WoodWeek 12 February 2020
Extreme conditions brought about by drought in Australia and heatwaves in New Zealand have meant that the year has started with a challenge for everyone involved. Given the long-term nature of the business relationships, the current conditions - now aggravated by recent heavy rainfall in places - will test the integrity of forest managers and their business partners across our trans-Tasman forest industries.
A quick reminder for everyone looking for valuable ways to improve their business. Please note, MobileTECHAg 2020 in New Zealand is open for registrations. This event brings a range of resource industry experts together so you can learn from others. Registrations are now also open for the FIEA Forest Industry Safety & Technology 2020. Last week we highlighted two keynote speakers on managing safety and fatigue in our workplaces. Early Bird Rates have been extended for this event, so make sure you REGISTER NOW to get your discounted ticket!
In market news we have an update on the China market. Today’s graph shows the speed at which export logs from Europe poured into China. Further reading will reveal that recently lumber exports from Europe overtook Canada’s shipments to China as well. As yet we don't have any indication of when the beetle-induced woodflows will abate from Europe.
Finally this week, we have an infrastructure story with potential for a major economic lift for the North. The recently announced "Kia Kaha Northland" plan - backed by two key political leaders in the North - sets out an ambitious plan. If achieved, it would no doubt have some effect on forestry in the North.
This week we have for you:
BREAKING NEWS - MPI says China ports NOT closedNew Zealand logs piling up at Chinese ports -The Ministry for Primary Industries says Chinese borders are NOT closed to New Zealand logs, but there are problems with over supply, and logs backing up at Chinese ports, which means the demand for new logs is falling.
Forestry contractors warn 30 percent of New Zealand's logging crews are not harvesting as a result.
Government agencies are working on a support plan for the East Coast, which is being hit particularly hard.
Julie Collins is the Deputy Director-General Te Uru Rakau. She spoke to RNZ's Corin Dann this morning.
China market changes in 2019In 2019, the most notable change in China’s softwood log and lumber market was the significant growth of such imports from Europe. This was mainly due to an infestation of spruce bark beetles and windstorms that have led to a massive timber salvage program in Europe. This has hampered the competitiveness of other softwood species in the Chinese market.
In the first 11 months in 2019, European softwood log exports (excluding Russia) to the Chinese market were a whopping 6.8 million m3 – the pace for the last three months was over one million m3 per month. This represented an increase of 484 percent over the same period of 2018. On the contrary, the softwood log supply from North America was 4.9 million m3, down 27 percent year on year.
Softwood log exports from Europe were led by Germany (3.1 million m3, up 2,764% year on year) and the Czech Republic (1.9 million m3, up 1,277% year on year). The current Cost and Freight (C&F) at China’s main ports (by containers) is about Euro 95-100/m3 (US$ 105-110/m3). The C&F for New Zealand radiata pine log is around US$123/m3, and Canadian hemlock is about US$120/m3.
European spruce logs are gaining market share at Chinese sawmills in the production of construction lumber and are displacing radiata pine logs and especially North American softwood logs. There are several reasons for this. First, the log scaling in Europe allows for at least a 5 percent gain in volume for Chinese importers — this contrasts with North American logs, where there are normally no gains or even a volume loss for Chinese importers. Second, European spruce logs are longer (mostly 5.7m to 11.5m with over-length tolerances). Better yields are achieved in Chinese sawmills with Central European logs compared to using North American logs. Last, European spruce logs are now the cheapest species in Chinese wholesale markets – even cheaper than radiata pine logs. As a result, European log imports have soared, thus pushing down the prices of North American and radiata pine logs.
It’s difficult to predict how long this trend will continue; however, we expect the supply of European spruce logs will remain strong for several years, although this does depend on weather conditions. Furthermore, more Chinese players are investing in log yards in Europe to ship logs to China at competitive prices. This will create a tough challenge for other softwood log suppliers to compete – including North American logs.
Source: Forest Economic Advisers & Canada Wood Today
CEO: VicForests will back its contractorsVicForests’ CEO Monique Dawson has committed to the continued support of 10 contractors and 90 workers who have been impacted by a force majeure notice because fires have meant timber supply cannot be guaranteed in the foreseeable future from East Gippsland.
Almost all (90% plus) of the affected contractors will remain fully employed, continuing important work on huge road clearing tasks and building firebreaks.
“We are focused on supporting our VicForests family including our contractors,” said Ms Dawson. “They are integral to the social and economic well-being of many rural communities.”
