Happy New-Year. Welcome back to your office or to your work site. We trust the break over Xmas was relaxing, the weather was warm and the food and company over the holiday period was really something to remember as you start to settle into 2008. The upcoming year for the forest products industry is certainly shaping up as an interesting one.
On this side of the Tasman we have the Emissions Trading Scheme which started on 1 January. This, as already reported is going to have a major impact on the forestry landscape in New Zealand. Not only is there still a major inequity in the treatment of forestry compared to other land uses (see story below on agriculture which has been given a 2013 emissions moratorium) but there continues to be a marked inconsistency being proposed under the scheme for past and future forestry investors. The real impact on energy costs for wood processors as a consequence of the ETS is something still being quantified.
Managing the volatile exchange rates and shipping costs that have continued to call into question the viability of many exporters this year will still be a major focus for the Kiwi industry. Changing ownership of forest products companies will also not be far from the news. As reported below, Graeme Hart still has some $2 billion of wood products and building materials assets on the market. The positive news is the progress being made on promotion of wood and its use through the NZ Wood campaign and advances in addressing skills shortages by a number of initiatives that have been set in train in late 2007.
In Australia, A3P, the key voice for the softwood plantation industry, is reported to have identified three major issues in the year ahead; increasing the area of plantations under forest management certification, strengthening action on illegal timber imports and developing new guidelines on structural timber compliance. Climate change and associated policies with the new Government, countering anti-forest plantation campaigns that increasingly are being waged, working on issues relating to water use and continued rationalisation of both forest products companies and industry associations will continue on from work last year.
Globally, the region that most will be looking closely at will be Russia - checking to see if the Russian Government will make good its intention of implementing the 80% softwood log export duty on 1 January 2009. As reported by International Wood Markets Group, if it comes to pass, its anticipated that almost all of Russia's current 50 million cubic metres of annual softwood and hardwood log exports will be curtailed, at least in terms of legal volumes. What's this mean? The global wood trade could lose 40-45 million cubic metres of wood per year. World log prices will climb. At the same time, exports of manufactured wood products by low cost Russian mills will increase competition for some wood producers. The impact will be substantial in this part of the world.
Improving international competitiveness and forestry, wood processing and manufacturing efficiencies will of course be a major focus for this year, as it was last year for the industry on both sides of the Tasman. Through some of the unique technology programmes planned (see story below on key upcoming programmes for the first half of 2008) and through Friday Offcuts, we aim to ensure we can assist you in meeting some of the goals you have set for your business in 2008. We look forward to working with you in the upcoming year.
For the first half of the year, several major technology programmes and conferences have been announced. Mark the following dates and contacts into your diaries. Further information on the programmes will be announced and profiled in future issues of Friday Offcuts.
Timber Connection Design Seminar, Friday 22 February, Auckland New Zealand. Further information from www.timberdesign.org.nz
ForestTECH 2008 - Tools & Technologies to Improve Forest Planning and Operations, 21-23 April, Albury, NSW, Australia. Further information from www.foresttech2008.com
62nd Appita Annual Conference & Exhibition, 20-23 April 2008, Rotorua, New Zealand. Further information from www.appita.com
ScanTech2008 - Sawmill Scanning & Optimisation Technologies, 18-19 June, Brisbane, Australia, 24-25 June, Rotorua, New Zealand. Further information from www.scantech2008.com
Kiln blaze leaves AU$3m bill
A fire in a timber drying kiln has caused a reported AU$3 million in damage to AKD Softwoods business in Victorias south-west on Wednesday. Aerial pumps were needed to attack the fire due to the height of the 20m kiln. Crews also had to contend with an elevated tank containing hot oil, which expanded with the heat from the fire and overflowed, cascading onto the flames. The cause is thought to be a fault in an oil pipe.
New Zealand Log Prices - December 2007
Overall Log Index
Overseas log prices have continued to make gains in $US terms, but volatile exchange rates and shipping costs continue to bedevil the trade and many exporters are still sitting on the sidelines. Shipping rates, although nominally unchanged on average, remain very high and vary greatly between ports and from week to week. Increasingly log exports are used as a filler on outbound vessels with spare capacity. This extends to the container trade where logs can be shipped in containers at cheaper rates than as bulk cargo. There are fears that the surge in fertiliser prices will cause a drop in fertiliser import volumes, tightening outbound cargo availability still further.
