WoodWeek – 24 January 2018

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Greetings from your WoodWeek team. Plenty of news of the wood variety this week. It's not all good news, but there are plenty of challenges for our industry.

First up, Treasury is looking like the bad guy having allowed only a very short time frame for a debate about including forestry rights as 'sensitive land' in proposed changes to the Overseas Investment Act rules. This comes after an election campaign where that was originally declared off the table, I seem to recall. It appears the Government's desire to get the modified free trade agreement ratified is behind the change of heart. They wouldn't be able to change the rules after ratification. Understandably, the Forest Owners Association has come out against the change.

Moving to some independent commentary from ANZ economist Con Williams who puts the issues around foreign direct investment clearly and without political bias:
”The role of foreigners investing in New Zealand industries is not a simple matter, but when you look at the facts that investment is substantial and now quite important to our ability to pay our way in the world every day but earnings from our exports.”

Meanwhile, also with some irony since the election campaign, fortunes have turned after more than 20 very positive years for Juken New Zealand. They are grappling with market downturns in Japan for their specialised wood products. Since the company announced talks yesterday morning, the union and media sources have been a bit more specific on the challenge with "up to 100 jobs to go as Gisborne mill struggles against international competitors" to quote them.

STOP THE PRESS - We have positive news for the East Coast with an announcement from Activate Tairawhiti, New Zealand’s newest economic development agency. It was established in 2015 with the support of local business leaders, Gisborne District Council and Eastland Community Trust. This came in just minutes before we released today's issue.

Back at the wharf, things continue trending upward. The price for A-Grade export logs reached $129 a tonne, up from $128 a tonne last month, and $127 a tonne the month earlier, marking the highest level since AgriHQ began collecting the data in 2008, according to the agricultural market specialist's monthly survey of exporters, forest owners and saw millers. All of the main log grades tracked by AgriHQ either held steady or lifted as much as $2 a tonne on the previous month, AgriHQ said.

New Zealand is experiencing strong demand for its logs from China, which has clamped down on the harvesting of its own forests and reduced tariffs on imported logs to meet demand in its local market. AgriHQ said Chinese demand for New Zealand logs remained just as firm as previous months, and is set to hold that way until at least the Chinese New Year in February next year.

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Short time for forestry OIA debate

Treasury: Including forestry rights as sensitive land under OIA - The Government is interested in including forestry rights (often referred to as cutting rights) as sensitive land under the Overseas Investment Act. The Treasury is inviting submissions before 26 January on this proposal to help inform advice.

The compressed timeframe for consultation is driven by the need to ensure that any changes the Government decides to make could be in place before the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) enters into force to ensure transparency and certainty.

The timing of when CPTPP enters into force is currently unknown because it is dependent on other CPTPP partners which, like New Zealand, will need to complete their own domestic procedures following signature of the agreement.

A copy of the consultation document is attached.

Read the Treasury Forestry Right Discussion Document

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Forest owners against OIA change

The Forest Owners Association has send a clear message that their members are against the proposal the Overseas Investment Office should approve or decline sales of forest cutting rights.

The FOA says it would jeopardise the government’s ambitions of both seeing a billion trees planted and of meeting its Paris Agreement obligations to reduce carbon emissions.

Treasury has invited submissions on a proposal to expand the scope of the OIO to include forest cutting rights for blocks of forestland larger than 50 hectares.

But FOA President Peter Clark says overseas investors will look elsewhere if cutting rights came into the OIO.

“We entirely get the idea that any investment into New Zealand is a privilege. We know and accept that overseas investors who wish to buy or lease substantial areas of land in New Zealand to plant trees for harvest have to go through the OIO application process.”

“But this proposed change of direction goes well beyond land ownership into another interest entirely.”

“The government issued a ministerial directive to the OIO back in late November. The directive separated approval criteria for forestland from that for farmland.”

“That separation was a clear signal that the government believed it was vital to attract investors to plant some of the extra 50,000 hectares of land a year which would be necessary to meet the government’s own billion tree target.”

The ministerial directive for forestland told the OIO to give high relative importance to the criterion for an investment which would ‘advance significant government policy’.

“This is a crucially important message” says Peter Clark. “This criterion was specifically not applied by the government to the sale of farmland.”

“The purpose and message of that ministerial directive was clearly to get enough investment in tree planting to use plantation trees’ ability to lock up large volumes of atmospheric carbon. This quality applies to every tree which is planted in every forest - not just by some investors, in some places, at some times.”

