Friday Offcuts 27 July 2012
You’d have to ask why this didn’t happen before Monday. The deal was announced some 13 months ago. Early reports (maybe premature) mid-week from the Australian newspaper said that negotiators may well have agreed on 525,000 hectares of native forest being protected, the largest allocation in the State's history. Word out there at the moment is that any deal struck is also expected to cost more than the AU$276 million already allocated.
Gunns is of course still in the news. This week Gunns weren’t commenting on reports that its creditors have called in an insolvency specialist to carry out a review of its balance sheet. According to the Australian Financial Review a group of lenders led by ANZ, reportedly nervous over the AU$500 million debt due to be refinanced at the end of the year, were meant to receive the report by KordaMentha last week. Final bids for South Australia's forestry assets are also due next Tuesday.
More positive news out this week was the marking of the 40th anniversary of the Landsat program, the world’s longest-running Earth-observing satellite program. Over the last four decades Landsat satellites have delivered probably the most consistent and reliable record of Earth’s changing landscape. In New Zealand, the Government has announced the structure of the country’s new Advanced Technology Institute. It was granted NZ$166 million over four years and is being set up to bring innovative R&D together and to provide a more effective mechanism to take it to market.
Innovation and the world’s leading products in solid wood and panels along with an insight into new research from leading local and overseas leading R&D organisations will be the focus of October’s new programme set up for Australasia’s forest products companies, Wood Innovations 2012. Finally, Carbon still remains a hot topic internationally. The immediate future of the NZ’s fledgling carbon scheme was being questioned this week and NZU's fell to a record low of $4.92 yesterday. Understandably interest in this region’s Carbon Forestry annual update Carbon Forestry 2012 is just as hot with the event running in Auckland on 22-23 August.
This week we have for you:
No deal yet for Tasmanian agreementNegotiators in the Tasmanian forest dispute failed to reach an agreement and have asked for a two-week extension to finalise a deal to reduce native forest logging in the state. Monday this week was the deadline imposed by the State and Federal governments to reach agreement on what areas would be protected.
A deal on the dispute would have freed up millions of dollars in federal assistance for the industry. Instead, negotiators have asked for a two-week extension for talks. The negotiators want to do more modelling on the effect on regional communities of stopping logging in high-conservation-value forests. After an hour-long meeting with the Premier, the negotiators were given the extension. There is optimism from negotiators that the extension and the modelling to be done, partly by Forestry Tasmania, may be enough to get a deal. More >>
NZ’s $166m Advanced Technology Institute launchedNZ Science and Innovation Minister Steven Joyce has announced the structure of the government's flagship innovation body, the Advanced Technology Institute, designed to help get innovative ideas out of the lab and into the marketplace.
Based in Auckland, the Hutt Valley and Christchurch the ATI will help connect high-tech firms' with New Zealand's Crown Research Institute, universities and polytechnics, Joyce said in his statement.
"We expect the ATI to focus on industries with significant growth potential. The ATI will take over some business development functions that currently sit within the Ministry of Business, Innovation and Employment. That will include the administration of some business research and development grants," he said.
The ATI was allocated NZ$166 million over four year as part of the government's Budget 2012. The ATI has been criticised for not involving the Crown-owned advanced materials research institute, Industrial Research Ltd (IRL) in its final decision process. Joyce said, IRL will remain part of the ATI but its focus will be broader in scope operating as a Crown agent.
As part of the new Wood Innovations 2012 event being run in mid-October, the General Manager of Advanced Manufacturing Technologies, IRL, Dr. Richard Templar will be discussing the ATI and future linkages to the forest products R&D efforts. Remember, details on the full programme, both for New Zealand and Australia for this unique series on wood products innovations can be downloaded from the event website, www.woodinnovationsevents.com
New Zealand Log Prices - July 2012The volume of logs exports from New Zealand in May dropped back by 21% from the record level of log exports recorded in April 2012. The volume of product exported into China and South Korea were well down on the same month in the previous year, falling 25% and 55% respectively. Demand from India was still solid in May with logs totally more than 200,000m³ exported to this market. In May log exports to Japan from New Zealand reached record monthly levels, compensating for the very small volumes exported in the previous month.
Demand from China for imported logs has eased in recent months. In the 3 months to May 2012 China imported 15% less logs than in the same period in 2011. Russia continued to dominate supply in this period although the volume supplied by Russia was down 20% on the same time last year. Imports from Canada were on par with the previous year, while supplies from the US dropped by 28%. In the 3 months to May 2012 New Zealand supplied 2.3 million m³ of logs to China, 6% more than in the previous year. During the same time period Russia supplied 2.8 million m³.