“We feel their predicament very deeply and are striving to help them in every way possible.”
Force majeure is a legal and administrative step that VicForests is obliged to take if it knows that circumstances will prevent it meeting contractual obligations. New South Wales has taken a similar step.
Ms Dawson said the loss of timber resources had not yet been conclusively assessed. The important task is to confirm not only how much forest was burnt, but the proportionate severity of the burning, and what was recoverable while protecting and promoting biodiversity and regeneration.
“This will take some weeks and possibly months to fully assess, and will involve aerial photography, using laser imaging data, and undertaking boots-on-the-ground assessments,” said Ms Dawson.
VicForests is working to minimise the effects of the fires on its businesses and contractors and seeks to recommence normal operations as soon as possible.
“Our task is to complete this work with DEWLP as soon as possible,” Ms Dawson said. “We want to provide on-going assurances to our contractors and staff and get anyone affected back to normal work.”
“In the short term, this work will include building firebreaks and emergency road clearance. “Over the mid-term it will include additional haulage through VicForests selling timber out of storage or negotiating opportunities more broadly across the industry.”
Tasmania: Norske Skog sells forestsNew Forests to Purchase Tasmanian Plantations from Norske Skog – Australia- based international forestry investor New Forests has agreed to purchase the Tasmanian plantations of a local subsidiary of Norwegian pulp and paper company Norske Skog. The purchase includes a net plantation area of more than 18,000 hectares of radiata pine in the south of Tasmania and an agreement for timber sales to the Boyer Mill, which continues to be operated by Norske Skog.
The purchase is made on behalf of the New Forests Australia New Zealand Forest Fund 3 (ANZFF3), a closed-end comingled forestry fund focused on sustainable timber plantations in Australia and New Zealand. Mark Rogers, New Forests’ Managing Director for Australia and New Zealand noted, “This acquisition is a good outcome for New Forests’ ANZFF3 and its investors, who are seeking a diversified exposure to the mature, professionally managed timberland markets of Australia and New Zealand. The purchase brings added geographic and market diversity to the fund, which will also benefit from a secure, long-term offtake agreement to the local mill.”
The plantations have traditionally serviced around two-thirds of the Boyer Mill supply. Through a long-term pulpwood supply agreement, ANZFF3 will supply 360,000 tonnes annually to the mill, commencing at completion of the transaction. Existing contracts related to the plantation estate, including forest harvesting and haulage, will transfer with the sale.
New Forests’ Matt Crapp is Director of Operations for ANZFF3 and will oversee the transition of the plantation management upon settlement, expected in mid-2020. Crapp explained, “New Forests has strong ties throughout the Tasmanian plantation industry and will appoint a reputable and experienced property manager to oversee day-to-day operations. We anticipate opportunities for current Norske Skog forest management staff to gain employment under the new property management arrangement.”
Crapp continued, “We also look forward to bringing the estate into the broader New Forests’ portfolio, where we emphasise long-term management strategies that seek to align financial value with improving productivity, promoting forest health and resilience, and ensuring that forest management contributes to local economic, environmental, and social objectives.”
Source: New Forests
Rayonier: Analysts review quarterly resultsFirst Look at RYN's Q4: Q4 Modestly Ahead, Guidance Soft - RYN reported Q4 EPS of $0.12, above BMO/consensus of $0.09. Adj. EBITDA of $65mm in line with BMO's $64mm and consensus $65mm. All three timber segments were ahead of BMO from higher vol's, offset by Real Estate (R/E). FY20 EBITDA range of $245-270mm driven by ~$25mm uptick in R/E (H2 loaded) and bumps in So. and W. harvest vol’s. Guide below BMO at $280mm and consensus of $271mm.
New Zealand (NZ). Modestly above BMO. Adjusted EBITDA $16.1mm; BMO at $13.4mm, Q3 $17.7mm, 4Q18 $19.3mm. Q4 harvests up 5% y/y and 2% above BMO. Sawlog prices were weak: Export -11% y/y, +8% q/q, Domestic -13% y/y, -8% q/q. RYN is flagging competitive pressure in China from the Euro beetle and slowing demand from coronavirus. New fuel rules will raise 2020 freight costs.
