WoodWeek 31 January 2018
Coincidentally, the Wood Processors & Manufacturers Association continues to lobby the government for a more favourable trading environment. This action comes as processors such as Juken NZ face subsidised foreign competition. Other wood exporting countries such as Canada and Russia support their local industries while Chinese wood manufacturers benefit from subsidies. This is creating an uneven playing field for New Zealand processors, according to the WPMA, which would like to see the government take a complaint to the World Trade Organisation.
Meanwhile in Tasmania, a government grant of AU$13 million was announced as part of the plan for Australia’s biggest plantation hardwood mill to be built in Burnie. State politicians are claiming new mill should create 221 direct jobs in forestry, transport, engineering and construction. The state government is also offering a loan of up to $30 million to the company. The mill is expected to process more than 300,000 cubic metres of plantation hardwood logs each year.
In logging news, Komatsu is set to purchase most of the Quadco and Southstar forestry attachment operations from Prenbec Equipment, a company based in Quebec, Canada.
New Zealand’s major export earners by the numbers. Finally, a quick look at the industry’s role in earning our keep for New Zealand. Total annual export earnings were valued at $53.7 billion for the year ended December 2017, up $5.2 billion (11 percent) year on year. Logs, wood, and wood articles rose $546 million to $4.7 billion, a 12 percent lift. Jumping by 20 percent, dairy products led the rise, up $2.8 billion to $14.0 billion. Meat exports were up 11 percent – rising $706 million to $6.6 billion.
This week we have for you:
New record for log pricesNZ export log prices hit new record on strong Chinese demand - New Zealand export log prices advanced to a new record, driven by continued strong demand from China, lower shipping rates and a favourable currency.
The price for A-Grade export logs lifted to $131 a tonne from $129/t last month, 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. The average export price for pruned logs jumped to $176/t from $170/t last month and marking the highest level since July 2016, AgriHQ said.
New Zealand is experiencing strong demand for logs from China, which has clamped down on the harvesting of its own forests and reduced VAT locally, to meet demand in its local market. AgriHQ said Chinese demand for logs remains high, with a record total of 2,903,943 tonnes imported in November, up 20 percent on October levels and 10 percent above the same period a year earlier.
"Strong demand has had China continue to import significant quantities of logs," AgriHQ analyst Reece Brick said in his report. "China continues to be NZ's major destination for log exports, making up 83 percent of NZ's total log exports in November."
Brick noted exports to China in the year to November 2017 were up 16 percent compared with the entire 2016 calendar year. Export data for the December month is due to be released this week.
In other markets, exports to Japan were also strong, up 30 percent from year earlier levels, while exports to India were down 13 percent, he said.
Ahead of AgriHQ's log price survey, the market was bolstered by higher in-market prices, a fall in shipping rates, and the New Zealand dollar holding below 70 US cents, he said.
In the New Zealand domestic market, pricing was generally flat compared with the previous month for all log grades with the national average for structural logs at $129/t, pruned logs at $182/t and roundwood at $97/t.
Still, Brick said the recent flatness is not an indicator of the longer term trend, with all reports suggesting first quarter contracts have lifted by as much as $5-$7/t for higher value unpruned logs, especially through the central North Island.
"The usual combination of exceptional export pricing and solid domestic demand have been quoted as the main drivers behind these increases," Brick said.
He noted there was a smaller portion of pruned logs moving into the export market, and prices for both pruned logs and pulp were expected to be mainly unchanged in the first quarter.
Wood processors call for helpNZ wood processors lobby government for help against subsidised foreign rivals - The Wood Processors & Manufacturers Association of New Zealand continues to lobby the government for more a more favourable trading environment as processors such as Juken New Zealand eye drastic measures in the face of subsidised foreign competition.
Last week Juken NZ, a unit of Japan's WoodOne Ltd, put forward a plan to halve the Gisborne wood-processing mill workforce as it struggles in a highly competitive market, and as overseas buyers are buying a record volume of logs.
