Friday Offcuts 29 August 2014
This week we have some research supplied by WOOD MARKETS into India where growing interest is being shown by wood producers. India has the second-largest population in the world at 1.21 billion and is expected to surpass China by 2025. New Zealand has been in this market since the mid-90s and still dominates softwood log imports into the country (81% of the total). Opportunities for wood and lumber exporters to India are thought to be substantial.
Interest in a series of technology related events for Australia and New Zealand has really ramped up this week with phones running hot. ForestTECH 2014 in late November in both countries has already built up quite a list of presenters waiting in the wings with both programmes already full to overflowing. It will be one of the largest gatherings of forest inventory and resource planners seen in this region for some time.
If planning to attend, it’s probably best you check out the story below. A number of other major meetings have been planned around either the Rotorua or Melbourne events, including, a Cengea Solutions one-day workshop for their Australasian clients in Rotorua on Tuesday 18 November (the day before the New Zealand conference), a LiDAR analysis introduction course is being run the day after the Rotorua conference on Friday 21st November by Interpine and a half-day practical workshop run by Australian forestry companies (including FCNSW, HVP, Forestry Tasmania and HQPlantations) along with the Canadian Forest Service on the operational deployment of LiDAR and remote sensing has also been scheduled for Wednesday 26 November in Melbourne. Make sure you build this into your planning schedule.
For Wood Innovations 2014 being run in 2-3 weeks’ time, 3-D printing specialists have been lined up to present in both Rotorua and Melbourne to open local wood treatment and processing companies eyes to the possibilities of this new process to future design and manufacturing (see story below). For planning again, remember in Australia, the Timber Preservers Association of Australia (TPAA) will be running their own Technical and Council meetings along with the 2014 Annual General Meeting the day before the Melbourne conference runs, on Monday 22nd September 2014.
Finally, we outlined in last week’s issue that sixteen Best Practice Guidelines and three training DVDs could now be accessed free of charge through New Zealand’s forestry ITO, Competenz. At the recent Wood Flow Logistics event run in Melbourne in mid-June, PF Olsen Australia outlined the draft of the Log Haulage Manual, a training manual for drivers and loaders. The new manual has now been completed and is available through the ForestWorks website. Enjoy this week’s read.
This week we have for you:
Foresters like Labour's climate proposalLabour’s proposal to set up an independent Climate Commission to advise the New Zealand Government on how to meet its emissions targets has been welcomed by the Forest Owners Association.
“It will reduce the likelihood of governments tinkering in the ETS. This, together with clear price signals for carbon, will enable businesses and land owners to adopt low-carbon strategies with a much higher level of confidence,” says FOA environment committee chair Peter Weir.
“Ever since climate change arrived on the agenda, we have been asking the major political parties to stop playing politics with carbon emissions and pricing. The most recent ETS change undermined investment in forestry with an overnight, unannounced, change that prevented Kyoto forest owners from using international units to settle their emissions obligations. Forest owners were the only emitters to be singled out in this way, contradicting assurances made by the government only six months before. “The government has agreed to reconsider that change, but we are still waiting to hear if they will work with us on a mutually beneficial solution.”
Mr Weir says moving New Zealand to a low-carbon economy has huge benefits, quite apart from the message it sends to the world about Kiwis playing their part in addressing the global problem of climate change.
“Crown Research Institute Scion says there are around half million hectares of marginal farmland that would be better off in forestry for a whole host of environmental and economic reasons. Among them, cleaner rivers, less soil erosion, more biodiversity protection and greater long- term surety of log supply to major wood processors. But at current land prices, it is not economic to develop this land for forestry based on log prices alone.”
Mr Weir points out that the prevailing low carbon price has devastated the tree nursery sector. Nurseries scaled up production when new land planting took off in response to an initial carbon price approaching $20 a tonne, only to have to mulch in seedlings when the government allowed the carbon price to fall back to 12 cents a tonne.
“A realistic price for carbon and an independent Climate Commission to keep the policies of successive governments on track, would – in combination with Labour’s proposed “Wood-First” construction policy – encourage both new planting and replanting to the benefit of the economy and the environment,” he says.
Let’s all ‘Touchwood’We can’t escape the use of timber. It literally surrounds our lives. But, what if there is a way to provide more timber from fewer trees?
