In a story below we highlight results from a recently released Global Lumber-Sawn-wood Cost Benchmarking Report. It's interesting to see that of the 29 regions or countries surveyed, Australia had the highest sawmilling costs for the third consecutive time in the bi-annual survey. European sawmilling costs from the survey were generally below the global average, North American sawmilling costs were above the average, while Southern Hemisphere costs were on both sides of the global average.
In line with recent analyses on the global sawmilling industry, an overview of "Global Practices Impacting on Saw Design & Operation" was given to Australian and New Zealand sawmillers by Bernd Hartmann, Product Manager-Saw Technology from the German company, Vollmer Werke as part of the SawTech 2007 series which finished this week.
New investment, buy-outs, amalgamation and closures of smaller and less efficient sawmills has meant that now globally, 10 forest products companies (7 from North America, and 1 each from Finland, Chile and Germany/Austria) now produce over 50% of total global sawn timber production. Total sawn timber production from the 10 companies increased by 5% between 2006 and 2007 with the largest year on year increases been recorded by West Fraser (+37%), Georgia Pacific (+18%) and Klausner Gruppe (+12%).
Copies of this presentation along with others detailing new innovations in saws and sawing technologies are available by ordering a set of SawTech 2007 event proceedings from amanda.davies@innovatek.co.nz. Subscribe a friend
Auspine chief Adrian de Bruin is selling his one-third stake in the forestry company for nearly AU$115 million - double what they were worth just seven months ago. The sale of his shares, and the other 8.9 per cent in the hands of small shareholders, will deliver outright ownership to Tasmanian forestry giant Gunns, making it now Australia's largest privately-held diversified owner and manager of hardwood and softwood forest resources. The takeover will be completed in the next five weeks. The sale includes 46,000ha of freehold land and 40,000ha of forest located in the South-East and western Victoria.
Sumitomo Forestry interested in CHH MDF operation
The NZ Commerce Commission has received an application from Sumitomo Forestry Co Limited seeking clearance to acquire all of the medium density fibre board (MDF) assets and business operations of Carter Holt Harvey Limited (Building Supplies Division) situated in Rangiora, New Zealand. The New Zealand operations of Sumitomo Forestry are undertaken by a wholly-owned subsidiary company, Nelson Pine Industries Limited. It manufactures MDF in Nelson and sells it under the brand name GoldenEdge MDF. More >>.
UN report endorses wood climate change credentials
The fourth 2007 report from the United Nation's Intergovernmental Panel on Climate Change (IPCC) stresses that action must be taken now to prevent the catastrophic impacts of global climate change. This is good news for wood as forests and wood have a vital environmental role to play.
"Wood has an opportunity to really take the lead here - the research shows that we have to act now. The threat to our environment is immediate and critical. Forests and wood combat climate change - it's that simple," says Geoff Henley, Programme Manager for NZ Wood.
The final report from the IPCC summarises the findings of three reports released earlier in the year. The third Working Group report - "Mitigation of Climate Change", details the role that forests and wood will play in a global climate change mitigation portfolio.
"Wood has received an international endorsement as an environmentally sensible consumer choice in the move towards a more sustainable world," says Henley. The report states that in the context of global change and sustainable development, forest management activities will play a key role through mitigation of climate change.
However, the report also emphasises that forest management practices need to assess the potential impact on soils, water cycles and biodiversity. There are also opportunities to further enhance wood's emissions profile through the likes of reducing emissions from deforestation and forest degradation, enhancing the sequestration rates in existing and new forests, and providing wood-products for more energy intensive materials.
The already high environmental management standards across New Zealand's forestry enterprise are further supported by the recent roll-out of the Environmental Code of Practice, developed by the New Zealand Forest Owners' Association.
"Educating New Zealanders on the true environmental value of forests and wood in light of the findings of the IPCC will be a real focus for NZ Wood," says Henley. "What the findings tell us is that we can make a difference to the environment but we need to start now. Using more wood is a great way to start," he adds.
WPA providing coordinating voice for wood processors
WPA providing coordinating voice for wood processorsWood Processors Association Chairman David Anderson, reporting at the organisation's annual meeting, applauded the NZ forest products industry for working more closely together than it had ever done in the past. It is clear that there is a new sense of cooperation within the processing sector, evidenced by the fact that eight new affiliate members and five new corporate members have joined the recently established Wood Processors Association (WPA) in the last 12 months.
New corporate members include the large processing company, Juken New Zealand Ltd, as well as Forever Beech Ltd, Norske Skog, Pacific Pine Industries Ltd, and Westco Lagan Ltd. This shows that WPA is providing the coordination and voice that wood processors need to have in what has been and is likely to continue to be challenging times for the sector.
