WoodWeek – 25 July 2018

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For the June 2018 year, New Zealand exported $55.5 billion worth of goods, up $5.6 billion from the June 2017 year. Dairy products led this rise (up $1.7 billion) followed by meat and edible offal (up $1.0 billion), and forestry products (up $740 million). This week we have an experimental world map with countries labelled by our key exports to them; courtesy of Stats NZ.

First up this week, if the following prediction comes to fruition it could help diversify our log export markets. In India, softwood is gaining market share over hardwood in part due to limited certified hardwood fibre. Several factors suggest future increases in wood demand there as they are poised to become the world’s third-largest economy by 2030.

Since March the Chinese currency has depreciated by around 6%, taking it down to almost RMB6.7 to the dollar. This decline should be seen against the background of a weakening Chinese economy and the strengthening of the US dollar. Analysts write that further weakness is likely if China uses exchange rates to support exports in its ‘trade war’ with the US.

In September, leading global technology providers will be travelling into this region to participate in the eagerly awaited WoodTECH 2018 series. “It’s been eight long years since those involved in wood manufacturing have had an independent technology update,” says FIEA director Brent Apthorp.

Australia's Linx Cargo Care is planning to buy wood processor Pedersen Group for an undisclosed amount. The prospect of a new owner may arouse the interest of Rotorua residents on the east side of Lake Rotorua. The community came together to fight the local council over the noise from the former Lumbercube mill, which closed for other reasons in July 2016.

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Chinese currency depreciates

RMB depreciation - Since March the Chinese currency has depreciated by around 6%, taking it down to almost RMB6.7 to the dollar. This decline should be seen against the background of a weakening Chinese economy and the strengthening of the US dollar. Analysts write that further weakness is likely if China uses exchange rates to support exports in its ‘trade war’ with the US.

If indeed the Chinese authorities allow further currency depreciation the prospects for continued global growth will be undermined.

Phytosanitary certificates for imported logs now to be sent electronically - The Zhangzhou Customs Administration in Fujian Province has announced that it no longer requires paper phytosanitary certificates for logs imported through Zhangzhou Port.

According to China Customs, to promote implementation of a paperless system for commodity imports, phytosanitary certificates should be provided electronically for imported logs. As a result Chinese importers will require foreign suppliers to provide electronic phytosanitary certificates as soon as logs are shipped so electronic documents can be submitted for Customs examination.

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Analysts: India a market to watch

Huge growth potential and softwood opportunities – Softwood is gaining market share over hardwood in the Indian market, assisted in part by limited volumes of renewable or certified hardwood fibre. A variety of initiatives are pointing to huge future increases in Indian wood products demand, with the country poised to become the third- largest economy in the world by 2030.

India is a difficult market to access for most major log/lumber export-ing countries. New Zealand is its most dominant softwood country supplier, accounting for 70% of total softwood log and lumber imports; Malaysia is the country’s largest hardwood supplier. Rapidly depleting global hardwood supply and huge consumption growth anticipated in India mean that the demand for imported softwood will only expand. One forecast is for massive softwood expansion: from approximately 2.5 million m3 in 2017 to over 65 million m3 by 2027 (projected).

Source: FEA–Canada (see www.woodmarkets.com)



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OIO changes good and bad for forestry

Pros and cons for forestry changes

Changes coming through from the Government on overseas investment in forestry have pros and cons, says Christina Lefever, a special council with law firm Duncan Cotterill.

Forestry cutting rights are being brought under the overseas investment regime but they are making processes more straightforward, Lefever told Rural News.

Currently overseas investors wanting to acquire freehold or leasehold interest in forestry land are screened but overseas investment in forestry rights is not.

Some changes to simplify forestry investment were made by ministerial directive to the Overseas Invest Office (OIO) in December but most of the changes will be made through the Overseas Investment Amendment Bill, she says.

The Government has brought forestry rights under the overseas investment regime whereas previously they were excluded, Lefever says. “Forestry rights will be brought under the OIO regime but they are introducing more streamlined tests to make overseas investment more straightforward for overseas buyers,” Lefever says.