Timber scientist, Christopher McEvoy began Radial Timber Sales in 2004 because he saw a need for the timber industry to head in a new direction. His vision began when he became involved with the world’s first radial saw mill. The trees that Radial Timber uses are established and managed through their affiliate, Heartwood Plantations and are part of a renewable forest cycle.
McEvoy explains that “all of his plantations are old farmland which is converted to native plantations with endemic trees from the Gippsland region”. Each tree is then grown for 20-30 years, harvested, and a new tree re-planted to ensure a constant cycle of forest growth. This not only ensures the plantation does not need to expand, but also maximises carbon storage from the trees, creating a renewable forest cycle.
In line with the move towards forest sustainability, McEvoy recently launched his campaign, Touchwood, which aims to educate Australians in sustainable timber initiatives. Providing an opportunity for the community to make a difference, the campaign promises to plant a new native tree in their plantation for every ‘Facebook Like’ they receive.
“Radial Timber is just a small company in the timber industry but if Australia gets behind us we are prepared to plant up to 2 million trees in our plantation by the end of the 2020” says McEvoy. For more information visit the Touchwood website and then like, or share, their Facebook page.
New Zealand Log Prices - August 2014In-market log prices have stabilised in China, with A-grade log prices currently sitting at US$125/JAS, up from US$120/ JAS a month ago. Agrifax’s average for the past month is US$123/JAS, which reflects the fact that prices fell lower during the month, but have now bumped back up. Pruned log prices in China have moved up by 5% on average for the month to August.
Despite earlier reports of inventories starting to decline, further deliveries of NZ logs that were held back on NZ ports have meant that supply is still exceeding consumption in China. Various reports on inventory levels put the total at 4.5-5 million tonnes on ports, though there may have been regional declines in some areas offset by larger deliveries to other ports. However, the decline in deliveries does appear to have done enough to restore confidence that the lower price will correct supply in the market. With prices bouncing off the bottom in August it’s widely suggested that the low point has now been found, and prices will slowly recover from here.
The major barrier to recovery for in-market prices in China continues to be the high inventories and an increase in inventories in July is a setback. This not only pushes out the recovery by a month, but the volume added to inventory in July will likely take more than an extra month to clear. Overall the Agrifax Log Price Indicator was up by less than one point in August, which arrested four months of consecutive drops. Slight rises in export log prices was the turning point for the indicator, and offset the slight declines in domestic structural log prices.
Freight and foreign exchange movements helped returns at the wharf-gate for NZ exporters, and in-market log prices are now expected to have found the bottom of their fall and moved back up slightly during August. However, ports in China still have very high inventories which are reported to have climbed during July. This means that although supply is correcting downwards to the new prices, inventories may take longer than expected to decline back to normal levels.
Sawn timber use in NZ is estimated to be increasing, at the expense of exports. With building consents continuing to climb, demand for sawn timber during summer is expected to increase. This suggests that structural logs will continue to be in high demand and with harvesting declining there may be pressure on prices for the fourth quarter.
The Agrifax log price data is a weighted average of prices collected each month from a range of New Zealand log buyers and sellers. Log prices shown in the table will vary regionally and by supplier and should only be used to provide a broad trend of log price movements.
Planning around this year’s ForestTECH 2014Interest already in this year’s forest inventory and remote sensing event has been outstanding. Details on the early programme can be found on the event website, www.foresttech2014.com
For planning purposes, it runs in Rotorua, New Zealand on 19-20 November – and again in Melbourne, Australia the following week on 25-26 November 2014.
If planning travel or registrations for staff at either event, its best you look to arrange travel around some of the other events already being planned to coincide with the November forestry technology series. So, what else is being planned?
1. A practical half day workshop has been set up for Australian forestry companies to share information on research and the operational deployment of LiDAR and remote sensing into their own operations. This is being led by FCNSW, HVP, Forestry Tasmania, HQPlantations and the Canadian Forest Service and is planned to run on the second afternoon of the two-day Melbourne event on Wednesday 26 November.
2. In New Zealand, Cengea Solutions have planned a one-day workshop for their Australasian clients the day before the Rotorua conference, on Tuesday 18 November.