The volume of logs going into South Korea in May 2012 fell back in-line with normal seasonal demand. During March and April the volume of logs demanded by this market doubled from the same time the previous year. Despite overall demand easing back in May, New Zealand maintained their market share supplying over 60% of the logs imported by South Korea in that month.
Like South Korea, Japan’s demand for logs eased back in May 2012. The volume of logs entering Japan in May 2012 was 24% down on the same month in 2011. Canada and the US continue to dominate supply to this market with a combined market share of approximately 80% this year. In the 5 months to May 2012 New Zealand market share was only 4.5% down from 27% in the same time period in 2011.
The Agrifax Log Price Indicator moved up 1 point to 83 points this month. Prices were generally firmer for all grades of logs in the North Island. While in the South Island prices tended to be steady. Firmer prices were generally recorded for export grade logs, while prices tended to consolidate for the domestic grades.
In-market returns for logs eased slightly this month. But due to the increase in the value of the New Zealand dollar returns were eroded further in local currency terms. Shipping prices are similar to the levels recorded a month ago. The cost of shipping logs to the main Asian markets is currently US$2-3/tonne less than it was a year ago.
The Agrifax Log Price Indicator is currently NZ$2 per tonne lower than it was a year ago. Prices for unpruned logs are up from year ago levels. While pruned log prices are well down as are prices for pulp grade logs.
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.
Woodmetrics sale announcedThe owners of Woodmetrics Ltd confirmed to Friday Offcuts that they are selling the company to Gerry Mortimer. Gerry will operate the Woodmetrics business alongside his Mortimer Forestry business which offers forest management and ETS services. Woodmetrics was started in 2001 by CHH to offer a unique stumpage selling service to private forest owners. In 2003 the current owners; Philip Elworthy, Peter Harington, and Ian Bell bought the company from CHH in a management buyout. Since then they have managed over 220 stumpage sales in the North Island of New Zealand.
The current owners said they're delighted to be able to sell the company to someone who is going to continue to operate at the high level of integrity which has been the hallmark of the Woodmetrics service. Gerry Mortimer says that he is grateful for the opportunity to purchase the company with an established position in the market and a set of values which matches his own. He will continue with the same business approach model as the previous owners, providing independent woodsale management advice to forest owners.
Future Forestry Finance papers available to FIEA membersIn March of this year over 200 delegates attended the Forest Industry Engineering Associations Future Forestry Finance (FFF) Conference. Aimed at finance and forestry professionals the series ran in both Auckland and Sydney.
Delegates for the event were able to download all presentations from the event website, www.forestryfinanceevents.com on the conclusion of the event. For FIEA members, a cross section of key papers has now just been added to the Tech Updates Members Section of the website. Access codes have recently been sent out to all members. In addition to the presentations just uploaded, around 450 presentations from recent events can also be accessed and used by all members.
Papers from the FFF event able to be accessed by FIEA members include;
Expanding Plantation Investment in Australia: What are the key policies & investment models needed for the continued investment in Australian plantations? Rob de Fegely, Chairman, Myoora Investments, Australia
Restructure of the Australian Forestry Sector: MIS rationalization and State Government exits Dr David Brand, Managing Director, New Forests Asset Management, Australia
Commercialising slow-pyrolysis for Bioenergy and Biochar Adriana Downie, Chief Technology Officer, Pacific Pyrolysis, Australia
Will there be Australian Harmonisation of Carbon Forestry with NZ? Peter Balsarini, CEO, Carbon Conscious, Australia
Evaluating Future Forestry's Growth Potential Bill Liley, Director, Indufor Asia Pacific, New Zealand
Small Scale Forest Aggregation is the key to the Expansion of Processing Capacity and Adding Value Hamish Levack,Executive Memeber of NZFFA, New Zealand
Global Competitor Trends: Do Brazil and Chile impact on NZ? Bob Flynn, International Timber Director, RISI, USA
Mauri Piki, Mauri Tu, Mauri Ora – A potential Role for Traditional Ecological Knowledge in Forestry Management Dr Kepa Morgan, Senior Lecturer, Faculty of Engineering, The University of Auckland, New Zealand
Celebrating the 40th Anniversary of LandsatMonday marked the 40th anniversary of the first launch in the Landsat satellite series. Since 1972, seven Landsat satellites have been launched to gather information about Earth from space. Currently a joint venture by NASA and the U.S. Geological Survey (USGS), the Earth-observing satellite mission has helped study Earth changes made by natural processes and human practices.