Of the Asian markets Korea has shown the greatest improvement, with in-market prices up by $US5 to $10 to in excess of $US130 a metre. However with inventories still quite high and the winter slowdown coming, exporters believe that prices have peaked in the meantime. Chinese stocks are still in oversupply and there are signs that some extra volume is being diverted back to Korea, with the risk of upsetting what is still a fragile market.
In domestic log markets, pruned log price changes are mixed, but overall the tone is weaker, with the prospect of a $3 to$5/tonne drop in the offing for the first quarter of 2008. Structural grade un-pruned sawlog prices are generally unchanged, but as with pruned logs, a price reduction in the New Year is expected. Chip log inventories are very high and prices are under pressure. The New Year will see a drop in Kyoto induced logging activity that should help restore a balance, but this will take some time to achieve.
The NZX Agrifax Log Price Index, which measures returns from the whole forest, regained last month's losses, rising $2 to finish the year at just under $NZ70 a tonne. The rise was almost entirely due to improved export returns.
Log price changes: North Island
Domestic:
Pruned price changes are mixed, but P1's up $2 a tonne in North and Central regions, but down slightly in the lower North Is. P2's are down in general. Other domestic grades are unchanged, although the tone is weaker.
Export: K grades are up $5 to $7 a metre in the north and up $2 on average in the south, with J grades only slightly firmer.
South Island:
Domestic:
Prices for most domestic grades are unchanged overall, although for pruned there are some increases and decreases.
Export:
KS and KI prices are up $5 to $10 a metre. The pulp price is steady to down $3 a metre.
Scion wins contract to carbon footprint forestry industry
New Zealand Crown Research Institute Scion has been awarded a Ministry of Agriculture and Forestry (MAF) contract to measure greenhouse gas (GHG) emissions, or the carbon footprint, of the entire forestry industry supply chain.
Scion will build on its existing research in the field of Life Cycle Assessment (LCA), the internationally recognised tool for assessment of a product's environmental impact, to develop methodologies, guidance and operational tools to help the forestry industry better understand and mitigate its total environmental impact.
The year-long project, due to start in February 2008, will analyse GHG emissions from initial forest plantings and management, through the timber manufacturing and distribution stages. It will also incorporate end-of-life scenarios where carbon is potentially released back into the atmosphere.
Scion chief executive, Dr Tom Richardson says "The forestry industry as a whole can now capitalise on Scion's capabilities and international expertise in this field and use it to impact on their bottom line. The ability to give end-users clear information on the 'greenness' of products will give organisations a global competitive advantage in what has become an increasingly tight market.
"Many of New Zealand's key international timber markets are putting increasing pressure on suppliers to provide details on GHG intensity throughout product life-cycles. For example, Japan has established a "wood miles" forum to raise awareness on the energy consumed for imported timber transportation."
The research will be undertaken in collaboration with a number of industry partners including the Wood Processors Association. Through their participation, a series of case studies will be developed to provide the methodology for measurement across a range of timber products, such as particleboard, timber weatherboard and rough-sawn timber.
Hart shifts up a gear for 2008
Graeme Hart just before Xmas spent $US2.7 billion on the acquisition of Alcoa's packaging and consumer businesses. The New Zealand billionaire entered the packaging industry in a big way with the $A3 billion acquisition of NZ's Carter Holt Harvey group in 2005. Before acquiring CHH Hart bought International Paper's beverage packaging operations for about $US560 million and then followed up earlier last year with the $US3.5 billion purchase of Europe's SIG Holding AG.
After the purchase of SIG Holding AG, Hart had created the world's second-largest beverage packaging group behind Tetra Pak. With the latest purchase of Alcoa's downstream packaging businesses Hart will broaden both the scope and global reach of his group.Having sold off CHH's forestry assets for $A1.6 billion, properties for about $300 million, Hart has at the moment has a reported $2 billion of wood products and building materials assets on the market.