WPA Chief Executive Peter Bodeker reported that the major activities looking forward would be to provide a detailed and reasoned response to the proposed Emissions Trading Scheme released by the Government in September. Other issues include rationalisation and review of timber treatment, as well as a major stake in the industry promotional programme NZ Wood.
WPA represents 18 corporate member companies responsible for the primary processing of approximately 80 percent of New Zealand's wood, as well as 13 affiliate members from a variety of industry-related companies. With annual export earnings of NZ$3.2 billion, the forestry and wood processing industry is New Zealand's third largest export earner. Additionally the sector has NZ$1.5 - $2.0 billion of domestic sales.
Ambitious Australian timber recovery target set
Leading timber industry representatives have announced a bold plan to double post-consumer timber recovery to one million tonnes each year. The target will see 65 per cent of timber diverted from Australian landfills. The National Timber Stewardship Group (NTSG), comprising representatives from timber industry associations, importers, wholesalers and retailers, with input from state government representatives, announced the target recently to celebrate National Recycling Week.
Chair of the National Timber Stewardship Group, Mr Andrew Dunn said the target is ambitious, but realistic and necessary. "Australia already reuses large quantities of pre-consumer timber in products such as finger jointed timber, particleboard, medium density fibreboard and charcoal as well as in landscaping, horticulture and renewable energy products."
"We are committing to reductions of post-consumer timber by setting a national target of doubling recovery rates to one million tonnes annually by 2017. This represents approximately 65 per cent of all post-consumer timber sent to landfill throughout Australia. The target is achievable, but will require a significant coordinated effort by the timber industry, governments and the resource recovery sector. This is why the NTSG proposed the target as part of a national product stewardship strategy for post-consumer timber", he said.
Actions proposed to increase recovery include: improved manufacturing and ordering processes to minimise waste, development of markets for recovered timber in reuse, recycling and energy recovery applications as well as greater education about existing reuse and recycling options.
Campbell Group having US$4 billion in forestry assets
The Campbell Group said is has just completed a sale of Northwest timberlands to Sierra Pacific Industries (SPI). Terms of the sale of roughly 100,000 acres in Washington and Oregon were not detailed. A larger transaction between the two had been contemplated but it isn't clear if additional acreage was involved.
That larger sale, shrouded in secrecy, had SPI and Oregon's Rosboro Lumber acquiring 221,000 acres in Washington and Oregon from Campbell for an estimated US$660 million (about US$3,000/acre), contacts said. SPI was to close on 177,000 acres of that in Washington, with Rosboro taking over the remaining 42,800 acres in Oregon.
Both Campbell and SPI have been expanding in recent years. With the Campbell purchase, SPI would add to its already sizable portfolio of 1.75 million acres in the Northwest, after acquiring 147,000 acres in western Washington last year from Cascades/Crown for US$179 million $1,217/acre).
Campbell also has completed the acquisition of 1.55 million acres in Texas, Louisiana, Georgia and Alabama from Temple-Inland for US$2.38 billion. With that acquisition, Campbell said its assets under management span across 13 states with a total market value of over US$4 billion. Source: RISI
Global lumber benchmarking highlights winners and losers
The third edition of the report, Global Lumber/Sawnwood Cost Benchmarking Report - 2006 & 2007 Q2 has just been released. The Global Lumber Benchmarking Report summarizes delivered log and sawmill costs as well as revenues and earnings for the year 2006 and for 2007 Q2 (and historically for 2002 and 2004) in 29 regions or countries.
One of the most significant changes seen in the survey was the rise in delivered log costs in almost every region: since 2002, global log prices have increased by 66%, to an average of US$64/m3 (US$350/Mbf, Scribner), and have pushed average sawmill margins lower relative to 2002 and the strong results achieved in 2004. The global trend of rising log prices is expected to continue, as tightening timber supplies in North America and Europe, coupled with the Russian log-export tax schedule, will keep log prices firm.
Other country or regional specific results for "average sawmills" from the benchmarking survey included:
The lowest delivered log costs occurred in Russia for companies with their own forest licences, where logs are "at cost"; the next lowest-cost region was the Canadian Prairies, followed by Chile.
China has the highest delivered log costs (over US$100/m3) using a combination of imported and domestic logs. Western and central European countries had the next highest log costs, while Oregon had the highest North American log costs.
The lowest global average regional sawmill costs (before considering capital costs or depreciation) achieved at "average mills" in 2006 were seen in China due to very low labour costs and low-capital-cost mills. The next lowest-cost regions were Chile and Brazil, followed by the Baltic States - all regions benefited from below-average labour costs.