To date, the Landsat series is the longest continuous global record of Earth’s surface from space. Over the past 40 years, we have actively monitored our home planet close-up, thanks to the satellite program. Topics that have been studied by Landsat include: Urban growth, food production, forest and water resource use, human health, energy production, disaster relief, and climate change.
Landsat has been fundamental to our scientific understanding of the Earth. Originally, the data gathered was used to inventory Earth’s natural resources from space. Today, the Landsat program has grown to address critical issues such as water quality, glacier recessions, sea ice movement, massive species encroachment, deforestation, land use changes, coral reef health, population growth, and damages from natural disasters. More >>
Forestry SA asset bids dueFinal bids for South Australia's forestry assets are due Tuesday of next week, with offers expected from The Future Fund-backed The Campbell Group and US-based Hancock Natural Resource Group. There has been some movement in the $700 million process recently, with Global Forest Partners understood to be considering its position while Canada's Brookfield Asset Management is understood to have withdrawn, The Australian Financial Review reports. UBS is advising the cash-strapped state which is looking to sell the cutting rights for three harvests in the Green Triangle, regarded as one of the best softwood-growing areas in the region. Source: Stock Journal
Australian plywood, veneer and wood manufacturing projections
The Plywood, Veneer and Fabricated Wood Manufacturing industry in Australia is influenced by demand for plywood, veneer and fabricated wood from downstream industries, particularly within the housing and commercial construction sector. According to IBISWorld industry analyst Alen Allday, “with weaker residential and non-residential building construction activity in 2011-12, industry revenue is estimated to decrease 2.6% for the year to $1.67 billion”.
Over the five years through 2011-12, industry revenue is estimated to have declined by an annualised 1.8%, with moderate fluctuations from year to year. Residential construction activity increased steadily in 2006-07 and 2007-08, largely due to high demand and the First Home Owner Grant, while commercial and industrial construction activity increased rapidly.
As residential and non-residential building construction activity declined significantly in 2008-09, industry output fell. Despite increased construction activity in 2009-10, industry revenue declined due to lower output and prices. Industry output increased strongly in 2010-11 as the construction sector increased inventory levels. This is expected to be followed by a relatively large decline in 2011-12 as construction levels remain weak. Lower furniture manufacturing activity in recent years also contributed to industry declines.
In the five years through 2016-17, industry output volumes are expected to increase despite lower output forecast in 2012-13. Although industry revenue is also forecast to decline in 2012-13, industry revenue is forecast to increase as growth returns from 2013-14. “The outlook for the industry depends on downstream demand from the construction sector in Australia and other wood product manufacturing industries”, Allday adds. Future demand for the industry's products is expected to be low due to major housing price increases in recent years and uncertainty surrounding future interest rate rises and economic conditions.
Over the past five years, the level of market share concentration in the Plywood, Veneer and Fabricated Wood Manufacturing industry increased, with several major players expanding their operations and increasing market share. Dozens of other small and medium-size producers operate within the industry. Market share concentration is expected to increase slightly over the next five years due to further merger activity by the largest companies in this industry, and with other firms expected to exit the industry, particularly exporting companies.
The largest firms in this industry are also expected to continue to expand operations into new geographic regions, and with new wood products. The four largest companies in the industry are Fletcher Building Limited, Building Supplies Group Holdings Pty Limited, Boral Limited and Gunns Limited.
NZUs hit new record low of $4.92Following announcement on Wednesday by the European Commission of a package of measures aimed at propping up prices in the EU ETS, prices of UN offsets fell to new lows, with spot green CERs closing at €2.90 and ERUs lagging these at €2.44; about NZ$4.46 and $3.75 respectively.
While clearly aimed at dragging up low carbon prices, the Commission's plan, which involves temporarily withholding supply of credits in the early years of Phase 3 of the EUETS (2013-2020), appears to have been received with some disappointment.
Carbon allowances had gained for 3 days straight prior to the announcement, however prices for European Union Allowances fell about 5% on publication of the proposal, which traders appeared to find short on detail. While the Commission provided scenarios around the temporary withholding of between 400m and 1.2 billion tonnes, no indication was given as to the favoured option.
For CERs and ERUs, which currently trade at about half the cost of EUAs and are the price-setting credits in our New Zealand market, the fall was more pronounced - about 10%. NZUs followed suit and settled back to new record lows.