3. In New Zealand a LiDAR analysis introduction course to learn how to manipulate and utilise LiDAR datasets (with a specific focus on forestry derived outputs, such as terrain and vegetation surfaces, vegetation related metrics, through to extracting plot and tree level) is being run the day after the Rotorua conference, on Friday 21st November by Interpine.
The practical workshop is aimed at building on the ForestTECH 2014 conference content and will allow people to start using the technology and understand how to utilise the data. Participants will be using forestry specific LiDAR derived datasets in software such as FurgoViewer, Quick Terrain Modeler, LasTools, Fusion and ESRI ArcMap. Further details can be found by clicking here
So if planning to attend or send staff, ensure you allow plenty of time – and book early. Interest as mentioned is already very high. Full details on the ForestTECH 2014 event for both countries can be found on www.foresttech2014.com
3D printing focus for Wood Innovations 2014 dinnersWith technology very much at the fore for the Wood Innovations 2014 programmes running in mid-September, wood treatment and manufacturing companies in New Zealand and Australia will be provided a rare insight into the “New world of 3-D printing” as part of the dinners for both events.
In New Zealand, Johan Potgieter who absolutely wowed delegates at the recent MobileTECH 2014 event in Auckland, will be presenting. Johann is an Associate Professor in Mechatronics and Robotics in the School of Engineering and Advanced Technology at Massey University (Auckland). He’s currently conducting consulting research with HIEFF Engine and Chrysler in Detroit. In addition to being an avid user of additive manufacturing since the mid-90s Johan has a well established reputation for his work in educational robotics - so much so that he has been inducted into the World Robotics Education and Competition (REC) Foundation Hall of Fame.
In Melbourne the following week, Ian Gibson, Professor of Industrial Design at Deakin University, will be presenting. He’s currently spearheading the implementation of the new and ground-breaking Centre for Advanced Design and Engineering Training and calls himself a “3D Printing dinosaur”. Ian started working with the technology way back in 1992 at Nottingham University, where he helped set up the first Rapid Prototyping (as 3DP was called then) research facility in the UK. He’s established a world-class facility in Hong Kong, helped set up the Global Alliance of Rapid Prototyping Associations and has been involved in in the field of tissue engineering and medical applications in Singapore.
Both presenters as part of the Wood Innovations 2014 event in mid-September will really open the eyes of local wood manufacturers to the possibilities that exist with 3-D Printing or additive manufacturing. It will have a major impact on this industry in the not so distant future – and could well play a part in your own operation. Full details on the Wood Innovations 2014 even can be found on the event website, www.woodinnovations2014.com
Log haulage manual now completedForestWorks in Australia has been developing a Log Haulage Manual to improve safety standards and best practice operations in the industry. The resource is now complete and available to download from their website.
NZ lumber market updateDemand for sawn timber in NZ has continued to increase during 2014. Estimates of domestic use of sawn timber can be derived from Ministry for Primary Industries statistics of production, exports and stocks. The data show that domestic sawn timber use was over 600,000m³ during Q2 2014, the first time that this has occurred since Q3 2010, and only the second time in the past six years. However, as production has remained relatively flat and stocks actually rose from Q1 to Q2, it means that the increase in the domestic market for lumber has come at the expense of export earnings, rather than from an overall increase in production.
Overall, sawn timber production for the second quarter was down 1% year-on-year, and 2% up on the five year average for the second quarter. Estimated domestic sawn timber use rose by 30% year-on-year for the second quarter, which was offset by a 26% decline in exports, and a 5% rise in stocks. The largest declines in lumber exports were a 43% drop in exports to China, while exports to South East Asia, Australia and the US were down 10%, 11% and 6% respectively.
The current outlook for sawn timber is for increasing demand for the rest of 2014 and into the start of 2015. With residential housing consents in NZ growing steadily, domestic sawn timber use will continue to increase. There is also growth in US housing starts, which will increase demand for imports there. In the past NZ lumber exports to the US have been closely linked to housing starts there, and this means that with housing starts forecast to grow steadily, there should be increased demand for NZ lumber there too.