“Planting trees is the only feasible way, at the moment, the government can meet New Zealand’s commitment to reduce greenhouse gas emissions. This was the key message from the London based Vivid Economics’ report ‘Net Zero in New Zealand’ last March, as well as from our own Commissioner for the Environment in October 2016.”

“The catch is that there is manifestly not enough available capital in New Zealand, including from the government coffers, to get enough trees planted to reach a climate change target without properly approved overseas investment.”

Peter Clark says it is therefore a shock to see the suggestion of cutting rights revived.

He points to Treasury’s backgrounder to submissions on the proposal. It gives an example of overseas investors offering to commit half of their forest volume to processing within New Zealand, to give themselves a better chance of having their application approved.

“I don’t know how any investor, local or otherwise, could sensibly commit such a volume of their harvest to a local processor more than 25 years into the future, nor how a government could expect that.”

“Nobody knows which or where the local mills might be in 25 years. Nor can they tell what their timber specifications might be and so what sort of management the trees ought to be given to supply to those specifications.”

“At the moment more than half the value of New Zealand forest exports is processed wood products, about $2.8 billion worth. Sawn timber is the biggest component. Processing for the New Zealand market is a large volume on top of that, and that’s where our best quality logs go.”

“These processed exports are worth more than what we earn from log exports. We absolutely do need, and are market committed to, our local processors. We do not need government rules to crystal-gaze market conditions, and terms, in the year 2043 and beyond.”

Peter Clark says even when approvals are granted by the OIO the process has become extraordinarily time consuming and expensive.

“It would not be worth the grief and months of uncertainty to put cutting rights applications in. The investment would go elsewhere and Forestry Minister Shane Jones’ excellent tree planting programme won’t reach its potential.”

“The proposal is inconsistent at another level as well. We don’t see any suggestions of milking rights for dairy farmers going through the OIO. Nor should there be.”

“In November, the government wanted more forest investment and gave the OIO a directive to help achieve this. But now, in January, it is heading in the direction of the same OIO rules thwarting that investment.”

“The Prime Minister stated last August that climate change ‘is my generation’s nuclear free moment and I am determined that we tackle it head on.’”

“Unfortunately, this proposal looks to me like reverse gear, rather than head on.”

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Foreign investment: Two key observations

As usual during election campaigns, many things are said with passion but sometimes without clear context as well. The role of foreigners investing in New Zealand industries is not a simple matter, but when you look at the facts that investment is substantial and now quite important to our ability to pay our way in the world every day but earnings from our exports.

ANZ economist Con Williams puts the issues around foreign direct investment in the attached note clearly and without political bias.

He begins: "Foreign investment, particularly ownership of rural land, is a controversial and emotive topic all around the world.

A huge proportion of NZ's competitive economic advantage resides in our land and the income generated from it. As such, there is strong interest in maintaining local ownership."

> Observation one: this is nothing new
> Observation two: does NZ need it?

Here is a snippet about forest industry investment.

"In the primary sector space, controversy usually arises when a landmark or an ‘iconic’ piece of land is to be sold into foreign ownership."

"What we do know from analysing land transactions approved by the Overseas Investment Office is since 2001 there have been approximately 2,480 in total. These approvals have involved a gross land area of 2.186 million hectares, of which a net 0.958 million hectares - or 44% - was proposed to go into direct foreign ownership."

"While it is unknown whether or not this land was actually sold; whether the foreign investor subsequently became a resident; and/or resold to another foreign investor or a New Zealander, at face value it indicates 15 per cent of the total agriculture and forestry land in New Zealand has involved some form of foreign investment since 2001."

"Splitting approvals by land type shows forestry stands out. Indeed, since 2005 the cumulative gross area approved for foreign investment represents 50% of New Zealand’s total forestry area. The cumulative gross foreign investment approvals for viticulture and pipfruit account for the next highest proportion of their land area, at 27% and 14% respectively."


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Source: ANZ Bluenotes

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New record for log prices

NZ Export Log Prices Hit New Record on Continued Strong Demand From China - New Zealand export log prices edged higher to a new record, buoyed by continued strong demand from China, a weaker currency and historically low shipping rates.

The price for A-Grade export logs reached $129 a tonne, up from $128 a tonne last month, and $127 a tonne the month earlier, marking the highest level since AgriHQ began collecting the data in 2008, according to the agricultural market specialist's monthly survey of exporters, forest owners and saw millers. All of the main log grades tracked by AgriHQ either held steady or lifted as much as $2 a tonne on the previous month, AgriHQ said.

