WoodWeek 28 July 2021
In addition to two days of conferencing and exhibitions three additional technology workshops and meetings in Rotorua are also available for delegates to ForestTECH 2021. These workshops are free for ForestTECH 2021 delegates as part of your conference registration.
Thanks to the team at PF Olsen, today we have the latest export log market summary for you. At Wharf Gate (AWG) prices for export logs in July decreased an average of $8-9 per JASm3 from June prices. There was a wide range of prices depending upon location as demurrage costs in Gisborne due to port congestion affected AWG log prices. There were also different market strategy approaches by log exporters with their AWG pricing.
The combination of the usual drop in productivity in China during their hottest months was exacerbated by the Chinese government forcing some sawmills to relocate from Taicang, Jiangsu Province. The Indian log market is showing signs of recovery with a shortage of logs anticipated in Tuticorin. The demand for logs and sawn timber in New Zealand has not reduced during the winter period.
This week's SnapSTAT graphic shows how the Baltic Shipping Index has tracked upward since March, underpinned by our continued strong log exports. Thanks to our sponsors - the great team at Chainsaw & Outdoor Power (COP) and Oregon.
Moving from log exports to the other end of the value chain, Stora Enso has started producing bio-based carbon materials from lignin. Pilot production of Lignode® by Stora Enso, wood-based carbon for batteries, is currently being ramped up. Applications include electric vehicles and consumer electronics as well as large- scale energy storage systems.
This week we have for you:
Log Export Update: Move over Beef & LambHigh log and beef prices push overall exports to record $6 billion - With the latest reporting of New Zealand's latest record for exports, the main menu items are now "beef & logs", not beef & lamb!
That's a 17 percent or $871 million increase on the previous year. New figures from Stats NZ show beef exports rose $31m to reach a new high of $411m in June 2021, compared with June 2020. This increase was quantity driven, with volumes up 8.5 percent. The previous high for beef export values was in the month of March 2020 ($405m).
Exports for logs and wood reached a new high up $105m or 23 percent from June 2020 to $561m in June 2021. Stats NZ international trade manager Alasdair Allen said the average value of untreated log exports has been steadily rising from the low in July 2020 to reach $199 per cu/m in June 2021.
Forest Owners Association president Phil Taylor said demand is strong domestically but also internationally with increased orders from China. "Supply is significantly constrained and so as a result we've seen very strong pricing over the last nine months. Post Covid the supply chain has been significantly disrupted so that's created not only delays but obviously very significant costs."
Taylor said large fires in the Pacific Northwest and down the West Coast of the United States and in Chile had affected stocks, as well as the spruce disease affecting forests in Europe. "New Zealand has always been a very good and effective supply chain, so given the global constraints China is looking at New Zealand. So, with the strong demand it creates a classic supply and demand imbalance pushing up the prices."
Growing demand in the domestic market was keeping forest owners and mills busy, he said. "We're seeing a huge demand from our domestic processors and our preference is to supply them first with our high quality logs." Earlier this year there were reports of a massive timber shortage in the building sector, but Taylor said there was plenty of stock.
ForestTECH Conference - More choicesForestTECH is this region’s most popular annual independent forestry technology series. This year, in addition to advances being made in remote sensing and forest inventory, like ForestTECH 2020, one of the two days has been set aside to profile the very latest developments in forest establishment, mechanised planting and silviculture.
This year, in addition to two days of conferencing and exhibitions three additional tech workshops and meetings have been set up for Rotorua delegates around ForestTECH 2021. This capitalises delegates who will be travelling into Rotorua to attend ForestTECH 2021. All are free to ForestTECH 2021 delegates but a booking is required.
What’s being covered?
1. A short two-hour workshop on Imagery & Remote Sensing with ArcGIS is been given by Eagle Technology on the morning of Monday 22 November at the conference venue.
2. A half-day workshop focusing on changes to the Forestry Emissions Trading Scheme and an update on National Environmental Standards for Plantation Forestry is being given by Te Uru Rākau at Scion on the morning of Monday 22 November.
3. A half-day Remote Sensing Cluster Group meeting will run at Scion on the afternoon of Monday 22 November. The meeting will combine recent research focussing on tree inventory and detection with an update on the “Tools for Foresters” initiative. Presentations will be given by both researchers and industry and will focus on key end user applications of remotely sensed data.
Note: Programme details for the event and further information on the workshops that have been set up can be found on the event website, foresttech.events/ft21.
PF Olsen Log Export Market UpdateExport Log Markets
China - The price for A grade logs was in the mid 190’s range for June and early July shipments. There is now a standoff between the log exporters and Chinese log buyers with LC’s not signed at 185 USD per m3 for A grade.
Softwood log inventory has risen to about 5.5m m3 and daily port off-take has dropped to around 60k m3 per day. While this drop in offtake was expected due to the hot sticky weather in China, the offtake over the last three years has dropped to only about 75k per day in July. (Last year was an anomaly due to the severe floods in China). In each of these years demand and log prices increased through the 4th quarter.