Source: BMO Capital Markets, Canada
Responsible Wood: Statement on koala deathsResponsible Wood CEO Simon Dorries has released a media statement on the land clearing koala deaths…
Following extensive media reporting of the tragic deaths of koalas in Portland, Victoria, Australia’s largest forest certification body, Responsible Wood, can confirm the private landowner is not certified to the Australian Standard for sustainable forest management. Responsible wood understands the landowner has admitted responsibility for what was an unauthorized and potentially illegal land clearing operation, and not a forest harvesting operation.
Responsible Wood CEO, Simon Dorries said the certified harvesting of plantation trees requires forestry operators to implement procedures detailed in standards to identify and protect wildlife habitat. Certified plantation forest harvests in the Portland area follow detailed koala preservation procedures.
Koala preservation procedures are also overseen by the Victorian Department of Environment, Land, Water and Planning. Drones and human spotters are used to find all koalas by experienced foresters whose aim is ensure full sustainability of the forests and their habitats.
“We share the community concern and reiterate that such an occurrence is completely in conflict with our sustainable forest management standards.” Mr Dorries said.
Responsible Wood understands the matter is being investigated by authorities and does not anticipate making further comment.
Source: Responsible Wood
Tigercat: Harvesting Head Product Line ExpandsTigercat continues to expand its range of harvesting heads with the new 568, a robust, productive four-wheel drive harvesting head for roadside processing.
The new Tigercat 568 harvesting head offers excellent productivity and reliability. Optimized harvester head hydraulics maximize performance and efficiency, while robust, high quality components provide long term reliability. Large diameter hoses and large capacity valves provide ample strength to match the greater hydraulic flow and power of Tigercat carriers.
Timed knife arms and triangulated wheel arms allow the operator to pick quickly from the pile and to maintain positive tree contact when feeding. The floating front knife and fixed back knife ensure good quality delimbing. Single or dual-track measuring wheels with a horizontally pivoting trailing-arm design, along with priority-flow length measuring, provide superior length accuracy.
The patented 4WD – 2WD auto-shift drive system provides extra power and positive grip when feeding large trees, fast speed in smaller trees, and full manual control when needed. With Tigercat’s 4-2 drive system, you get speed and powerful feeding all in one. The 568 starts in 4WD, maximizing feed force for faster acceleration and to quickly power through bigger trees. As the load drops, it automatically shifts to 2WD, improving efficiency and increasing feed speed. The system shifts back and forth seamlessly with no operator input required, all while maintaining precise and accurate length measurements.
D5 control system
The 568 harvesting head uses the Tigercat D5 control system. The system allows the operator to monitor lengths, diameters and species in real-time to ensure maximum productivity with a simple and intuitive Tigercat-developed user interface. The Tigercat D5 control system is available in three levels of bucking control and reporting: Tigercat D5 Prio, Tigercat D5 Prio PC and Tigercat D5 Optimization, allowing operators to tailor the system to their needs.
European lumber overtakes Canada in ChinaEurope surpasses Canada as lumber supplier to China - China imported approximately 3.39 million m³ of softwood lumber from Russia during 4Q 2019 (-9% compared to 4Q 2018), 1.14 million m³ from main European countries (+90%) and 761,000 m³ from Canada (-33%).
Carbon forester makes big callOne of the country’s largest forestry owners will plant 120 million trees to meet 20 per cent of New Zealand’s 2030 Paris climate commitment Agreement targets for carbon reduction, the Environment Select Committee was told in Wellington on Monday.
New Zealand Carbon Farming (NZCF), a locally-owned company which has nearly 73,000 hectares of forest in New Zealand, told the Committee that minor settings changes to the ETS will enable it to invest in an additional 100,000 hectares of planting. Under the Paris Agreement, New Zealand must make 178 million tonnes of carbon reductions in the next ten years. NZCF’s programme will deliver 36 million tonnes of that target. NZCF managing director Matt Walsh says New Zealand must show leadership on the climate emergency by taking real and concrete action to reduce emissions. “Delivering 178 million tonnes of carbon reductions in the next ten years will require major commitment to strategies that are proven and effective, now – we can’t afford to wait for a magic bullet as this target looms closer,” says Matt Walsh.
“This will take real leadership on the part of both the Government, and local businesses and communities. That’s why we’re making the largest emissions reductions pledge ever made by a New Zealand company, to deliver 20% of New Zealand’s climate commitments.”
NZCF told the Environment Committee that its pledge, which the company will meet entirely through private funding, will do more than provide an increase in permanent carbon forests in New Zealand.