New Zealand is experiencing strong demand for its logs from China, which has clamped down on the harvesting of its own forests and reduced tariffs on imported logs to meet demand in its local market. AgriHQ said Chinese demand for New Zealand logs remained just as firm as previous months, and is set to hold that way until at least the Chinese New Year in February next year.

"Strong and constant demand out of China is the main factor which has pulled wharfgate log prices to record levels," said AgriHQ analyst Reece Brick. A weaker local currency, which had been trading around seven-month lows against the US dollar for most of November and early December, as well as historically low shipping rates had also supported wharfgate log values, he said.

Brick noted that the main issue for the export market at the moment is shipping logistics, with massive volumes of logs heading to the export market creating congestion at ports.

Beyond China, export markets have had mixed fortunes, he said.

In the New Zealand domestic market, trading continued at essentially the same level as a month ago, though some higher prices were reported, he said. This put the national average for structural logs at $129 a tonne, pruned logs at $182 a tonne and roundwood at $97 a tonne.

"Strong housing construction rates continue to underpin wider demand for timber from mills - a situation which is set to remain the norm for at least the medium term," Brick said.

Mills have benefited from consistent wood flows in recent weeks, as dry weather conditions halted any previous disruptions to harvesting, he said.

"All signals point to stable-to-firming domestic log prices through Q1 next year," he said.

Still, Brick noted that rising wharfgate prices over the past 18 months have forced mills to be more price competitive and more mills are battling to make a profit margin, even with strong end-user demand for processed wood.

"Although short-term cash flow is an issue, part of the concern is the mills' inability to invest in new technology," Brick said. "Many are unable to front the cash to invest in more efficient machinery that would allow them to make larger margins on logs. This calls into question the longevity of these mills, especially if there’s no reprieve in competition from overseas traders."

Source: BusinessDesk via Scoop News

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FWPA consults on robotic forestry systems

In December, a workshop was convened by Forest and Wood Products Australia Limited (FWPA) to discuss the current state of robotic systems in the forest sector and identify what activities, if any, should be undertaken in Australia (and possibly collaboratively with New Zealand).

Prior to the workshop, Professor Rien Visser from the School of Forestry, University of Canterbury, was commissioned to undertake an international scan of the current state of robotic systems in the forestry sector. Professor Visser’s report was circulated to participants prior to the workshop and a copy is available here.

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JNL to refocus mill production

Juken New Zealand proposing to re-focus their production. In a media release yesterday the company outlined plans for staff at their Gisborne and Wairarapa wood-processing mills to boost competitiveness and secure their long-term future.

Forestry and wood processing company, Juken New Zealand has now begun a process of consulting employees at its Gisborne wood-processing mill about potential changes to the products made there in order to return the plant to profitability and secure its long-term future.

The Juken NZ mill at Matawhero opened in 1994 and employs around 200 full time employees. The mill processes radiata pine from the company’s East Coast forests to produce a range of solid wood and engineered wood products including plywood, LVL (Laminated Veneer Lumber) and SLVL (veneer) They are sold mainly to the Japanese housing market.

At the same time, the company is also making changes to what it makes at its Wairarapa mill, increasing production of its ‘J-frame’ framing for the New Zealand housing and construction market and decreasing the specialist products made for the Japanese building market. These changes won’t result in job losses for any of Juken’s 222 permanent staff in Wairarapa.

General manager, Dave Hilliard and other senior staff have been meeting local workers to discuss the proposed changes and the reasons for them. He says there’s been a significant drop in demand from Juken’s main export market in Japan for plywood and structural LVL building products in the past few years, which has seen these parts of Juken’s New Zealand processing business operating at a loss.

“The Japanese housing market has been in decline and future demand for these products is not expected to improve because of the ageing population in Japan.”

Hilliard says the company’s plywood is also increasingly unable to compete in the domestic and international markets against product out of large-scale wood processing plants from the likes of China and South America.

“All of our people have worked hard over the last five years to stay competitive, including increasing our New Zealand and Australian sales to reduce our reliance on the Japanese market, invested in a form-ply plant, reduced costs and hours of operation.”

Hilliard said despite these efforts, the mills current Plywood and LVL production capability and product mix doesn’t match the volume and price required by customers – which has led to increasing losses from plywood and LVL production.

