Welcome back from your end of year break. We hope it was relaxing. We hope also that the weather played its part in making the two or three weeks off - everything that you'd planned for. Welcome back also to your first issue of Friday Offcuts for 2009. We'll continue this year to bring you breaking news that will impact on Australasian forest products companies and the stories behind the news. Increasingly, we'll be providing you with an overview of new and developing technologies that will improve the efficiencies of local companies in the current climate.
Remember, Offcuts is your weekly e-newsletter. You provided us late last year with some excellent feedback on what you value from your weekly Offcuts fix, what you want to see more of - and less of - and a bunch of ideas for improving the format and content. These are being further developed and will be rolled out for you in the upcoming year.
Remember also that content is being driven by you - our readers. As you did last year, please continue to send through leads, stories, links to eye catching articles or news items and of course, any photos, announcements and write-ups of recent or upcoming events. We'll of course endeavour to incorporate them into future issues. Use and add to the e-letters and Events pages on the website. These are resources that have been developed from your suggestions. Keep also those last stories - the "one to end the week on" - flowing through - but try this year to keep them clean. By the way, I'm not sure what it is about this industry we all work in but only 1 in 10 of the jokes being supplied passes the "editing test" for Offcuts.
Finally, the first issue for 2009 has several really positive news stories to start on. It's tempered though by the sad news of the sudden passing of one of the sawmilling industries really great guys, Len Valadez, from Cal Saw. Len had in recent times been travelling from the Lakewood/Tacoma region in WA, USA to this part of the world to pass on his extensive knowledge of saw design and inexpensive tools that local wood producers could use to improve their sawing efficiencies. He will be sadly missed by his close friends and the many that he has helped whilst working "down under".
Televised advertisements for Linea weatherboards in New Zealand breached advertising standards according to a decision made by the Advertising Standards Authority (ASA). Ruling on a complaint made by the Pine Manufacturers' Association, the authority upheld the objection with respect to a showhome that had been built using James Hardie's Linea product.
Linea is a composite board made primarily from cement, crystalline silica and wood fibre. In an advertisement featuring a Tairua showhome, the house and owners were shown seven years after the house was built. The homeowner commented, "I really like dark weatherboard houses. We did consider timber - well you could paint them a dark colour, but they don't stand up, they warp and crack."
The narrator also made the comment that "If this house was made out of timber weatherboards it would probably be due for a repaint. But with Linea weatherboards' 15 year paint warranty, there's no need." The authority ruled that the advertisement did not confine itself to informing consumers about the positive merits of the Linea product but disparaged a competing product, timber weatherboards . As such it breached the code for comparative advertising.
The narrator also made the comment that If this house was made out of timber weatherboards it would probably be due for a repaint. But with Linea weatherboards' 15 year paint warranty, there's no need." The ASA said the commercial "directly implied that the Linea product itself was sold with a "15 year paint warranty" from the manufacturer James Hardie Limited".
The Pine Manufacturers' Association's submission stated that it had been unable to identify any leading paint suppliers that had entered into any such arrangement with James Hardie. The panel ruled that the failure to identify the actual providers of the paint warrantee meant there was a sufficient level of ambiguity in respect of this absolute claim to result in the likelihood that a consumer would be misled by the comparison . The panel ruled accordingly that this aspect of the advertisement breached both the code for comparative advertising and the code of ethics, as it was likely to mislead the consumer.
2009 Technology Programmes set up for industry
It was a very full year in 2008. A wide range of programmes were run profiling new technologies for forestry and wood products companies in Australasia. With a wide cross section of forestry companies, wood producers, suppliers to the sector and researchers, another full programme of events has been scheduled for 2009.
Because of repeated requests for planning and budgeting as we move into the new year, for your information we have attached a listing of FIEA Technology Programmes planned for 2009. With your new calendars and wall planners up, mark these dates in. Events include:
- Wood Preservation 2009 Tools, Technologies and Product Opportunities 15-16 April 2009, Rotorua, New Zealand 21-22 April 2009, Brisbane, Australia www.woodpreservationevents.com
- Residues to Revenues 2009 Wood Management, Handling & Combustion Technologies to Improve On-site Energy Efficiencies 10-11 June 2009, Rotorua, New Zealand 15-16 June 2009, Melbourne, Australia www.woodresiduesevents.com
- SawTech 2009 Sawing Technologies to Improve Mill Performance 9-10 September 2009, Rotorua, New Zealand 14-15 September 2009, Melbourne, Australia
- ForestTECH 2009 Tools & Technologies to Improve Forest Planning & Operations 10-12 November 2009, Rotorua, New Zealand 16-18 November 2009, Albury, NSW, Australia
Pulpwood supply deal signed by Willmott and Visy
Willmott Forests, the largest developer of newly established softwood plantations in Australia has announced that it has signed an agreement with Visy Pulp and Paper Pty Limited for the long term supply to Visy's Tumut kraft pulp and paper mill.