Many log processing facilities in Taicang will have to close or relocate after the government, with very little warning, effected regulation in early July that will restrict sawmilling to specific identified industrial districts. Initial estimates are this will reduce milling capacity by about 50%. Taicang was China’s second largest port for softwood imports and received about 20% of China’s total softwood imports. Taicang is only just over 50km north-west of Shanghai so the regulations are likely to be a combination of government wanting to repurpose the land as well as reduce pollution. This land will most likely be repurposed for housing or higher tech companies.
India - Kandla is expected to receive one ship each from Uruguay and Australia in August. Six vessels are expected to arrive in September, as five from Uruguay and one from Australia are likely to be loaded in August. The sawn timber price in Kandla is weak at INR 601 per CFT.
Fire damaged pine logs exported in containers from Australia to Mundra port is near zero. Log quality within specifications has been very variable. A log shortage is anticipated in Tuticorin in September, as shipping liners are citing congestion and not providing containers to Indian ports. In South Africa, the Durban riots have made many shippers count their losses and has also displaced shipments. In the Tuticorin market sawn timber prices have risen to around INR 700 per CFT.
Source: PF Olsen Wood Matters
Northport Moves Ahead(BusinessDesk) Northport lines up $800m expansion, sidelines Auckland debate. A three-pronged road, rail and coastal shipping network are vital parts to a viable, functioning upper North Island freight strategy, says Northport chief executive Jon Moore.
While locally owned coastal shipping, which would provide feeder services between main hub ports and smaller spoke ports, was probably part of a “longer term strategy”, Moore said upgraded rail service remained the "missing link".
That has become an acute issue as the country’s northernmost port gears up to deal with localised growth and play a “supporting role” to an overburdened Ports of Auckland (POAL). It also meant KiwiRail needed to get on with building its long awaited 19-kilometre rail spur from Oakleigh, south of Whangārei, to Marsden Point, he said.
Moore, who has held the top job at the port since 2007, said that link was key to ensuring the deep-water port contributed to a “resilient” three port strategy. To that end a full “end-to-end” supply chain analysis is needed across all three transport modes, focusing on reducing trucking pressure and congestion in Auckland, he said.
Rail funding – Last month, KiwiRail was allocated about $700m in funding from the government’s New Zealand upgrade programme to upgrade rail connections in Northland, along with the $200 million or so to purchase land along the Marsden Point line.
Cost blowouts to projects under the $6.8 billion NZ upgrade programme have meant plans to build a new highway to connect the port with State Highway 1 has been scrapped. However, the rail spur is a project that’s been in train since 2012 and KiwiRail estimates it could take another five years to complete.
Pentarch Group buys Boral TimberBoral Limited agrees to sell its Australian timber business for $64.5 million - Boral Limited has entered into an agreement with Allied Natural Wood Enterprises Pty Limited (Pentarch Group) to sell its Australian hardwood and softwood timber business for $64.5 million, subject to customary completion adjustments, a news release said.
The divestment of the timber business, which is expected to be completed in 2021, is in line with Boral’s strategy of resetting its portfolio of assets, positioning Boral to build a stronger core business that delivers improved results. Completion of the transaction is subject to customary pre-closing conditions.
Boral’s CEO & Managing Director, Zlatko Todorcevski, said: “The sale of Boral’s Timber business represents another important milestone in focusing our portfolio and positioning for the future. “In Australia, our focus is on our leading integrated construction materials business and maturing our adjacent growth strategies such as recycling, waste, supplementary cementitious materials and lower carbon products.
“The sale of Boral’s Timber business to the Pentarch Group, a private company with growing interests in the forest products sector, is a good outcome for this business and its customers. “Boral has owned and operated the timber business for many decades and I want to take this opportunity to formally recognise the enormous contribution employees and management have made over the years to the wider Boral group.”
Boral’s carrying value of the timber business is broadly in line with the sale price prior to any completion adjustments. The transaction is not expected to result in any cash tax paid. In line with Boral’s financial framework, the proceeds will be used to optimise Boral’s net debt position and after allowing for reinvestment needs, any surplus is expected to be available for distribution to Boral’s shareholders.
GFP sells Australian Forest Estate to AXAAXA IM logs into biggest forestry deal in more than a decade - Investment house AXA IM has taken control of 24,000 hectares of pine plantations straddling the border between Victoria and South Australia in a deal of around AU$775 million with US fund manager Global Forest Partners (GFP), the biggest timber transaction in the country for more than a decade.
The acquisition is the first investment in Australian forestry for AXA IM, which manages almost 60,000 hectares of plantations across France, Ireland and Finland. The deal illustrates AXA’s appetite for sustainability-themed investments as institutional investors worldwide align their portfolios with climate change issues.
