WoodWeek – 29 September 2021

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Greetings from another eventful news week in the world of wood. With log exports down the news is not currently getting any better. Shockwaves are reverberating beyond China from a substantial property company struggling to come up with terms to pay its massive debts. There is a concern for the property sector in China as property developer Evergrande faces the risk of default.

Evergrande — the world's most heavily indebted property company — is suffering a liquidity crunch that could prove terminal. The crisis at the company, which as recently as two years ago ranked as the world's most valuable property stock, highlights both the speed at which corporate fortunes can unravel and the deep flaws in China's growth model. Evergrande currently has 778 projects underway in 223 cities. The property sector contributes 28% of China’s economy and has been one of the engine rooms for China’s economic development. The Chinese government therefore will most likely intervene in some form.

What does the future hold for carbon? Having recently hit $60 a unit, carbon forestry is arguably more profitable than sheep and beef. The biggest players are making millions of dollars as the industry expands. But what does the future hold and is carbon farming squeezing out productive land use? Jamie Gray, business reporter for the NZ Herald investigates.

A deal has been finalised that will soon see the largest vessel to ever call at New Zealand for the loading of logs. Oldendorff Carriers has now concluded two deals that will bring Post-Panamax vessels to load logs from Tauranga. Both fixtures will see Oldendorff provide ships that will be over 30,000mt deadweight more than the current largest vessel to have loaded logs from New Zealand.

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PF Olsen Log Export Market Update


AWG Prices - There was little change in AWG pricing in North Island ports apart from Gisborne. The loading of logs into ships continued at Covid-19 Alert Level Four, and a dispensation was provided in Gisborne to cart-in bush stocks for the last couple of days at Alert Level Four. This helped to reduce the queue of log vessels at Eastland Port. Even though AWG pricing for logs at Gisborne increased $16 per JASm3, the pricing levels at Gisborne could increase by about the same amount again if demurrage costs were all but eliminated.

China ~ The CFR price for A-grade logs in China has increased 10 USD per JASm3 this month. Prices for A grade logs currently range from 175-182 USD per JASm3, depending upon the sharing of demurrage costs between seller and buyer. The daily port off-take of logs is still stubbornly low at 65k m3 per day. Log stocks in China have not increased but there is a lot of volume on boats queuing at Chinese ports. Some industry observers estimate log stocks could be over 7m m3 including all the volume on the water.

Congestion in China has reached the point where at the end of August approximately six percent (599) of the worlds handy size fleet capacity was queueing off the China coast. This has two effects, high demurrage, and reduced shipping capacity. This congestion has been caused by China authorities reacting to Covid outbreaks by closing ports, delaying berthing, and imposing strict procedures that have reduced ship handling capacity. There has also been strong demand for grain, minerals, and iron ore imports.

There is a concern for the property sector in China as property developer Evergrande faces the risk of default. Evergrande currently has 778 projects underway in 223 cities. The property sector contributes 28% of China’s economy and has been one of the engine rooms for China’s economic development. The Chinese government therefore will most likely intervene in some form. Even if the central government opts to let Evergrande default rather than bail it out directly, authorities are likely to be involved in coordinating the continuation of these projects that employs 163,000 people. There will, however, be short term disruptions.

The Caixin China General Manufacturing PMI fell to 49.2 in August 2021 from 50.3 in July, missing market estimates of 50.2. This was the first contraction in factory activity since April 2020.

Source: PF Olsen Wood Matters


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Jamie Gray: Where is Carbon Headed?

Millons at stake: What does the future hold for carbon? Having recently hit $60 a unit, carbon forestry is arguably more profitable than sheep and beef. The biggest players are making millions of dollars as the industry expands. But what does the future hold and is carbon farming squeezing out productive land use? Jamie Gray investigates.

Matt Walsh and Bruce Miller have been at the sharp end of business throughout their careers. Now they head up NZ Carbon Farming with skills honed on the commodities trading rooms of London and the startups of Silicon Valley. Neither Walsh nor Miller would fit the environmentalist tag, but they would not fit the bill as hard-nosed money men either.

For them, it's about planting as many trees as they possibly can. Until now, they have kept a low profile, but in an interview with the New Zealand Herald, they carefully laid out The Case for Carbon. A doubling of the carbon price to $60 a unit has certainly focused attention on the sector.

NZ's biggest – NZ Carbon Farming, which has been going for 11 years, is the country's biggest carbon farmer. It has 45,000 hectares of land which it manages in conjunction with 6000 parties, many of whom are farmers, and another 45,000ha in its own right.

"We have gone on this journey with a large group of people who have benefited significantly from the value that we have been able to deliver out of carbon," Walsh says. The land use capability system used has eight classes. Classes 1 to 4 are classified as arable land, while classes 5 to 8 are deemed to be non-arable.