Australia had the highest sawmilling costs for the third consecutive time in the bi-annual survey.
European sawmilling costs were generally below the global average, and North American sawmilling costs were above the average, while Southern Hemisphere costs were on both sides of the global average.
Average sawmills in South Africa had the highest global earnings due to strong markets and tight timber supplies - its results were double the next highest country. The next highest-earnings regions were found in Chile, Northwest Russia (logs at cost) and Lithuania.
A total of 15 countries or regions out of 32 surveyed recorded zero or EBIT losses for "average" mills in 2006.
Further information on the third edition of the Global Lumber/Sawnwood Cost Benchmarking Report can be seen on www.woodmarkets.com
New Zealand Log Prices - November 2007
Overall Log Index
The inventories in New Zealand's major log export markets of Korea, China, and India have continued to fall and this has led to increased demand. Depending on the timing of contracts, overseas prices have increased by US$4 to $10 per metre over the past month. Importers realise that they need to lift prices significantly if they are to encourage NZ forest owners to mill their trees in the current climate of poor returns. A further rise of US$10 is expected for December. In Japan, A grade log prices are back US$3 per metre.
Shipping costs continue to oscillate around and this is unsettling the export trade. A number of exporters have ceased trading for now, due to the risk associated with the volatile shipping rates. Spot rates actually stayed below US$80/metre this month, but there is considerable variation across ports. A lack of un-contracted vessels means that prices will have to rise in order to secure suitable shipping. Shipping rates over US$80 per metre are still expected in December and January.
The NZX Agrifax Log Price Index, which measures returns from the whole forest, fell NZ$1.60 a tonne to $67.80. Lower export returns, particularly in the North Island had the greatest impact. Export returns are expected to improve in coming months and the Christmas/New Year slow down will help reduce supply. The unfortunate supply boom and subsequent price bust we have seen this year in our export markets is partially due to the now widely fragmented nature of the current log exporting industry. Improved co-ordination of this sector would seem a good aim for 2008.
Log price changes: North Island
Domestic:
Pruned logs are steady to down $5/tonne, but showing signs of weakness. Unpruned sawlog prices are steady. Round wood prices are up in the southern part of the region. Chip log prices are steady.
Export: Export log prices are down by about $5/metre, an exception being KS logs in the southern ports which are up slightly. Chip logs are steady in most ports, but up by $2 to $4/metre in some southern ports.
South Island:
Domestic:
Most domestic grades unchanged, but Southland pruned prices have rebounded slightly. In Canterbury, Forest Management has increased pruned prices by $2/tonne.
Export: Prices are down $3 to $5 a metre on average in Canterbury, Export activity remains very low in Otago/Southland with prices steady to down $3/metre.
Gunns' Tasmanian pulp mill has moved closer with confirmation last week by the company that it has finance for the AU$1.7 billion project and will weather opposition, including a blockade. It is expected that the project should have final state and federal permits by the end of the year. Building would start soon after.
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Large order for Swedish sawmill manufacturer
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Norske Skog's earnings down
Norske Skog's gross operating result before special items was NOK 850 million in the third quarter of 2007, down from NOK 1,129 million in the second quarter. The lower result is related to weaker price development in the regions Asia, Australia and South America, increased prices on recovered paper as well as a substantial negative effect from the strong Norwegian currency.
"With yet another disappointing quarter behind us, the need for a comprehensive restructuring becomes even more evident," says CEO Christian Rynning-T
An oldie but a goodie. A man was riding his Harley along a California beach when suddenly the sky clouded above his head and, in a booming voice, the Lord said, "Because you have tried to be faithful to me in all ways, I will grant you one wish.
The biker pulled over and said, "Build a bridge to Hawaii so I can ride over anytime I want."
The Lord said, "Your request is materialistic, think of the enormous challenges for that kind of undertaking; the supports required reaching the bottom of the Pacific and the concrete and steel it would take! It will nearly exhaust several natural resources. I can do it, but it is hard for me to justify your desire for worldly things. Take a little more time and think of something that could possibly help mankind."
The biker thought about it for a long time. Finally, he said, "Lord, I wish that I and all men could understand women; I want to know how she feels inside, what she's thinking when she gives me the silent treatment, why she cries, what she means when she says nothing's wrong, and how I can make a Woman truly happy."
The Lord replied, "You want two lanes or four on that bridge?
And on that note, have a great weekend. Cheers.
Brent Apthorp
Innovatek
PO Box 904
Level Two, 2 Dowling Street
Dunedin, New Zealand
Ph: +64 3 470 1902
Fax: +64 3 470 1904
Web page: www.innovatek.co.nz
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