WPMA chief executive Jon Tanner said any closure or diminution of a wood processing company is a great loss to the regions.
While Juken is facing some specific challenges in the Japanese market, 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," said Juken general manager Dave Hilliard.
Other wood exporting countries such as Canada and Russia support their local industries while Chinese wood manufacturers benefit from subsidies, creating an uneven playing field for New Zealand processors, according to the WPMA, which would like to see the government take a complaint to the World Trade Organisation.
Tanner said Juken is not alone: "We are certainly getting a consistent message from our membership that they are being squeezed and squeezed hard. It's getting harder."
Against that backdrop "we are maintaining the line with the ministers that we do need to create a fairer playing field for manufacturers in New Zealand and that means tackling international subsidies that are paid to our competitors," he said.
According to Tanner, "we are seeing rising prices in raw materials going offshore and we believe, and have written to senior ministers, that is being underpinned by WTO- prohibited subsidies overseas."
So far, Regional Economic Development Minister Shane Jones has been supportive, Tanner said. "The consistent message he has given us before and after the election is that he will not see local businesses suffer because of these conditions," he said.
Tanner underscored that New Zealand has the opportunity to "push for change," in particular as it signs up to the renamed Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which includes major log exporter Canada. "Under that, we really have to push strongly to make it a fairer world for New Zealand manufacturers," he said.
He lauded the new government's efforts so far, in particular plans to bring forestry cutting rights into the Overseas Investment screening regime.
"They are simply trying to take steps to level that playing field internationally," he said.
A Treasury spokesman confirmed Treasury has taken the approach of targeted consultation on bringing forestry cutting rights under the OIO and is seeking submissions.
Source: BusinessDesk via Scoop News
ABARES reports record Australian log volumesAustralia’s log harvest in 2016-2017 was estimated at record 33 million m3, up nine percent year-on-year. A report released by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) highlights that Australia’s forestry sector is continuing to enjoy some of the best conditions in its history.
ABARES Executive Director, Steve Hateld-Dodds, said the report, Australian forest and wood products statistics: March and June quarters 2017, showed the industry is now in its fourth consecutive year of growth.
“In 2016-17, the volume of logs harvested is estimated to have reached record levels, increasing nine percent on the year prior, to nearly 33 million m3,” Dr Hateld- Dodds said. “The value of total logs harvested was up nearly 12 percent to $2.5 billion, reflecting increased estimated softwood log prices and softer hardwood log prices.”
The report also revealed a softening domestic demand for wood products, with a 6.1 percent decrease in dwelling commencements compared to the previous year. Exports of Australia’s wood products are higher than ever, reaching a record $3.4 billion on the back of strong demand for roundwood, newsprint and miscellaneous forest products exports.
This means Australia’s trade deficit in wood products is now under $2 billion--its lowest level in six years.”
The report finds the Chinese market accounted for the majority of total wood product export growth in 2016-17. In fact, nearly half of Australia’s wood product exports in 2016-17 went to China, a market worth over $1.6 billion.
Komatsu to acquire Southstar and QuadcoKomatsu to acquire Quadco & Southstar operations On January 26 Komatsu Limited (President & CEO: Tetsuji Ohashi) signed an agreement to acquire from Prenbec Equipment Inc (CEO: Charles MacLennan), a company based in Quebec, Canada, the Quadco and Southstar forestry attachment operations, excluding the forestry equipment businesses of Tanguay and Forespro delimbers. The acquisition will be made through a wholly owned subsidiary of Komatsu in the United States and is expected to close in February 2018, subject to completion of the closing conditions.
By adding the Quadco felling heads and Southstar large harvester heads to the existing lines of Log Max and Komatsu small and medium-sized harvester heads, Komatsu will become an industry leader in forestry attachments. This will allow Komatsu to offer its customers a full range of forestry attachments.