One of those is the counter-factual test – where the investment is compared with a hypothetical New Zealand purchaser that may or may not exist.

“They have eased up the counter-factual test for overseas buyers buying up bare land to plant new forest. Their investment will be compared with the current land use. There will be no requirement to essentially compare their investment against some possibly hypothetical NZ purchaser who might also plant a forest.

“For an overseas buyer who is looking to purchase an existing forest that will look at the current rules on that forestry investment, whether there are supply arrangements in place with NZers, whether there are environmental protections currently in place on specific areas of the land, and whether the overseas investor is willing to commit to retaining all those arrangements; then in itself that will be enough.

“There will probably be a requirement to commit to replanting on harvest as well. But over and above that they don’t need to show some benefit above what any other forestry owner might actually do. That can be difficult to demonstrate when you are buying existing trees that will keep on growing regardless of who owns them.”

Lefever says the Government’s announcement that the Overseas Investment Act would be amended to cut out red tape is a positive signal to potential investors.

Forestry Owners Association president Peter Weir says though he still can’t see the point of including cutting rights in the scope of the OIO, the deepest objection to the working of the OIO seems to have been removed.

“We will welcome a more efficient OIO processing system,” Weir says.

“Forest Owners said when the Billion Trees in Ten Years Government target was formulated during the coalition negotiations that it would be very difficult to achieve that many trees planted if there were onerous obstacles to overseas investment imposed at the same time.

“Our industry as it is will be planting half of the total but to get to the billion trees New Zealand will need a lot of additional land, labour and investment. Investors are very sensitive to market signals, and quite frankly the Government signals have been mixed over the past few months.”

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India log market activity update

The Indian log market has reached China price parity with ‘A’ longs now selling for USD 159-160/JASm3. While volumes delivered to this market are 14% down year on year to May 2018, it has been a steady market and exporters still expect an increase in demand in Q4.

There is an increased schedule of ship arrivals from NZ over the next six weeks, so this will be a good test of this market. Containers of logs are also arriving from Germany, South Africa and southern yellow pine from the USA.

The labour shortage mentioned in previous Wood Matters continues, but some labour has returned to the mills from agricultural work. Log stocks are about 120,000m3 in Kandla and 30,000m3 in Tuticorin. The cash flow of log buyers is still tight after the introduction of GST and the increased scrutiny on bank lending compounding the weakening of the Indian Rupee against the US dollar.

Source: PF Olsen Wood Matters

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Linx Cargo Care to buy Pedersen Group

Australia's Linx Cargo Care to buy wood processor Pedersen Group - Sydney- based Linx Cargo Care Group is planning to buy wood processor Pedersen Group for an undisclosed amount.

The two have entered into a conditional purchase agreement and expect the deal to be completed in mid-August, Linx said in a statement. Rotorua-based Pedersen, owned by private equity firm Maui Capital, services the Kinleith and Kawerau mills in New Zealand, Norske Skog's pulp mill in New South Wales, the Maryvale paper mill in Melbourne and the Vanua Levu chip plant in Fiji.

The companies wouldn't comment on the purchase price but in the year ended March 31, 2017, a Maui company valued its 64 percent stake in Pedersen at $23.6 million, accounts filed to the Companies Office show. That implies a value of $36.9 million for the whole company at the time.

Linx operates across Australia and New Zealand. Its C3 business specialises in forestry logistics and operates in 13 ports in New Zealand, and has an existing joint venture with Pedersen for wood yard management.

Pedersen Group will continue to operate independently under the Pedersen brand following the completion of the acquisition, and all 140 Pedersen employees will be retained by the new owner, the companies said.

"The acquisition of Pedersen Group by Linx Cargo Care Group will provide long- term stability for our employees and customers, and the operational and financial capacity to allow our business to pursue its growth aspirations," Pedersen Group chief executive Gavin Hudson said.

Anthony Jones, group chief executive for Linx and chair of C3, said the acquisition would help Linx improve its services to forest owners and wood processing businesses and extend its global reach.

Source: BusinessDesk

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The World’s Forests: Latest Edition

The State of the World’s Forests - Nearly three years ago, world leaders agreed to the United Nations 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs) – the central framework for guiding development policies throughout the world.