“Our planting programme alone will create 2,000 new jobs in rural New Zealand – in regions that are crying out for investment,” says Matt Walsh.
“We are also leaders in the science of forest regeneration – a technology we’d like to see recognised in climate legislation. We actively manage our forests to return them to a native state, managing succession and speeding up regeneration to create an indigenous, biodiverse forest.”
“We have also seen the potential for a wide range of complementary businesses, from honey to adventure tourism, to establish alongside our forests, creating business and employment opportunities for regional economies.”
Mr Walsh says the selection of land for new planting is also very important to the success of the programme.
“This programme isn’t going to have any effect on the availability of productive farmland. We only plant on the most marginal land – areas that are hard to access, erosion prone and with no other productive purpose.”
“And the amount of land we need to meet this legacy is tiny. By planting less than half of 1% of marginal land – we will achieve 20% of New Zealand’s emissions target.”
NZCF has the proven ability to deliver on the pledge. Over the last 10 years, the company has reduced New Zealand’s emissions by 19 million tonnes.
“Our forests are currently the engine for New Zealand’s carbon reduction programme, storing 4.5 tonnes of carbon per minute – every minute of every day. To-date, we have achieved the equivalent of taking every car off New Zealand’s roads for a year.”
Mr Walsh says NZCF has recommended simple improvements to the Climate Change Response (Emissions Trading Reform) Amendment Bill, currently at the Select Committee stage, which based on the company’s experience of ten years in the ETS, will make a significant contribution to New Zealand’s emissions reductions.
“For us to make our 20 per cent pledge possible, we need the Government to ensure ETS settings are fair and encourage more participation by local investors, including small communities, landowners and iwi.”
In particular, Mr Walsh says the wider industry, including NZCF, is seeking to gain greater flexibility for existing forest owners.
“Over 70 per cent of the industry is in support of a change in the settings to enable an existing ETS forest to be replaced by a forest planted on other land.” This includes Tainui, Nga?i Tahu, Ngati Porou, FOMA, Forest Owners Association, Farm Forestry Association, Scion, Matariki, Port Blakley, PF Olsen, BP, Shell, OMF, Carbon Match and World Wildlife Foundation. ?
Known as carbon equivalent forestry land swaps, or offset planting, the policy has already been in place in the ETS for 6 years and is already part of New Zealand’s international obligations. NZCF’s proposal is to make this setting more equitable across the board, by also extending offset planting to ETS forests that are part of carbon accounting.
“This change will not cost the Government at all – in fact independent economic analysis by Sapere has established that every hectare offset planting is applied to generates between $7,900 and $12,200 in benefits to the national accounts – up to $1.2 billion which can be returned to New Zealand families and communities from our programme alone.”
“We believe making these minor changes to make the system fairer and remove some of the current uncertainties and will enable land use flexibility including our own 120 million trees programme.”
“We hope the Government recognises the importance of urgent and significant action on climate change, and enables local businesses like ours to play a major role in meeting New Zealand’s international commitments.”
Double whammy for mill workersWorkers at Carter Holt Harvey's Whangarei sawmill are "disappointed" with the company's announcement confirming the mill's closure, union representatives say.
On Monday, CHH Timber chief executive Clayton Harris confirmed a final decision had been made to close the mill, with the loss of 111 jobs, after consultation started in January.
The closure was disappointing and a "double-whammy" for the industry which is already under stress from coronavirus, said Northern Amalgamated Workers Union secretary Maurice Davis.
Log exports to China have slowed and forestry workers around the country have downed tools, due to fears of coronavirus spreading. The mill's closure would impact 111 jobs, plus up to 40 sub-contractors, Davis said. But he had faith the workers, who had much- needed skills, would be able to find new jobs.
Northland infrastructure bid gaining supportResponse To Kia Kaha Northland “Absolutely Extraordinarily Positive” - Northport must commit to being among the world’s cleanest, greenest, lowest- carbon and most sustainable ports as it takes over functions from Auckland over the years ahead, the Mayors of the Far North, Whangarei and Kaipara said on Sunday.
The Mayors said there would be no port expansion northwards into Whangarei Harbour, with Northport being required to expand its current operations only east and west. The new four-lane highway and double-tracked railway must also be suitable for the electric and hydrogen vehicles of the future, they said.
The Far North’s John Carter, Whangarei’s Sheryl Mai and Kaipara’s Jason Smith were commenting after the first week of Kia Kaha Northland, a campaign for Northlanders to say yes to five major projects that will connect Northland to Auckland and the world and transform the regional and national economies. High- level decisions on the five projects will be made in the next 112 days.