New report out on China Softwood Market
China continues to have the largest impact on regional softwood trade and price development in the Asia Pacific. China's market impact affects us all: forest investors, growers, contractors, processors, traders and infrastructure operators. Poyry believes China will continue to dominate the regional softwood market over the next decade.For this reason Poyry Management Consulting (Australia) Pty Ltd in collaboration with Poyry (Beijing) Management Consulting Co. Ltd. Shanghai Branch has just completed the latest Poyry insight report: "China Softwood Market: The Real demand drivers and implications for investment and trade". This 103 page report covers:
Possibility of pulp mill still being built in TasmaniaThe receiver for bankrupt Gunns Ltd., Korda Mentha, is discussing the possibility of constructing a pulp mill in the Tamar Valley of Tasmania, Australia, Seven News reported this week. The ratification by the Supreme Court of a deal to pay A$50.6 million to 9,000 managed investment scheme growers is paving the way for Korda Mentha to focus on selling the permits for the pulp mill. This gives certainty to parties regarding who owns 50,000 hectares of timber, which would be the likely source of fibre for the pulp mill license, a spokesperson for Korda Mentha said. In January the law was changed to extend the life of the permits in order to make them more appealing to potential purchasers.
Source: Seven News
Tasmanian forest peace deal repeal passedThe Tasmanian Government's bill to dismantle the forest peace deal has passed through the Parliament's Upper House. The Legislative Council held its third reading of the bill yesterday morning before voting nine to five in favour. On Wednesday MLCs passed a raft of amendments, making Thursday’s vote a formality.
After four years of negotiations and countless hours of debate in Parliament, the forest peace deal has come full circle. The deal added an extra half a million hectares of native forest to the state's existing reserves of one million hectares. The repeal bill will reclassify 400,000 hectares of native forest for potential future logging.
Tasmanian Resources Minister Paul Harriss told Parliament it was a turning point for the state. "It puts a stop to 30 years of encroachment of the Green tide which has smashed our economy and busted our budget," he said. It's the first major piece of legislation the Liberal Government has been able to get through the parliament albeit with a few amendments to appease the specialty timbers sector. It will be able to source wood from certain areas, without having to adhere to Forestry Tasmania's standards, but not for another three years.
Phill Pullinger from Forestry Tasmania said it was an unsustainable situation. "Moving to open those places up to logging is a recipe for conflict so it's sad the Government has taken this backwards approach, ultimately it's an approach that will fail," he said. Terry Edwards from the Forest Industries Association however was cautiously optimistic the industry would benefit. The bill will now go to the Lower House.
Regional investment tool for New Zealand releasedNZTE has developed a set of 14 Regional Investment Profiles in partnership with Economic Development Agencies to promote investment opportunities in each region of New Zealand. Released earlier this month the profiles provide information about sector strengths and how these are supported by each region’s workforce, raw materials, services and infrastructure. They also include case studies and comments from businesses that have invested in each region. Read More
Satellite data to help land ownersAbout 60 percent of California is experiencing “exceptional drought,” the U.S. Drought Monitor’s most dire classification. Without enough water in the soil, seeds can’t sprout roots, leaves can’t perform photosynthesis, and agriculture can’t be sustained.
Currently, there is no global network monitoring soil moisture at a local level. Farmers, scientists and resource managers can place sensors in the ground, but these only provide spot measurements and are rare across some critical agricultural areas in Africa, Asia and Latin America. The European Space Agency’s Soil Moisture and Ocean Salinity mission measures soil moisture at a resolution of 50 kilometers, but because soil moisture can vary on a much smaller scale, its data are most useful in broad forecasts.
Enter NASA’s Soil Moisture Active Passive (SMAP) satellite. The mission, scheduled to launch this winter, will collect the kind of local data agricultural and water managers worldwide need.
SMAP monitors the top 5 centimeters of soil on Earth’s surface. It creates soil moisture estimates with a resolution of about 9 kilometers, mapping the entire globe every two or three days. Although this resolution cannot show how soil moisture might vary within a single field, it will give the most detailed maps yet made.
“If farmers of rain-fed crops know soil moisture, they can schedule their planting to maximize crop yield,” said Narendra Das, a water and carbon cycle scientist on SMAP’s science team at NASA’s Jet Propulsion Laboratory in Pasadena, California. “SMAP can assist in predicting how dramatic drought will be, and then its data can help farmers plan their recovery from drought.”