Recycling decommissioned treated timber
Louisiana State University AgCenter's Calhoun Research Station is developing methods to recycle decommissioned preservative-treated wood. New researchers are working in two areas - engineering new wood products and chemically removing preservatives from decommissioned, preservative-treated wood - according to Dr. Todd Shupe, a researcher in the LSU AgCenter's School of Renewable Natural Resources who initially developed the processes.
"Disposal of decommissioned preservative-treated wood has increasingly become a major concern because the popular disposal options - incineration or land filling - are becoming more costly and impractical," Shupe said. The researchers at Calhoun are mostly working with used utility poles that no longer are suitable for their original use.
Finding new uses for treated products is important to Louisiana because nearly half of the state's southern yellow pine lumber production is treated with creosote, penta or chromated copper arsenate (CCA), LSU AgCenter said. Most material was treated with CCA before the industry voluntarily phased CCA out for consumer uses. Now, the three chemicals are largely used for industrial applications ranging from railroad cross ties and utility poles to highway and bridge guardrails.
The engineering aspect of the work is focusing on refabricating used wood products into composite or laminated materials. One project involves Arnold Forest Products of Shreveport, which manufactures CCA-treated wood components for highway guard rails and wooden blocks that are attached between the metal rails and the wooden posts. The LSU AgCenter researchers are helping develop re-engineered components from recycled wood.
A related project looks to refine a process called liquefaction - a method for recycling CCA-treated wood, which is ground and liquefied with an organic solvent that removes chemicals from wood products. This process uses relatively low temperature, short reaction time and small amounts of organic reagents, Shupe said. The results can yield the chemicals originally used in the preservative as well as nontoxic liquefied wood that can be used for resins, moulded wood products, foams and plastics.
A second process uses super critical water - water at high temperature under high pressure - that's used to recover the preservatives and detoxify the wood for reuse. Shupe says research has shown this process can remove creosote from wood and yield a mixture of industrially useful hydrocarbons and other chemical compounds along with toxin-free wood. "These processes can now remove 99% of all metals from sawdust," Shupe said. Source: RISI
Regional training awards dates set for 2008
The regional series of awards ceremonies in New Zealand to celebrate the training successes of the previous year have now been set down for this year by FITEC. Details and dates are listed below. Nominations for New Zealand forestry and wood products training awards open in March 2008.
- Auckland, Thursday May 8th - Northland, Friday May 9th, Whangarei - Central North Island, Thursday May 15th, Taupo - Bay of Plenty, Friday May 16th, Rotorua - Hawkes Bay, Thursday May 22nd, Napier - Nelson & Bays, Friday May 23rd, Nelson - Canterbury, Thursday June 5th, Christchurch - Otago/Southland, Friday June 6th, Dunedin
Canadian pulp and paper industry on comeback
After spending the past decade as a licence to lose money, Canada's pulp and paper industry is on the verge of recovery, the Conference Board of Canada says. Years of restructuring and production cuts will finally allow prices to rise in 2008 and the industry to turn a modest profit, albeit a paper-thin C$6 million, the board says in a report published late last year.
Although the pain will extend for a third straight year in 2007, with losses of C$400 million forecast, 2008 will mark a turning point for the "malaise" that has stricken the industry.
Pulp is expected to be the driver of the recovery, with strong demand in China and Western Europe for Canadian exports. As well, the board expects the dollar to continue to fall from recent highs, reaching parity in the near future and sliding to $0.92 U.S. by 2011, making export prices more competitive.
Profits are expected to grow to C$597 million in 2009, C$1.04 billion in 2010 and C$1.15 billion in 2011, the board forecasts. Despite that, "the health of the industry is still precarious," Val
Stop agriculture from killing the climate
Industrial agriculture is killing the climate. But it is possible to turn this key source of greenhouse gas emissions into a carbon sink, our new report 'Cool Farming: Climate impacts of agriculture and mitigation potential' reveals.