“The response from Northlanders, Aucklanders and people from all around New Zealand to Kia Kaha Northland has been absolutely extraordinarily positive,” they said.
“We have had support from right across the political spectrum, from Maori and Pakeha, from farmers and city-dwellers, from chambers of commerce and community volunteers, and from Northlanders from southern Kaipara to Cape Reinga.
“More than 117,000 people have engaged with our content on Facebook, over 25,000 have watched our first video all the way through, and over 3000 are now formally backing Kia Kaha Northland by liking our page.
“The message is overwhelmingly that central government needs to get on and make the Big Five happen – for the benefit not just of Northland, but of Auckland and all of New Zealand.”
The five projects Kia Kaha Northland is campaigning for are:
1. A $240 million dry dock to enable ships from New Zealand and Australia to be serviced and repaired in Whangarei rather than have to make the long trip to Asia.
2. A new base for the Royal New Zealand Navy to replace that at Auckland’s Devonport.
3. An expanded Northport to take the cars and containers currently entering New Zealand through the port in the Auckland CBD, and for exports from Northland and elsewhere.
4. The completion of a four-lane expressway from Whangarei to Auckland, including the planned four-lane highway to Port Marsden.
5. Fast-tracking a double-tracked rail line from West Auckland to Whangarei, including the planned spur to Port Marsden.
“The most common feedback from Northlanders so far is ‘yes, make the Big Five happen, but make sure you protect our environment, cultural heritage and unique Northland way of life’,” the Mayors said.
“We agree 100%. None of the Big Five will be allowed to happen willy-nilly. They will be carefully regulated by the Northland Regional Council, Patuharakeke Te Iwi Trust Board and iwi, and every Northlander who loves our region.
“As Northland’s mayors, we will be the first to board the protest vessels or go to the barricades if there is any serious risk to our marine or land environments, cultural values or unique Northland way of life.
“Northlanders can be assured that the four-lane highway and double-tracked rail line must be suitable for electric and hydrogen vehicles, and that Northport will be New Zealand’s most modern port, among the world’s cleanest, greenest, lowest- carbon and most sustainable.
“There will be no port expansion northwards into Whangarei Harbour, with Northport being required to expand its current operations only east and west.”
The Mayors said the first-week response to Kia Kaha Northland, for which no ratepayers’ funds are being used, had exceeded the campaign’s forecasts, but there was still a long way to go.
“Bluntly, outside the excitement of Waitangi week, the Wellington bureaucracy ignores Northland and no politician of any party colour will ultimately press go on the Big Five unless Northlanders say loud and clear that we want them,” they said.
“We need all Northlanders to support Kia Kaha Northland by liking it or following it on Facebook, Twitter and Instagram, or by emailing, calling or writing to the Prime Minister, the Deputy Prime Minister, the Leader of the Opposition and our local electorate and list MPs. We need to make 2020 Northland’s year.”
Photo credit: NorthPort
Buy and Sell
... and finally ... time for a chuckle
If ever there was a time you needed to laugh it would have to be when you thought
the New Year might be a bright one and instead our collective business prospects
have been dented by heat, wind and water (first not enough; then too much).
New to town, a lady was eager to meet people and make friends. So one day she struck up a conversation with the only other woman in the gym. Pointing to two men playing racquetball in a nearby court, she said to her, "That's my husband." Then she added, "The thin one--not the fat one."
After a slightly uncomfortable silence the other woman replied, "And that's my husband - the fat one."
A Giraffe walks into a bar.
The barman said, "We've never had a giraffe in here before."
The giraffe said, "I'm not surprised, that door-frame is far too low."
SuperBowl joke - A college senior took his new girlfriend to a football game. The young couple found seats in the crowded stadium and were watching the action. A substitute was put into the game, and as he was running onto the field to take his position, the boy said to his girlfriend, "Keep and eye on that guy, I expect him to be our best man next year."
His girlfriend snuggled closer and said to the surprised young man, "That's the strangest way I ever heard of for a fellow to propose to a girl. But, hey who cares, I accept!"
A bloke was sent to prison and on the first day said to his cell mate,
"I won't be in here long."
He replied, "Well the judge did give you 6 years."
"Yeah I know, but I think the wife will break me out, she's never let me finish a sentence before."
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