This edition of The State of the World’s Forests is aimed at enhancing our understanding of how forests and their sustainable management contribute to achieving several of the SDGs. Time is running out for the world’s forests: we need to work across sectors, bring stakeholders together, and take urgent action.

The State of the World’s Forests 2018 identifies actions that can be taken to increase the contributions of forests and trees that are necessary to accelerate progress towards the SDGs. It is now critical that steps be taken to work more effectively with the private sector, and the informal forest sector must be transformed in order to bring broader economic, social and environmental benefits.

Seventy years ago, when FAO completed its first assessment of the world’s forest resources, the major concern was whether there would be enough timber to supply global demand; now we recognize the greater global relevance of our forests and trees.

For the first time, The State of the World’s Forests 2018 provides an assessment of the contribution of forests and trees to our landscapes and livelihoods. The purpose of this publication is to provide a much wider audience with an understanding of why forests and trees matter for people, the planet and posterity.

Source: FAO

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WoodTECH 2018 - Global technologies

International technology being showcased at WoodTECH 2018 - Never has the local wood manufacturing industry seen such a turnout. Leading global technology providers will be travelling into this region in September. Why? To participate in the eagerly awaited WoodTECH 2018 series. “It’s been eight long years since those involved in wood manufacturing have had an independent technology update” says Brent Apthorp, FIEA Director.

“Last year, we had a record turnout to the WoodTECH series in Australasia. Well over 400 attended. It was the largest gathering yet seen of sawmilling companies, saw-doctors and sawing technology providers. The series concentrated on sawmill scanning, sawing and green-mill optimisation technologies. This year the focus is shifting to dry-mill or stand-alone wood manufacturing operations.

Technologies being showcased include; robotics and automation and changes being seen in wood manufacturing, advances in wood scanning and board optimisation, finger-jointing, cross cutting and ripping, timber gluing and laminating, timber machining, kiln drying, timber finishing, material handling operations, mill maintenance, changes to timber standards, H&S and training and skills development.

“We’re delighted to have attracted this year leading International tech providers and equipment manufacturers from around the globe” says Brent Apthorp. Outside of the Australasian expertise brought together, presenting companies include; SuitX, USA, LMI Technologies, Sweden, RemaSawco, Sweden, WoodEye, Sweden, MiCROTEC, Italy, Airstar, USA, PMP Solutions, Canada, Invictum, Slovakia, USNR, USA, Weinig Grecon, Germany, Conception, Canada and TS Manufacturing Canada.

“As well as more practical sessions aimed at mill production and operational staff, we’ve this year been able to build in technologies right at forefront of scanning, optimisation and wood handling technologies” says Brent Apthorp. “We’ve been able to include advanced manufacturing technologies like robotics. Industrial exoskeletons which are being used increasingly to reduce worker fatigue in the manufacturing environment are also for the first time being introduced to local wood manufacturers. Some local companies have explored the opportunities but have as yet to learn just what the technology is, how and where is it being applied and does it have any use in wood manufacturing”.

Also, in the tech space this year we’ll be covering wearable technologies that are able to harness the power of mobile connected employees on-site and the option of laser cutting of wood. Exhibitions showcasing new innovations, new products and new services likewise are a huge attraction for local companies. At last year’s event the trade show sold out well in advance of the event running. This year, the turnout is anticipated to be huge with both venues likely again to be full.

Programme information is now on line. Registrations are flowing in. You can check all of the details out on the event website www.woodtech.events




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NZ trade shortfall tops $4B in June year

Trade shortfall tops $4 billion in June year – Statistics NZ – The value of annual imports rose $374 million more than exports, pushing the June 2018 annual trade deficit to $4.0 billion, Stats NZ said today. This is the largest trade deficit for a June year in a decade.

Compared with the June 2017 year, the trade deficit this year widened as all major import and export groups increased.

“The last June year surplus was in 2014, driven by high dairy export values,” acting international statistics manager Dave Adair said. “Exports dipped in 2015 leading to a deficit, which has widened since due to steadily rising imports.”