This agreement commits more than 500,000 tonnes of pulpwood between now and 2020 providing a secure market for pulpwood produced from existing plantations in the Bombala region. This agreement adds to the previous commitment entered into with Visy in 2005 for supply of pulpwood from Willmott Forests' softwood plantations under management in the Murray Valley region.
Visy's kraft pulp and paper mill located in Tumut NSW is currently undertaking a AU$470 million expansion which will increase softwood fibre demand by 1.0 million tonnes per annum to 1.9 million tonnes from mid-2009. Of this amount, 35% will be furnished from plantation softwood sawmill residues with the remaining 65% (or 1.2 million tonnes) to be supplied from plantation grown softwood pulpwood.
Passing of well known Sawing Guru
On coming back into the office this week it was sad to hear of the sudden and untimely death of one of the world's leading innovators in lumber sawing, Leonard Valadez of California Saw and Knife Works. Len had been involved in several sawing technology programmes that we ran for New Zealand and Australian sawmilling companies over the last 10 years. He was a leading light in saw design and operation. He was always enthusiastic in passing on his knowledge to a wide cross section of sawmill personnel - throughout North America and more recently - into Australasia.
Len was involved in an automobile accident and passed away on 16 December 2008. Services were held in Lakewood, WA, on 22 December. Len lived most of his life in the Lakewood/Tacoma area in WA, USA. After earning a BA in physics from Willamette University, with subsequent advanced degrees in metallurgical engineering and mechanical engineering from Columbia University and the University of California at Berkeley, Len worked with Weyerhaeuser for 10 years as a Mechanical Engineer. He joined the team of California Saw and Knife, serving 24 years, lastly as vice- president.
In his work he travelled extensively, providing sales service and technical support. Our thoughts go out to his young family on the West Coast of the US, his workmates at Cal Saw and others from within the industry who have been fortunate enough to know and to have worked with Len over the years.
$50 million wood pellet plants being built in Australia
Western Australian based Plantation Energy is gearing up to build a AU$25m wood pellet mill on the outskirts of Mount Gambier and has plans to build another at Heywood of the same size, initially to service market demand in Europe for biofuel.
As biofuels become better understood in Australia the company is hopeful that the product will be shipped by rail to Port Augusta and other domestic coal-fired power stations. Plantation Energy said late last year that a AU$25m wood pellet plant was under construction at Albany in Western Australia and was expected to be commissioned for use in February.
Equipment for the new plant in the Green Triangle region had been ordered and building works were expected to commence in April with production maybe in September or October of this year. The company was reported to be working with Forestry SA on the location of the Mount Gambier based mill and the pellet mill at Heywood will be located at the site previously earmarked for a pulp mill.
Initiatives boost forestry on both sides of the Tasman
The Australian Government has adopted some of the main elements of a forest industry development initiative that has been successfully operating in New Zealand for the last three years. The Rudd administration announced this week that it is committing AU$9 million to the Forest Industries Development Fund (FIDF), a new grants programme designed to boost the international competitiveness and value of Australia's forest products.
Doug Ducker, chairman of Woodco - the umbrella organisation for New Zealand's forest growing and processing industries - says there is a need for industries on both sides of the Tasman to become more cost-efficient, develop new income streams and move their products up the value chain.
"New Zealand's Forest Industry Development Agenda (FIDA) has been a great success, driving innovation at all levels of the industry, from environmental standards and regional roading through to the development and promotion of environmentally-friendly wood construction," he says.
"Having the Australians stepping up to the plate is great news. There is a lot of technical collaboration between the two industries and much of what we are doing here can be applied in Australia, which also has a large radiata plantation industry. We tend to leverage off each other and by working together, we have the potential to raise the status and value of radiata lumber and wood products in world markets."
Like New Zealand's FIDA, the Australian initiative favours projects that are co-funded by industry. This ensures industry buy-in to the projects and reflects the fact that many of the benefits of forestry - such as the soil and water conservation, and carbon storage - benefit society as a whole.
The Australian Government has committed Au$9 million to its fund to be spread over the next three financial years. In addition it is providing AU$8 million to address forest industry knowledge gaps relating to climate change, AU$1 million to develop a database of skill and labour requirements, AU$1 million to establish an industry skills council and AU$1 million to restrict imports of illegally logged forest products.
In the three years ending June 2009, FIDA will have benefited from a total of NZ$18.2 million in government funding, plus NZ$3.8 million and large "in kind" contributions from industry. In addition, the NZ Government has been investing NZ$25 million a year in roading development in Tairawhiti and Northland - major new forest harvesting areas. Woodco is in discussion with the new National-led Government about refocusing the FIDA investment at comparable levels beyond July 2009.
The Australian FIDF program website (www.daff.gov.au/fidf) contains details of the program and the expression of interest form. If you have any enquiries regarding the program or would like to submit an expressions of interest email fidf@daff.gov.au. Submissions close on Friday 6 February 2009.