Quadco and Southstar will continue to operate as independent companies within the Komatsu group following the completion of the acquisition and will maintain their existing sales networks. In order to offer improved value to customers, a forestry attachment division within Komatsu Forest AB will be formed, which will manage the Quadco, Southstar, and Log Max brands.
Komatsu anticipates that this acquisition will have no material impact on its consolidated business results and performance for the current fiscal year ending March 31, 2018. Komatsu will acquire the forestry attachment operations of the Quadco and Southstar brands through a wholly owned subsidiary.
Mill investment welcomed for TasmaniaThe Forest Industries Association of Tasmania (FIAT) and the Australian Forest Products Association (AFPA) welcome the $190 million investment in what will be Australia’s largest plantation hardwood mill and timber product manufacturing facility, in Tasmania’s north-west, CEO of FIAT, Terry Edwards and CEO of AFPA, Ross Hampton, said today.
“The Hermal Group’s decision to build the Tasmanian Amalgamated Renewable Timbers (Start) Mill and Cross-Laminated Timber Panel (CLPT) facility in Burnie is terrific. It will mean a major boost for our sustainable forest industries, not just in the north-west, but for the whole of Tasmania,” Mr Edwards said.
“We commend the Tasmanian Government for its commitment to provide $13 million in grant and training support funding for the project. We understand it to have been critical in the final investment decision being made and I encourage political consensus on the funding in the interests of investment and jobs for Tasmania,” Mr Hampton said.
Once complete, the facility will employ around 200 ongoing staff and will process more than 300,000 cubic metres of sustainable plantation hardwood logs each year. Initially they’ll be used in the creation of building products, including cross laminated timber panels. The investment will also lead to the creation of a significant number of indirect jobs in the north-west and in Tasmania generally, which is a significant development in an area that has struggled for investment and employment creation projects.
“This investment is good news for FORICO which will supply the bulk of the timber for the mill, but it also presents opportunities for smaller private holdings of sustainable native timber plantations in Tasmania,” Mr Hampton said.
“It is a welcome development that the project will provide for value-adding to the plantation resource within Tasmania, rather than exporting that resource to create wealth and jobs in other countries,” Mr Edwards said.
“We look forward to working with the Hermal Group and the Tasmanian Government to ensure this investment materialises and the benefits are far reaching for forest industries and more broadly, the whole of Tasmania,” Mr Edwards concluded.
Strongbuild: Timber/prefab growth will surpriseAcross the Tasman in Sydney, the timber and prefab sector is set to kick goals again this year if a raft of ambitious projects get the go ahead, among them one of the biggest commercial timber building in the world by volume.
Adam Strong, group managing director of prefab timber powerhouse Strongbuild, is expecting a year of continued growth in 2018, with little if any negativity from the market slowdown already apparent towards the end of last year.
The company has a “good pipeline of work”, and industry-wide he doesn’t see the sector slowing down anytime soon.
“What we do is choose the right project to add value to. A lot of people are coming to us. We’ve got a strong line of clients. They’re quality clients, like [retirement operator] Aveo, Mulpha, Frasers, Stockland and [Anglican church retirement operator] ARV.”
In fact, the construction slowdown, which his forecasts say could be about 20 per cent by volume, might well be of benefit to the sector, releasing trade skills and taking off some of the pressure from the recent boom. Besides, timber and prefab is a niche sector and it’s only just starting to properly take off.
Developers and builders are starting to grasp the ease and benefit of these solutions, Strong says, none more so than the education sector in NSW where former planning minister and now minister for education Rob Stokes late last year announced a $4 billion program to replace demountable classrooms with prefab timber structures.
Breakthroughs in the sector include stair and lift shaft now built in cross laminated timber, or CLT, and closed panel walls, or panellisation, meaning pretty much the entire wall including fitted windows and doors can be pre-made at the factory and sent out as a flat-pack.