"We have paid those landowners $94m over the 11 years - much of that from farmland that is marginal – grade six and above - so we are very proud of what we have been able to do for those people."

NZ Carbon Farming has struck deals with Māori land owners - providing carbon income from marginal land - which Walsh says has gone on to benefit some of the poorest communities in New Zealand.

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Source: Jamie Gray, NZ Herald



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Larger Log Vessels for Export Logs

A deal has been finalised that will soon see the largest vessel to ever call at New Zealand for the loading of logs – The deal between South Pacific Shipping (SPS) and Oldendorff Carriers was brokered by Braemar ACM’s Bruce McFarlane, a Mount Maunganui local. Braemar also negotiated the deal with ISO Stevedoring that delivered the mobile cranes from the manufacturer in Germany, to the port of Tauranga, New Zealand last year.

“We saw an opportunity to bring together two major players from the logs trade and dry bulk shipping to create new economies of scale through the utilisation of the new mobile shore cranes and larger vessels at Tauranga,” says McFarlane.

Cameron Mackenzie from South Pacific Shipping commented, “We’re excited to be a part of this Post Panamax fixture with Oldendorff Carriers. Not only will this be the biggest vessel to load logs from New Zealand, loading a gearless ship is also a first for the New Zealand log export industry. Our objective is to make the supply chain as efficient as possible while maximising port throughput, as well as minimising the environmental footprint from the transportation of logs. As market leaders, we wanted to be the first to participate in something that has not been achieved before.”

Oldendorff Carriers has been part of the New Zealand logs trade for decades. The opportunity to partake in the first Post-Panamax to load logs from New Zealand suited Oldendorff’s flexibility and diversity. With over 700 vessels in their operating fleet that range from 11,000 mt deadweight through to 210,000 mt deadweight, Oldendorff has been able to draw from its extensive fleet to quickly adjust to SPS’s developing shipping requirements.

Oldendorff Carriers CEO, Peter Twiss said, “We are extremely pleased to have been able to combine our commercial, operational and technical expertise from our Melbourne office, with our large fleet, to bring new economies of scale to our clients”. Oldendorff Carriers has now concluded two deals that will bring Post-Panamax vessels to load logs from Tauranga. Both fixtures will see Oldendorff provide ships that will be over 30,000mt deadweight more than the current largest vessel to have loaded logs from New Zealand.

See full press release here

Source: maritimeprofessional.com
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Comment: The Case for Nature-Based Forests

OPINON: Anne Salmond: The case for nature-based forests - The use of 'permanent' plantations of pine trees solely to build up carbon offsets is solving one harm with another, writes Dame Anne Salmond. There is an alternative.

As Argentinian ecologist Sandra Diaz said during the 2021 Nobel Prize Winners Summit: "We have incontestable evidence that the living fabric of the earth is being unravelled fast. The only reason this is happening is the present dominant model of appropriating nature. Runaway climate change, massive biodiversity loss and intolerable social and environmental inequality among people are simply the three most serious symptoms of the same root problem. They must be tackled together."

At present, there’s a concerted push for farming carbon with ‘permanent’ monocultures of pine trees in New Zealand (‘The Case for Carbon,’ NZ Herald, 24 September).

Let’s be very clear. A joint workshop of the Intergovernmental Panels on Climate Change and Biodiversity has recently warned against trying to tackle climate change with this kind of carbon farming.

Planting pine trees across the countryside purely for carbon ignores the risks of fire and pests with climate change; the biodiversity crisis; and the need to secure local prosperity and food production. It is a classic case of silo thinking.

While native trees like totara grow for perhaps 800-900 years, sequestering carbon over many generations, pine trees grow for perhaps 80-100 years – a classic case of short-term thinking.

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Source: newsroom



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Will an Evergrande collapse hit log exports?

Evergrande and the end of China's 'build, build, build' model – A dramatic video filmed in the southwestern city of Kunming in August hints at the scale of China's property bubble. Onlookers can be heard screaming in awe as 15 high-rise apartment blocks are demolished by 85,000 controlled explosions in less than a minute.

The unfinished buildings, which formed a complex called Sunshine City II, had stood empty since 2013 after one developer ran out of money and another found defects in the construction work. "This urban scar that stood for nearly 10 years has at last taken a key step toward restoration," said an article in the official Kunming Daily after the demolition.

Such "urban scars" are common all over China, where Evergrande — the world's most heavily indebted property company — is suffering a liquidity crunch that could prove terminal. The crisis at the company, which as recently as two years ago ranked as the world's most valuable property stock, highlights both the speed at which corporate fortunes can unravel and the deep flaws in China's growth model.