In the June 2018 year, New Zealand imported $59.6 billion worth of goods, up $6.0 billion from the June 2017 year. This was led by $24.0 billion worth of intermediate goods, up $3.0 billion from the June 2017 year. Petroleum and products (excluding petrol) led the intermediate goods rise, up $850 million. This was followed by parts of transport equipment, up $416 million, and parts of plant and machinery, up $413 million.

Petrol and avgas is a smaller group and has been the most volatile over the past years. This group rose in 2018 but is still 29 percent lower than 2014, due to falls in 2015 and 2016.

More dairy products exported in June year - In the June 2018 year, New Zealand exported $55.5 billion worth of goods, up $5.6 billion from the June 2017 year. Dairy products led this rise (up $1.7 billion) followed by meat and edible offal (up $1.0 billion), and forestry products (up $740 million).

Seeking your feedback on new visualisation - New Zealand's largest exports to the world is a new visualisation that shows New Zealand's main exports to the world on a 'chalkboard’. Stats NZ is seeking your feedback on how useful this visual is to you, and any suggestions on how it can be improved. To send your feedback, click on the feedback link provided on the page.

The Government Statistician authorises all statistics and data we publish.

For more information about these statistics:

• Visit Overseas merchandise trade: June 2018

• See Fuel lifts imports to new June high

• See CSV files for download

Source: Statistics New Zealand

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Early harvest for Coronet douglas fir

The Queenstown Lakes District Council (QLDC) has prepared a draft Outline Plan for the harvest and revegetation programme for Coronet Forest.

Established over several years between 1984 and 1996, the forest consists of 172.5 ha of Douglas fir and is a significant seed source contributing to the wilding pine problem on neighbouring indigenous tussock grassland.

QLDC General Manager Community Services, Thunes Cloete said the forest is being harvested early in order to eliminate the substantial impact the forest’s seeds will have on the ongoing wilding control programme.

“The Council adopted the Coronet Forest Management Plan 2017 at their August 2017 meeting. This plan contains details of the early harvest and revegetation programme which helps address the wilding pine problem and returns a large area of local landscape to native planting. QLDC acknowledges that this decision, although necessary, has seen some resistance. But as well as being a good return on investment the goal is to protect our local natural environment for generations to come,” said Dr Cloete.

Coronet Forest is owned by QLDC and Central Otago District Council (CODC) under a joint venture arrangement. CODC has agreed to the early felling of the forest.

QLDC Senior Parks & Reserves Officer (Forestry), Briana Pringle confirmed that QLDC has appointed PF Olsen Limited to manage the harvest.

“Our next step in the process is to engage suitably qualified and experienced contractors to undertake harvesting, roading and log cartage services for the harvest. We will be doing this over the next few months,” said Ms Pringle.

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Sino-Forest prosecutions continue

In Canada, the Ontario Securities Commission has imposed one of the largest penalties in its history in the fraud case involving failed timber company Sino-Forest Corp., ordering five former executives to make payments totalling more than $81-million.

Founder and chief executive Allen Chan was ordered to pay $67-million of the total himself.

Sino-Forest, which had a market value of $6-billion at its peak, was exposed as one of the costliest corporate frauds in Canadian history after a short-seller published a report in 2011 calling the company a Ponzi scheme and alleging it did not own the timber resources it claimed in its financial statements.

The OSC launched a complex and expensive international investigation as staff worked for years to collect evidence in China, where most of the accused were based.

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Jobs



Buy and Sell



... and finally ... something for a chuckle

Explaining politics –

I told my son, "You will marry the girl I choose."
He said, "No."
I told him, "She is Bill Gates' daughter."
He said, "Yes."

I called Bill Gates and said, "I want your daughter to marry my son."
Bill gates said, "No."
I told bill gates, "My son is the CEO of the World Bank."
Bill gates said, "OK."

I called the president of the World Bank and asked him to make my son the CEO.
He said, "No."
I told him, "My son is Bill Gates' son-in-law."
He said, "OK."

And that's exactly how politics works.

And thus, began the practice of hiring dumb people to work in influential positions of government. The practice is unbroken to this date.



That's all for this week's wood news.

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John Stulen
Editor
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

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