“We’re making all those in our factory and they’re going to site as closed panel walls,” Strong says. “I feel this solution is the sweet spot for apartments up to six floors. So medium rise, affordable apartments projects. It’s much more competitive.”
Savings can be up to five per cent, he says, pointing out that can be big dollars on a project of, say, $45 million. Plus there is the potential to shave up to four months off construction time.
China building code recognises radiata pineRadiata pine structural timber included in Chinese Code of Design for Timber Structures - The revision of the Chinese Code of Design for Timber Structures GB50005 is to be published on 1 August 2018.
Of interest to producers of radiata pine structural timber will be the inclusion of design properties for grades and sizes of NZ radiata pine.
The grades included are SG6, SG8, SG10, SG12 and SG15.
Sizes included are 45x75, 45x90, 45x140, 45x190, 45x240 and 45x290.
To be able to use the design properties stated, the timber must be graded and verified according to NZ rules, i.e. verification must be done to NZS 3622, with third party auditing.
This means that for the first time engineers in China will be able to design buildings using the NZ grades and sizes.
WPMA cooperated with SCION in getting these NZ radiata pine grades included in the revision; and received extensive assistance from Ministry for Primary Industries and Indufor Group.
Work is now being done to develop the handbook for GB 50005, coordinated by WPMA and SCION; meetings are attended by Dr Minghao Li from University of Canterbury and Bill Lu of Indufor Group. Assistance is again being provided by MPI and also by the Ministry of Foreign Affairs and Trade.
Source: Wood Processors & Manufacturers Association
Log import log news from ChinaChina to end to volume checks on imported timber – China’s General Administration for Quality Supervision, Inspection and Quarantine has announced that the requirement for checking the volume of imported timber has been terminated. This, say analysts, was decided in order to facilitate faster clearance for the ports and could lead to lower transit costs for importers.
Closure of timber enterprises in Taicang city – It has been reported that a zero tolerance measure has been taken on pollution from wood processing factories in Taicang City. This is part of the action on environmental pollution controls in Jiangsu province. An official notice (20 December 2017) was posted declaring that all wood processing factories in Taicang City must immediately cease production. All wood processing companies are required to relocate before 20 January this year.
Rise in log imports through Xiamen – According to the Xiamen Entry-Exit Inspection and Quarantine Bureau, log imports through Xiamen Port totaled 1.905 million cubic metres valued at US$46 million in 2017, up 10% in volume and 11% in value compared to 2016.
The imported logs were from 37 countries with New Zealand, Australia, the USA and Estonia topping the list in terms of volumes. Imports from New Zealand totaled 962,000 cubic metres valued at US$130 million and accounted for over 50% of the total volume and total value of imports through Xiamen Port.
The volume and value of imported logs from Estonia rose 103% and 138% respectively in 2017. According to the statistics, imported goods from Estonia through Xiamen port were valued at US$9.42 million of which 98% were logs.
The species of imported logs through Xiamen port are radiata pine, spruce, scots pine, ponderosa pine and loblolly pine but over 70% of the logs imported were radiata pine.
Source: ITTO TTM Report
... Almost finally ... Loggers vs lynx in USANow, here's a story you seldom see - the lynx has been declared to be no longer an endangered species in the United States.
Montana - Wildlife officials in the United States declared Canada lynx recovered on Thursday and said the snow-loving wild cats no longer need special protections following steps to preserve their habitat. The Fish and Wildlife Service said it will begin drafting a rule to revoke the lynx’s threatened listing across the Lower 48 state under the Endangered Species Act.
Wildlife advocates said they would challenge the move in court. First imposed in 2000, the threatened designation has interrupted numerous logging and road building projects on federal lands, frustrating industry groups and Western lawmakers. Some scientists and wildlife advocates have warned that climate change could reduce lynx habitat and the availability of its primary food source — snowshoe hares.
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That's all for this week's wood news.
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