“Significant investment would be required to increase to a scale to compete internationally. At this time, there’s just not the log or manufacturing volume of appropriate quality and price to justify that investment.”

The proposals being presented to staff would see the mills return to profitability to keep high-value wood processing jobs and investment in Gisborne and Wairarapa by refocusing on value-add products where there’s strong customer demand and Juken has a competitive advantage, including its premium sawn clearwood products.

“One of Juken’s advantages is that we process timber from our own forests on the East Coast and the Wairarapa. We’re one of the few forestry companies in New Zealand who grow and process our own timber”.

In Gisborne, we’ve invested to move from unpruned logs suited to Plywood and SLVL (veneer) products to a greater proportion of pruned logs suited to higher value clearwood products used for high-end residential and commercial interior cabinetry, furniture, solid doors and feature walls.”

“We’ve also increased our investment in kilns for the Gisborne and Wairarapa mills so we can increase production from the sawline producing these clearwood products.”

“We’re refocusing on producing high-quality solid wood products from both mills.”

“The solid wood saw milling and finishing lines in Gisborne would remain with increased investment over time to allow the mill to process all of Juken’s unique pruned logs from its forests.”

“This investment will likely initially be in log handling and sawmilling, but could expand to include production processes that use the sawmilled lumber products.”

He said if the decision is made to go ahead with the changes in Gisborne the mill would stop producing plywood and LVL products and reduce the manufacture of SLVL (veneer). Around 100 full time positions would remain at the mill.

“We are consulting with staff and will be working closely with them as we work through this proposal”.

“The proposed changes in Gisborne, if implemented, will be difficult for our people, particularly as they come in the New Year. We’ll be working with Government agencies and Gisborne iwi, civic, community and business leaders, over alternative employment opportunities for our people should the changes go ahead,” said Hilliard.

Hilliard said the proposed changes would have no impact on Juken’s forestry operations.

“We are committed to the future of the forest and wood processing industry and to developing our high-value timber processing and innovation business”.

“But, as an exporting manufacturer we have to ensure that our wood processing business is focussed on producing the right high value products to meet changing customer demand”.

The company advised staff that the consultation period in Gisborne would run for two weeks. After that it would consider feedback on the proposed changes before making any final decisions on the future structure and output of that mill.

In other reporting media sources are highlighting "proposed halving cutting the staff at its Matawhero mill from 200 to 100".

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Sources: Scoop News and NZHerald

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Analysts comment on Juken's challenges

Juken New Zealand, a unit of Japan's WoodOne Ltd, is consulting workers at its Gisborne wood-processing mill on a plan that may see it halve the mill's workforce as it struggles to return to profitability in a highly competitive market.

The Juken mill at Matawhero opened in 1994 and employs some 200 full-time employees. It is one of four Juken mills and processes radiata pine to make solid wood and engineered wood products such as plywood, laminated veneer lumber and SLVL (veneer), mainly for the Japanese housing market.

Juken general manager Dave Hilliard said there’s been a significant drop in demand from Juken’s main export market in Japan for plywood and structural LVL building products in the past few years, which has seen these parts of Juken’s New Zealand processing business operating at a loss. To address that, Juken NZ wants to stop plywood and LVL production at the mill and scale back veneer manufacturing, cutting the factory's full-time workforce to about 100.

“The Japanese housing market has been in decline and future demand for these products is not expected to improve because of the ageing population in Japan," he said. He also said the company's plywood is increasingly unable to compete in the domestic and international markets against product out of large-scale wood processing plants from the likes of China and South America.

The latest accounts filed to the Companies Office show Juken NZ reported a profit of $31.1 million in the year ended March 31, 2017 on revenue of $220.4 million with the bottom line flattered by revaluation gains of almost $40 million and attracting a tax bill of $11.7 million. That compared to a profit of $5.4 million on revenue of $219.9 million in the 2016 financial year when revaluation gains were more muted. Gross profit was relatively flat in the 2017 year at $42.7 million, with a greater proportion of sales to related parties in the period.

Juken NZ's Hilliard said "significant investment would be required to increase to a scale to compete internationally. At this time, there’s just not the log or manufacturing volume of appropriate quality and price to justify that investment.”

The local holding company's $343.2 million of plant and machinery was valued at $58.3 million as at March 31, 2017 after accumulated depreciation and impairment charges.