Supply constraints looming; opportunities arise in India!India is unique. It is the planet’s largest democracy and within ten years should be the world’s most populous country. India exists as an amalgamation of cultures, languages, religions, poverty and wealth, all co-existing in relative harmony and peace. It is simply a remarkable country.
August’s issue of WOOD Markets Monthly International Report says that India has always had a wood culture. The use of wood is centuries old, particularly in interior design and furniture. India uses more wood for interiors than Japan, virtually all of it is hardwood and, until recently, most of that was (50%) was teak! However, due to the deteriorating quality of available teak and a growing awareness of alternatives, many new products have arrived in the marketplace. The consumer is ready for change and, in fact, must change; as we all know, with change there always comes opportunity.
Softwood has long been looked upon as an inferior species by Indians, based largely on misconceptions about the characteristics of the species. However, in the last few years with the flood of softwood logs into the market, perceptions are changing. Softwoods are finding their way into the window- and door-frame market, into flush doors, and into furniture, and also into the lower-end packaging and construction applications. Manufacturers are learning to utilize these “new” woods effectively, and there is little doubt this trend will continue.
India has the second-largest population in the world at 1.21 billion; this should surpass China by 2025. However, the most interesting and important story in the demographics is that 50% of the population is currently under 25 years old, with the average age only 27. India has a young and increasingly sophisticated population. This group will become the drivers of the consumer revolution now beginning in India. India is a market that offers a huge population, good demographics, a democratically elected government, steadily growing per capita income, the ability to do business in English, and a need for wood!
For centuries, India was self-sufficient in wood supply. In fact, one of the attractions to the early traders was not just India’s spices, but also the abundance of exotic hardwoods available there, from teak to sandalwood to rosewood and many more. Much of this was carted back to Portugal, Spain, Great Britain or other European destinations, along with loads of spices. Due to the rapid depletion of forest cover, the government banned logging in the national forests (above 1,000 metres in elevation) in 1988.
After that, sawmills were forced to rely on logs from “trees outside forests” (TOF) or move to imports. The TOF included privately owned forests and forests managed by local communities. Many of these are now plantations of a wide variety of species — mainly teak, eucalyptus, poplar, mango, palm and pine. Most of this fibre goes into wood pulp, composite board fibres and plywood/veneer. There are some sawlogs, but plantation owners are reluctant to allow the forests to mature long enough to harvest the wood as sawlogs: they simply need to turn the crop into cash. With the cost of money hovering at around 10%, this is a simple business exercise in economics.
So, although at one time self-sufficient in forests, India now has to import rising volumes of wood to meet its growing demand. To make matters worse, the country is still losing forest cover at the rate of about 165 hectares per day (~50,000 hectares per year; Times India, June 11, 2013). Today, India still has indigenous forests, but these are slowly disappearing. In addition, wood demand has grown almost exponentially, and India now has to import more that 7.5 million m3 per year of logs and lumber to meet its current demand. Almost all of the required volume is imported as round wood in order to feed the vast number of sawmills that still exist (there are more than 26,000 sawmills and another 2,500 plywood/veneer plants scattered near the ports and around the country in India).
All of these mills rely on a steady diet of logs to survive, and this has resulted in 92% of all imports of wood occurring as roundwood (logs). The question is, as demand grows, will there continue to be enough logs to satisfy these mills? The answer: not likely. Since India has this large and growing wood deficit, supply constraints will eventually translate into good opportunities for softwood and hardwood sawn lumber producers/exporters. In fact, there are some big changes already starting to occur in imports.
Background: The Province of British Columbia (through FII, Forestry Innovation Investment), and the Government of Canada (through Natural Resources Canada) support market development efforts for Canadian wood exports. FII is leading an initiative to establish Canadian and, most specifically, B.C. softwoods in the market. The organization has opened an office in Mumbai and is busy promoting B.C. wood products at trade shows and speaking forums, and also to an array of professional groups. Brian Leslie is Technical Advisor, FII India, and is based in Mumbai. The above commentary is based on the research of Brian Leslie.
Source: International WOOD MARKETS Group, www.woodmarkets.com
Buy and Sell
...and one to end the week on...the tie down
Question. Would you tell them or just watch?
And on that note, enjoy the weekend. And yes, the score line last weekend at Eden Park was better than the previous week. Cheers.
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