative is a call to action to architects, designers and engineers to join forces, share innovation and contribute knowledge about large-scale, modular wood construction. By creating an open innovation platform around modular wood construction, Metsä Wood's aim is to connect the local wood construction industry with global knowledge to facilitate collaboration and growth.

Today the construction industry is dominated by two materials - steel and concrete. Only a fraction (5-10%) of global urban construction is wood, due in part to the fact that the industry is fragmented and local. Wood, however, is an optimal material for urban construction as it enables faster building processes; its lightness leads to more affordable structures and it is the most environmentally friendly building material, battling climate change through carbon storage. Metsä Wood's Executive Vice President, Esa Kaikkonen, explains: "Not enough knowledge about modular wood design and building is shared, so wood construction remains niche. There is plenty of innovation but it is difficult to find, so Open Source Wood is our solution. We believe that with open collaboration the industry can achieve significant growth."

Inspired by open source ideology - The initiative takes its inspiration from open source ideology, championed by the software industry, to drive innovation further and faster, and to increase speed to market.

Metsä Wood is taking the first step by sharing its own intellectual property for modular Kerto® LVL wood elements, making them available freely for everyone.

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Source: MetsaWood

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Carbon market update

NZU Update - NZUs have regained ground and are bid and offered $16.55 and $16.65 respectively on Carbon Match, with yesterday's last trade at $16.60.

More sizeable parcels have been harder to find, however. In particular, most forestry sellers say they're sitting tight in hope of higher price levels emerging, with many stating that $18 or north represents the level at which they'll consider showing more interest.

The market trundles along at much lower levels, perhaps suffering from the dearth of information. As we approach the mid-year there is still no word on the findings of "stage 2" of the ETS review. With a general election set for September 22 it remains to be seen whether the ETS, or more generally New Zealand's Paris commitments, will come more starkly into the political fray.

Meanwhile the NZ Productivity Commission, as tasked by the Minister of Finance, has begun its stakeholder engagement to "identify options for how New Zealand could reduce its domestic greenhouse gas emissions and transition towards a low emissions future, while continuing to grow incomes and wellbeing".

The inquiry, which is to build on stage 2 of the ETS Review, will not be reported to Ministers until 30 June 2018 and will focus not only on technological potential but also on how our regulatory, financial and institutional systems might better serve this "have our cake and eat it" aim.

Source: Carbon Match - open 1pm-5pm every weekday.

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Thanks to FICA Sponsors

We would like to thank all of the organisations who support FICA, which in turn works to promote business growth and improved safety and efficiency amongst forestry contractors for the benefit of New Zealand's Forestry Industry.

STRATEGIC PARTNERS
















MEMBERS' BENEFITS – BUSINESS PARTNERS
Blackburne Group (Accountancy & Management Services)
UDC Finance (Banking & Asset Finance)
Sweeney Townsend Insurance Brokers (Insurance Services)
TLC Insurance (Insurance Services)

GOLD SPONSORS
Cableprice NZ Ltd
Mini-Tankers (Z Energy)
Komatsu Forest NZ
Shaw's Wire Ropes
Pirtek
Crediflex
STIHL
Woodsman Pro
Madill
Beker Findlay Allan
Minter Ellison Rudd Watts
Ensign
Bridon Cookes
EMS
DC Equipment
Makita

SILVER SPONSORS
Blackwoods Protector
Trinder
Total Lubricants
Active Equipment
Manage Company
Aegis Oil

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... almost finally ... it's wood but weird

Two Guys Built A Nature-Themed Motorcycle Completely Out Of Wood That Runs On Algae Oil - A major pain for any car or bike enthusiast isn’t that the parts are hard to come by or minor scratches can ruin the pristine loo. It’s that rising fuel prices make it considerably more expensive to use a modified vehicle to commute, let alone make joyrides. So what if you could modify your ride to not need expensive fossil fuel at all?

Two Dutch innovators, designer Ritsert Mans and scientist Peter Mooij, teamed up to do just that – modify a motorcycle so it doesn't need to run on petrol. However, the alternative they chose wasn't electricity or solar power; instead they went with fuel made from algae.

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Jobs


Buy and Sell


... and finally ... think about it

A guy walks into a post office one day to see a middle-aged, balding man standing at the counter methodically placing "Love" stamps on bright pink envelopes with hearts all over them. He then takes out a perfume bottle and starts spraying scent all over them.

His curiosity getting the better of him, he goes up to the balding man and asks him what he is doing. The man says, "I'm sending out one thousand Valentine cards signed, 'Guess who?'"

"But why?" asks the man.

"I'm a divorce lawyer," the man replies.

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One day while jogging, a middle-aged man noticed a tennis ball lying by the side of the walk. Being fairly new and in good condition, he picked the ball up, put it in his shorts pocket and proceeded on his way.

Waiting at the cross street for the light to change, he noticed a young woman standing next to him smiling.

Noticing the rather distinct bulge she pointed and asked, "What's that?"

"Tennis ball," the man said, smiling back.

"Wow!" said the woman looking upset. "That must hurt. I once had tennis elbow and the pain was terrible!"

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A tourist on a diving charter off the coast of Florida asks the blond dive master: "Why do scuba divers always fall backwards off their boats?"

To which the blond replies: "Think about it! If they fell forward, they'd still be in the boat."



Have a safe and productive week.

John Stulen
Editor

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