Evergrande, for all of the high drama of its meltdown, is merely the symptom of a much bigger problem. China's vast real estate sector, which contributes 29 per cent of the country's gross domestic product, is so overbuilt that it threatens to relinquish its longstanding role as a prime driver of Chinese economic growth and, instead, become a drag on it.

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Source: NZHerald



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Tasman Ratepayers Benefit from Strong Log Prices

Green growth good for council's bottom line as forestry surplus hits $12.5m Higher-than-expected harvest volumes and solid log prices led to a forestry surplus of $4.1 million excluding distributions for Tasman District Council in 2020-21, driving up the overall activity surplus to $12.5m.

However, council finance group manager Mike Drummond said some of that surplus was non-cash income.

“As your trees grow, the value of the forest goes up – that is triggered as income and so it's not all a cash balance that sits within that activity,” Drummond told elected members at a full council meeting on Thursday.

TDC owns 2293 hectares of planted Pinus radiata forest, 203ha of planted Douglas fir and 29ha planted Cupressus species trees.

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Clean Vehicles Amendment Bill: Have Your Say

The purpose of the Land Transport (Clean Vehicles) Amendment Bill is to reduce the overall amount of carbon dioxide produced by cars in New Zealand. It would aim to increase the supply and variety of zero- and low-emission vehicles available to buyers by applying a clean vehicle standard to importers of new and used light vehicles. Only new and used vehicles arriving in New Zealand weighing under 3500kg would be subject to this proposed legislation, so existing second hand market vehicles will not be affected.

The clean vehicle standard would require importers to meet carbon dioxide emissions targets, based on the emissions of the vehicles they import. The bill would impose charges on importers who do not meet the applicable carbon dioxide emissions target. However, importers would be allowed to transfer carbon dioxide credits to other importers, bank any overachievement of a target for future use, and defer an obligation until the following year (for new vehicle importers only) to help them meet the target.

The bill would expand the existing clean vehicle discount scheme—established in July 2021—to include a wider range of eligible low emissions vehicles, and include charges on higher emissions vehicles. The scheme would encourage the purchase of these vehicles through rebates, and discourage the purchase of higher emission vehicles through imposing charges.

The bill would also ensure new vehicles are labelled to inform New Zealanders about vehicle emissions levels and the re

bates or charges that would apply if they were to buy the vehicle. Tell the Transport and Infrastructure Committee what you think Make a submission on the bill by 11.59pm Thursday 4 November 2021. For more details about the bill:
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Forestry Training Funding for Otago

Funding Support Secured For Forestry Pathways Programme - In its latest funding round, Otago Community Trust awarded a $19,611 grant to the Tokomairiro Training Pathways course to assist with the cost of running the Forestry Pathways Programme out of Tokomairiro Training Centre.

Tokomairiro Training programme manager Lynda Allan said the programme specialises in breaking down barriers to learning for young people, who are often at risk of dropping out of school.

“The Forestry Pathways Programme places emphasis on silviculture operations and introduces learners to a variety of industry pathways including future tertiary study and employment”.

The programme has been running for three years now, it is run for two days each week over a 32-week period and is well supported by local high schools and financially supported by several local forestry companies. The feedback we receive from students is overwhelmingly positive with several students now fully employed in the industry, said Ms Allan.

Otago Community Trust chair, Diccon Sim said trustees were particularly impressed with the Forestry Pathways Programme.

“The programme aligns closely with the Trust’s strategic priority of increased access to opportunities, particularly in its ability to provide economic benefits and enhance employment opportunities for a number of young people in Otago.”

In total Otago Community Trust approved just over $395,511 to 26 organisations in September 2021.

Source: Scoop


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Know what a ‘Limber’ is?

Without doing an online search would you have known what a Limber is? Me either?!?
Truth be known, I only looked because I thought it had to be a product made from wood with a name halfway between timber and lumber … It turns out the idea behind the name is more likely to be linked to the term “limber up” as in things that you need to do to keep your back from hurting.

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and finally ... time for a chuckle

A sweet grandmother telephoned St. Joseph's Hospital. She timidly asked, "Is it possible to speak to someone who can tell me how a patient is doing?"

The operator said, "I'll be glad to help, dear. What's the name and room number of the patient?" The grandmother in her weak, tremulous voice said, Norma Findlay, Room 302."

The operator replied, "Let me put you on hold while I check with the nurse's station for that room."

After a few minutes, the operator returned to the phone and said, "I have good news. Her nurse just told me that Norma is doing well. Her blood pressure is fine; her blood work just came back normal and her Physician, Dr. Cohen, has scheduled her to be discharged tomorrow."

The grandmother said, "Thank you. That's wonderful. I was so worried. God bless you for that good news."
The operator replied, "You're more than welcome. Is Norma your daughter?"
The grandmother said, "No, I'm Norma Findlay in Room 302. No one tells me anything."

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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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