Source: Carbon Match Weekly
Prestigious Australian forestry award announcedThe Institute of Foresters of Australia (IFA) recognises outstanding service to the profession of forestry in Australia with the Norman W. Jolly Medal. Yesterday IFA National President, Mr Rob de Fégely, announced CSIRO forestry scientist Dr Sadanandan Nambiar as the latest recipient of the Institute’s highest award.
Mr De Fégely says that “I am delighted to make this announcement as Sadanandan is a very worthy recipient. He is an eminent forest scientist internationally recognised as a leader in research on sustainable productivity and management of forests,” he said.
“Internationally, Sadanandan has been a tireless advocate of research into the potential of man-made forests, agro-forests and woodlands as land use systems that can foster both economic prosperity and environmental benefits for society,” said Mr De Fégely.
“Sadanandan is widely recognised as a science leader and a generous mentor by colleagues in Australia and internationally. He is an active Honorary Fellow in CSIRO Ecosystems Sciences, Canberra spending significant time supporting forestry in developing countries, especially Southeast Asia, championing sustainable forestry for rural development and poverty alleviation.”
Mr de Fégely will present the medal to Sadanandan at the Institute’s Biennial Conference to be held in Canberra 7-11 April 2013.
2012 Timber Design Awards finalists announcedThirty eight projects have been selected from a record breaking 93 entries across nine categories to go through to Stage Two of this year’s NZ Timber Design Awards. This is more than three times the number in 2011 and a record in the more than 30 year history of the Timber Design Awards. The winners will be announced Tuesday 9 October 2012 at the Award presentation evening event at MOTAT Aviation Hall in Western Springs, Auckland. Details of the finalists, their projects, and tickets for the awards evening can be found here.
Cyclone best practice guide to help timber plantationsSevere tropical cyclones, Larry, Ului and Yasi had devastating effects on the timber plantations and plantation trial plots in tropical Queensland regions. With climate change projections indicating an increasing frequency of severe cyclones in Queensland, Timber Queensland has released a Best practice guide for timber plantations in tropical cyclonic areas of Queensland.
Timber Queensland CEO Rod McInnes said the guide will assist plantation growers make appropriate species selection and implement risk management practices. “This guide also provides guidance on plantation design, location in the landscape, silviculture regimes and rotation length,” said Rod McInnes.
“Growers need to get these elements right if they want to weather the next storm and ensure the region’s growing and processing sector prospers,” he said. The guide is available Cyclone best practice guide to help timber plantations. Other resources available include tools to track the history of cyclones crossing the Australian coast line , a case study reviewing the impacts of Cyclone Yasi and a review of the science and knowledge used to produce the guide.
Government abandons NZ Carbon MarketThe New Zealand Government’s recent decision not to restrict the use of international carbon credits in the NZ Emissions Trading Scheme means the local NZ carbon market is likely to stay subdued for years to come. Due to oversupply the international carbon price has plummeted over 70% in the last 12 months, and because these units are eligible to be used in the NZ Emissions Trading Scheme, the NZ domestic unit price has followed the fall.
Compared with other carbon schemes NZ has few limits on international units. The European and Australian trading schemes, and the upcoming Californian scheme all place far more restrictions on the type and the quantity of international carbon credits that can be used. Limits on the use of international units leads to higher domestic carbon prices. In Europe, for example, the EU carbon permit is trading 60% above the price of the international carbon price.
By comparison the NZ carbon market has ground to a halt and large amounts of capital is being exported offshore to purchase cheap Chinese and Eastern European credits instead of being invested in local forests or clean technologies. More >>
Waiariki Chair of Forestry appointmentJeremy Christmas of Waiariki Institute of Technology School of Forestry and Primary Industries announced late last week that Professor Glen Murphy from Oregon State University will be joining the staff of the Institute in Rotorua. Professor Murphy will be taking up the position of Chair of Forestry which was recently vacated by Prof Cris Brack who returned to the Australian National University after a 3 year secondment to Waiariki Institute of Technology. Glen is on a 3 year fixed tenure appointment commencing on 10th October and has a strong background in harvesting research.
Buy and Sell
...and one to end the week on...an age test
Look at the picture - can you make the connection? For the younger generation, you will have absolutely no idea what we're talking about. Ask someone a little bit older in the office to connect the dots for you.
And on that nostalgic note - and for someone who could really relate to the age test - have a great weekend. Cheers.
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