Juken NZ's proposal to staff would see the mills return to profitability to keep high- value wood processing jobs and investment in Gisborne and Wairarapa by refocusing on value-add products where there’s strong customer demand and Juken has a competitive advantage, including its premium sawn clearwood products.

The company is also changing what it makes at its Wairarapa mill, increasing production of its ‘J-frame’ framing for the New Zealand housing and construction market and decreasing the specialist products made for the Japanese building market. These changes won’t result in job losses for any of Juken’s 222 permanent staff in Wairarapa, Hilliard said.

In a separate statement, First Union president Robert Reid said the move was a "bitter blow" for Gisborne workers and the community. "JNL is the only significant wood processor left in Gisborne and its downsizing is a market failure," he said.

The First and E tu unions are meeting with members to figure out to respond and have called on the government "to immediately establish a task force of its agencies with the industry, community and union leaders to implement a wood plan for Gisborne," Reid said.

The staff consultation period will run for two weeks. Juken will then consider feedback before making a final decision.

Hilliard said the proposed changes would have no impact on Juken’s forestry operations. Juken has over 30,000 hectares of sustainably managed and certified plantation forests in East Coast and Wairarapa.

Source: BusinessDesk via Scoop News

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STOP THE PRESS - News from Activate Tairawhiti

Activate Tairawhiti empathises with those affected by yesterday’s announcement from Juken. Juken has been a long-standing employer at Matawhero for well over 20 years. It is a shame that low demand in Japan has forced Juken to scale back its Gisborne plant.

Activate Tairawhiti recognises the importance of wood processing to the region and very much wants to assist Juken with their process by supporting engagement with other industry operators and third-party stakeholders to avoid or minimise the impacts of possible job losses on the region.

But these potential losses should not deter the Eastland Community Trust from its strategy of pursuing a wood cluster or NZ Centre of Excellence for wood processing for Gisborne.

Juken’s issues in the Japanese market are in stark contrast to very strong demand for NZ wood products from other Asian markets and from around the globe. That demand bodes well for the wider industry prospects and with the development of the Prime site in particular.

We are in the final stages of due diligence with a New Zealand-based sawmill operator, which is likely to purchase and recommission the Prime sawmill in the very near future. As part of this process, we completed a full run-up of the sawmill in November with 30 tonnes of logs processed through the green mill. The trial went successfully.

We anticipate being able to release further details over the coming fortnight and expect the operator will create a significant number of jobs on site by the end of this quarter. This is also a critical building block in unlocking future cluster parties and creating further employment on site.

Meanwhile, WET Gisborne Limited (WGL) is within the commissioning phase of its operation, with a long-term view of meeting the domestic market for high value structural lumber. WGL currently employs around 15 staff and, once operational, we expect this to increase to close to 25 with opportunities for further expansion.

We will release the details of our progress at Prime as soon as is contractually possible.

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ANZ Commodity Price Index

The ANZ Commodity Price Index ran out of puff in late 2017 with prices falling a further 2.2% in December. While dairy led the decline (-5.6% m/m) broader based weakness has started to creep in too, with non- dairy components slipping 0.4% m/m in December. The double-whammy for NZD returns was a 0.6% m/m increase in the NZD TWI. This saw NZD commodity prices slide 3.0% m/m in December. This was the largest fall in world and local prices since the current upward cycle in commodity prices began in early 2016.

Combined with the recent surge in oil prices, such dynamics will temper New Zealand’s terms of trade outlook over the first half of 2018. We don’t foresee a collapse, but expect around a 31?2% moderation in the terms of trade from the September 2017 peak. The subsequent improvement in dairy prices during January due to reduced New Zealand supply helps. But we believe further increases will now become more difficult. For most other sectors, the price outlook is steadier at what are mostly historically high local returns. But the moderation in New Zealand’s terms of trade is another indication of a likely more modest economic and employment growth picture in 2018.

A synchronised upswing in global milk supply placed downward pressure on all major dairy product prices in late 2017. Combined with lower seasonal demand, this saw milkfat prices lead the decline in December (Butter -10% & Cheese -11%). Milk powder prices suffered too, but not to the same extent (SMP -1.4% & WMP -2.2%). However, prices have reversed in the New Year as GlobalDairyTrade supply for WMP, SMP and butter were all reduced because of lower milk supply in December.