Farming is responsible for an estimated 8.5-16.5 billion tonnes of carbon dioxide, or 17-32 percent of all human-induced greenhouse gas emissions. The overuse of fertilisers, dependence on pesticides, land clearing, soil degradation, and intensive animal farming lie at the heart of the problem.
Using too much fertiliser accounts for the highest single share of agriculture's direct emissions, currently equal to some 2.1 billion tonnes of CO2 per year, and results in the emission of nitrous oxide, which is some 300 times more potent than carbon dioxide in changing the climate.
The second biggest direct emitter is animals. Cattle and sheep in particular, produce large amounts of the potent greenhouse gas methane when digesting; levels are increasing as a result of the growing demand for meat. Each kilogramme of beef produced results in 13 kilos of carbon emission; for lamb each kilo produces 17 kilos of emissions. More >>
Buddleia (Buddleja davidii), also known as butterfly bush, is a woody species with large purple flowers. It has become an invasive plant of both commercial and native forests in New Zealand due to its rapid growth and ability to colonise bare ground and is now the focus of a biological control programme.
The buddleia leaf weevil, Cleopus japonicus, is native to China where it feeds on buddleia. Ensis imported buddleia leaf weevil into New Zealand in 1992 and rigorous host testing was conducted within a quarantine facility. In 2005 the Environmental Risk Management Authority (ERMA) gave approval for its release.
Field releases began in spring 2006, with five experimental releases made in exotic plantation forests with buddleia in the North Island. Weevils are now known to have survived the winter at all sites, and early indications are that the biological control agent will do well on buddleia in New Zealand. Further releases are planned for the coming summer. If you are interested in using buddleia leaf weevils to help manage buddleia in your area, please contact Ensis.
Modelling to maximise Hoop Pine Values
Growers and processors of one of Australia's premium decorative timbers - Hoop Pine (Araucaria cunninghamii) - can now better assess the resource's value before harvest with the development of a new modelling program. Queensland has established 45,000 hectares of hoop pine plantations on former rainforest sites.
The model was funded as part of the Forest and Wood Products Australia (FWPA) resource characterisation and improvement program, with contributions from Ensis who developed the model to help more accurately predict the quality of hoop pine stands. This will allow growers to maximise returns by testing different log grading, processing and timber pricing scenarios before harvesting.
The full report "Resource and Processing Properties of Hoop Pine" is available from www.fwpa.com.au
...and one to end the week on...the Billboard and two wishes
And one to start the year on...sent in by an eagle eyed reader...a Billboard in the London Underground.
And one to end the week on. A man walks into a restaurant with a full-grown Emu behind him. The waitress asks for their orders. The man says, "A hamburger, chips and a beer," and turns to the Emu, "What's yours?" "I'll have the same," says the Emu. A short time later the waitress returns with the order. "That will be $9.40 please," she says and the man reaches into his pocket and pulls out the exact change for payment.
The next day, the man and the Emu come again and the man says, "A hamburger, chips, and a beer." The Emu says, "I'll have the same." Again the man reaches into his pocket and pays with exact change.
This becomes routine until the two enter again later in the week. "The usual?" asks the waitress.. "No, this is Friday night, so I will have a steak, baked potato, and salad," says the man. Same," says the Emu. Shortly the waitress brings the order and says, "That will be $32.62." Once again the man pulls the exact change out of his pocket and places it on the table.
The waitress can't hold back her curiosity any longer. "Excuse me, sir. How do you manage to always come up with the exact change out of your pocket every time?"
"Well," says the man, "several years ago I was cleaning the shed and found an old lamp. When I rubbed it a Genie appeared and offered me two wishes. My first wish was that if I ever had to pay for anything, I would just put my hand in my pocket and the right amount of money would always be there."
"That's brilliant!" says the waitress. Most people would wish for a million dollars or something, but you'll always be as rich as you want for as long as you live!" "That's right. Whether it's a cold beer or a Rolls Royce, the exact money is always there," says the man. The waitress asks, "But, sir, what's with the Emu?"
The man sighs, pauses, and answers, "My second wish was for a tall chick with long legs who agrees with everything I say."
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
This week's extended issue, along with back issues, can be viewed at
www.fridayoffcuts.com
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