“Investing in alternate real estate has been a focus of ours for some time now,” said Kumar Kalyanakumar, who heads the Australian arm of AXA IM Alts, its alternative investments arm. “Investing in forestry assets is a key ingredient of this strategy. We like the Australian forestry sector’s structural attractiveness of steadily growing demand and static supply.
“As an investment manager, we are also attracted to the benefit that forestry investments can offer in our pursuit of decarbonisation of our clients’ portfolios.”
SnapSTAT - Baltic Shipping Index
Source: Trading Economics
Euro corporate seeks NZ forest assetsA sister company to Swedish furniture retailer Ikea is on the hunt for investments in New Zealand, and not necessarily of the retail kind. While there’s no news on when exactly Ikea’s stylish shops will open in New Zealand, Ingka Investments Management NZ and Ingka Investments Forest Assets NZ were quietly registered with the Companies Office last December.
Both are described as related to forestry and are owned by Ingka Investments, a Dutch-based investment arm of Ingka Group, Ikea’s largest owner-operator. An Ikea spokesperson said: “Ingka Group is considering different opportunities, including forestry investments in the country. We will share more information as it becomes available.”
Ingka Investments was “constantly looking for new opportunities that are linked to our core business,” and ones which supported its sustainability goals and climate commitments.
Overseas, Ingka Investments holds a diverse portfolio including stakes in a truck sharing business, a logistics co-ordinates firm and various plastics recycling businesses. According to its website, it invests in both early stage and mature companies, and “in people before companies,” only aligning with businesses that share its values.
Ikea has previously said it would not use New Zealand materials, so the forestry businesses appear to be for investment only.
New John Deere Heads More PowerfulJohn Deere: Four wheel drive for big trees - The robust H425 and H425HD harvester heads are designed for big trees and require a large base machine. Design priorities were ease of use, durability, performance, economy, precisely routed hoses, and easy access to service points. John Deere harvester heads are equipped with the new SuperCut 100S saw unit, which features reliable chain tensioning, facilitates saw chain replacement, and enables the use of wide-tail saw bars.
Stora Enso: From Paper to BatteriesStora Enso’s pilot plant for producing lignin-based carbon materials for batteries is now operational. Stora Enso’s pilot facility for producing bio-based carbon materials from lignin has started operations. This follows the company’s EUR 10 million investment announced in 2019. Pilot production of Lignode® by Stora Enso, wood-based carbon for batteries, is currently being ramped up. Applications include electric vehicles and consumer electronics as well as large-scale energy storage systems.
The global battery market is projected to grow tenfold over the next decade as battery producers seek more sustainable materials for the electrification of mobility. Since sustainability is becoming a top priority for the automotive industry, car manufacturers and battery producers are focusing heavily on reducing carbon emissions in electric cars.
Today, fossil-based carbon is used in the anodes of rechargeable batteries. By converting lignin separated from wood into carbon-based anode materials, the synthetic and non-renewable graphite material can be replaced.
“With our pilot plant now ramping up operations, Stora Enso is entering a new value chain in supplying more sustainable anode materials for batteries. With Lignode, we can provide a bio- based, cost-competitive and high-performance material to replace the conventionally used graphite. To serve the fast-growing anode materials market, we are now exploring strategic partnerships to accelerate scale-up and commercialisation in Europe,” says Markus Mannström, Executive Vice President of Stora Enso’s Biomaterials division.
The pilot plant for bio-based carbon materials is located at Stora Enso’s Sunila production site in Finland, where lignin has been industrially produced since 2015. The biorefinery’s annual lignin production capacity is 50 000 tonnes, making Stora Enso the largest kraft lignin producer in the world.
Last Word: Why are You in Forestry?Today we bring you something to ponder and then act on, if anyone asks you why? - For each and every one of us working in forest and wood products industries we know within ourselves why we enjoy doing it every working day of the year. - However, we don't always get a chance or a way to explain to people in our local communities exactly what is so good about our sector. Now, thanks to Michael Green, a leading wood architect in Vancouver, you too can show folks around you (and your family, or your local school class, what is so fantastic about working with wood.
Click here for this 3-minute impressive reveal.
Buy and Sell
... and finally ... some midweek fun for you
My tolerance for idiots is extremely low today. I used to have some immunity built up, but obviously, there is a new strain out there.
Me: Sobbing my heart out, "I can't see you anymore ... I'm not going to let you hurt me again.”
Personal trainer: "Relax! It was only one sit-up!"
Turns out that being an adult is mostly just googling how to do stuff.
Do you ever get up in the morning, look in the mirror and think "That can't be accurate."
I went to the Missing Persons Bureau. No one was there.
I want to be 14 again and ruin my life differently. I have new ideas.
I'm on two diets. I wasn't getting enough food on one.
SOLI (Seen on LinkedIn):
See you again next week.
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