Meat and fibre prices were mixed in December (-1.8% m/m). Lamb prices increased 1.9% m/m to finish the year 15% higher. While local supply picked-up, low frozen inventories, procurement pressure and demand for speciality occasions (i.e. Easter period) continued to underpin prices. Venison prices remained steady going against the normal seasonal drop-off. Very tight supply, low inventory levels, less wild game competition in Europe and inter- market competition are all providing support. However, beef prices slipped 4.8% m/m as seasonal supply factors (local & US) and the completion of Chinese New Year orders weighed on prices. Coarse breed wool prices continued to struggle (-5.6% m/m), with high local inventories, increased seasonal supply and continued lack of Chinese interest.

Seafood prices eased 0.2% m/m. Small falls in mussels, ling and snapper were offset by marginal gains in hoki and salmon. Horticulture prices ended a solid season 16% higher than where they started. It will be a 3-4 month hiatus before the new season gets underway. Early indications are positive for both kiwifruit and pipfruit, with a fairly empty Northern Hemisphere market and strong economic momentum in Asia.

Forestry prices maintained positive momentum. Wood pulp prices increased 8% m/m, up a whopping 45% y/y. While seasonal inventories are still low and Chinese demand is sufficient to keep the market tight for now, prices may stabilise somewhat as demand appears to be easing. Log export prices inched up another 0.5% m/m with record offtake in China (i.e. high demand) and seasonally low inventories.

Aluminium prices fell 0.7% m/m. Forced production cuts to Chinese smelters are starting to take hold and volatility will likely continue as Chinese authorities pursue better environmental conditions and markets try to untangle the impact across the entire supply chain.



Source: ANZ

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MDF goes retro and outdoors

England - Large scale installations by Alexander Devereux for a sculptural parks in the North East of England, inspired by famous bridges in the region, were fabricated from Tricoya, a specialised MDF for outdoor use.

Devereux used Tricoya MDF on several projects. Unlike ordinary MDF, which is susceptible to swelling and breakdown even from ambient humidity indoors, Tricoya MDF has an outdoor useful life of 50 years, owing to its treatment with the acetylation process. Mounted outdoors as well as indoors, Devereux's works can be seen at England's Cheesburn Sculpture Park's permanent collection; and at Broomhill Sculpture Park in North Devon.

To get the aging metal effect, Devereaux slathered plaster and iron powder onto the Tricoya. A hinge detail measuring 3.5m x 3.5m x 1.5m at shows the stunning effect.

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Source: Woodworking Network

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NZU Update - Carbon Match

NZU Update - Well it has been a sleepy start to the new year, but over the last week NZUs have firmed again. At $21.20 (last trade yesterday) they are up $1 or nearly 5% over the last month.

Is this surprising? For now, we have a closed domestic carbon market, supplied only by new forestry issuance, legacy NZUs and the fairly modest annual allocation received by emissions intensive and trade exposed industry.

Compliance demand is mandated but natural sellers come to the table only when they are ready.

In the year ending June 2017 ETS forests received about 8 million NZUs for potential supply into the ETS. This year might be broadly similar. But for calendar 2018 compliance demand steps up from about 27m in 2017 to perhaps 34m - far outstripping fresh issuance.

Meanwhile our Paris Climate Change commitment (covering the period 2021-2030) is weighty.

As a country NZ needs to find approximately 193m tonnes of abatement over those ten years. This can be either sequestered by forests, physically reduced within our domestic economy, or, potentially, imported, once the door re-opens to international supply from willing countries with reductions they can spare.

But a Cabinet paper released at the very end of last year by Minister James Shaw highlighted that on current settings forestry's contribution will be small..."forecast abatement from forestry would only mitigate approximately 18 MtCO2e across the 2021-2030 period" and "the proposed Billion Trees Planting Programme could lead to between 10 and 30 MtCO2e of additional carbon dioxide being stored".

Against this backdrop and relatively firm log prices it's little wonder that many foresters are holding back, or adopting judicious selling approaches. Things can only get better - can't they?

Careful as you go. As the pressure builds expect attention to remain firmly focused on the role for international carbon markets. There are multiple options to consider. One which stands out is the EU ETS - a long established, deep and well understood market.

Late last year it was announced that the very small Swiss ETS would link with the very mega EU ETS. Not much was made of it - the Swiss carbon price was then around €6.50 and European Union carbon allowances were travelling about €1 higher than that.

With NZUs at NZ$21.20 the differential between EU carbon prices and NZUs is clearly more significant. And all options remain open.

Source: Carbon Match

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China launches carbon market

China has rolled out the world’s largest carbon emission trading market, a milestone that marks the country’s efforts to tackle growing environmental challenges, China’s top economic planning body announced on Dec.19.The nationwide carbon emission trading scheme will start with more than 1,700 companies in the coal-fire power generation industry, which emit over 3 billion tons of carbon dioxide in total each year, said Li Gao, Chief of Climate Division under the National Development and Reform Committee, at a press conference of the launch event.

In the carbon cap-and-trade program, a regulatory body sets a maximum national “cap” on greenhouse gas emissions, which include carbon dioxide and five other major gases, and are measured in terms of carbon dioxide equivalent. Each company in the trading market will be given a quota on the amount of greenhouse gas it is allowed to emit and can trade its unused quota to others for profits, Li explained.

Companies in this way can be encouraged to lower its emission amount as much as possible and shift its business model to a more environmental-friendly way, Li said. China, one of the world’s largest emitters of greenhouse gases, has spent 15 years scouting the globe to learn from the mistakes of other nations and find the best ways to build a trading system of its own.

Since 2011, China has kicked off seven pilot programs in two provinces and five cities where governments and companies have tinkered with cap and trade. Total turnover of the carbon trading reached 4.6 billion yuan in the past four years and overall volume of carbon emission has started to fall.

The launch of the carbon trading scheme is considered good news for wood construction industry.As a product from the nature, wood is an ideal construction material in terms of environment protection. Life cycle assessment studies have consistently showed that wood is better for the environment than steel or concrete in terms of embodied energy, air and water pollution, and greenhouse gas emissions. Wood products typically have less embodied energy, are responsible for lower air and water pollution, and have a lighter carbon footprint than other commonly used building materials.

Trees and forest products could play a critical role in helping to tackle climate change and reduce greenhouse gases. Using wood products that store carbon, as well as responsibly managing forests in a way that balances harvesting and replanting, can minimize China’s carbon footprint over the long term. In turn, wood buildings can require less energy to construct and operate over time.In addition, people feel an instinctive connection and attraction to natural materials, and evidence suggests this can contribute to an individual’s sense of well-being.

Canada Wood China is in a process to launch a joint research project with relevant Chinese governmental organization and reputable research institutes on wood performance of carbon footprint and sequestration with an objective of providing a scientific and technical basis to advance policy development towards wood products and wood construction.

Source: Canada Wood

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Jobs


Buy and Sell


... and finally ... something to laugh about

Paddy the Irishman texts his wife:
"Mary, I’m just having one more pint with the lads. If I’m not back in 20 minutes, read this message again."

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Quotable Quotes: "Expecting the world to treat you fairly because you are good is like expecting the bull not to charge because you are a vegetarian."

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A psychiatrist on holiday became fascinated by the antics of an apparent simpleton who had set up a sign on the beach which stated "Seagulls for Sale."

"That's why we are needed," he said to his wife. "I think I will humour him."

"How much are the seagulls," asked the psychiatrist.

"Only a fiver each," the jolly hawker replied.

"Okay," said the psychiatrist, "I'll buy one."

The hawker took the $5 note, and pointing skywards said: "That's your one up there."

---------------------

A recently divorced woman is walking along the beach contemplating how badly treated she got over the divorce settlement, when she spies a magic lamp washing up onshore. She rubs the lamp, and out pops a magical genie!! The genie notices her anger and lets her vent her troubles to him. As a consolation, the genie informs her that he will give her three wishes. But, he cautions her that because he does not believe in divorce, he will give her ex-husband ten times the amount of whatever she wishes.

The woman is steaming mad, thinking that this is hardly fair, but she makes her first wish. The first wish was for a billion dollars. The genie grants her wish and she finds herself sitting in pile of one billion one-dollar bills.

The genie then reminds her that her husband is now the recipient of 10 billion dollars. The woman can barely contain her anger when she makes her second wish. The second wish was for a beautiful mansion on the shore of her own private beach. In an instant it was granted, but the genie then reminds again that her ex-husband now owns ten of what she wished for, and points out at the beach to a small development of ten such mansions.

Upon hearing this, the woman takes her time to contemplate her last wish. Just as the genie was about to give up on her, the woman informs the genie that she wants to make the last wish. But, before she can do this, the genie again warns her that her ex-husband will get ten times what she wishes for.

"No problem," said the woman as she grinned in ecstasy. "For my last wish ... I'd like to give birth to twins."



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

John Stulen
Editor

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