New Zealand Log Prices - December 2008
The New Zealand log export market for December continued to be under severe downward pressure from almost every angle. Falling demand and mounting credit issues for those few customers who had placed orders appeared to be causing the most concern. This was on top of large inventories at all stages in the supply chain. Customers who had always bought 'at the right price' were not responding to almost any price and therefore the supply/demand balance was a long way off.
There remained a lot of volatility in pricing, with almost all export grades showing large ranges. On average the in-market price in Korea for a KS grade log was down $US15 to $US105 a metre. The volume of orders placed at these prices was minimal.
Shipping rates continued their astounding falls of late, to levels never seen since Agrifax started their survey in Jun 2003. Quotes as low $US10 to $US15 a metre were being reported, down over 80% since the June peak. Those that fixed forward shipping rates six or eight months ago on the premise that the global commodity boom would continue were feeling a lot of pressure on their margins from those that didn't.
The NZD in December steadied against all of the major currencies related to the New Zealand forestry industry (USD, Yen, Yuan, Won and Rupee), with the NZ/USD only moving down 0.7% on November to 55.5c. Most economists are predicting a New Zealand dollar worth between $0.45 and $0.50 this year. Global market commentators have started talking about markets turning around. Unfortunately, very few expect this to be in 2009.
Domestic log Supply wasn't the problem for sawmills in December. Instead, uncertain demand for processed product in 2009 was making a number of sawmillers nervous. Domestic sales for the first half of 2008 were fairly buoyant, but sawmillers were seeing a definite slowdown in demand. On the back of these negative indicators, it seems likely that NZ supply will reduce accordingly. This had already started to happen with some commentators reporting woodlot owners pulling wood off the market due to such low tendered prices.
As foreshadowed in November the NZX Agrifax Log Price Index, which measures returns from the whole forest, fell by $4 per tonne to $78 per tonne in December 2008. This is in stark contrast to November's record $5 increase.
Log price changes: North Island:
Domestic:
Pruned grades were holding much better in the Northern North Island. Pulp prices steady.
Export:
Huge volatility continued, with movements between +$13 and -$20/t. Pulp logs steady.
South Island:
Domestic:
Volatility across the South Island, but prices were trending down, mostly between $2 and $5/t. Chip logs were losing some ground in the Northern South Island.
Export:
Negative price movements of between $0 and $3/t, mainly on the back of significantly reduced volumes being traded.
The world's first biodegradable computer, the iameco, has been manufactured in Dublin from bio-degradable wood panels made from waste products in the lumber and pulp industry.
During a visit to the company by Ireland's Minister for Science and Innovation, Jimmy Devins, the inventors of iameco, MicroPro Computers Ltd, said they could implant the seeds of native-tree species into the wood panels. Source: Forest Sector Newsletter, TLA
Africa's largest underwater logging planned
Ghana, which is running short of forests to harvest, is about to turn to the dead trees underneath its Lake Volta as a new source of exotic timber, one of its top export earners. Lake Volta, one of the world's largest artificial lakes, is expected to yield millions of dollars worth of timber in what is set to be Africa's biggest-ever underwater logging of what was thought to be lost forests.
Experts say Ghana's forest cover has shrunk to about a quarter of its 1960 size due to over-logging and poaching. Underwater logging is seen as a novelty in the quest to save the West African nation's overland forests.
"As far as we know, this is the first for Africa on this scale," said Robert Johnson, representative of a Canadian firm that will dredge the depths of the lake to salvage some of Africa's prized hardwood. The timber was submerged when the lake was built 44 years ago. Among other countries harvesting timber from underwater are the two South American states of Suriname and Brazil, "but not on this scale," said Johnson.
An inventory, conducted using high resolution sonar - a technology used to locate objects underwater - has identified some 100 species of trees, including sought-after hardwoods such as ebony, teak and mahogany, all buried in the lake bed. Vancouver-based Clark Sustainable Resource Developments (CSRD) has secured a 25-year concession to extract the dead but valuable trees from a zone representing around 40 percent of Lake Volta's total area. Source: The Times
Duties slapped on Chinese and Indonesian toilet paper
An Australian Customs Service (ACS) investigation has found that toilet paper from China and Indonesia has been dumped in the Australian market. Exporters from China and Indonesia, except for Vinda Paper (Jiangmen), have been found guilty of dumping at 2-45% below normal prices. The Australian Minister for Home Affairs, Bob Debus, has also determined that there has been material injury to the Australian industry.
As a result, the Australian authorities have imposed anti-dumping duties ranging from 2% to 45% on toilet paper imports from the two countries involved. According to the ACS, the measures will remain in place from January 1, 2009, for five years, unless revoked earlier. Companies facing penalties have one month to appeal against the findings, which were published on 31 December 2008.
The original complaint was filed by Kimberly-Clark Australia and SCA Hygiene Australasia. They claimed that starting in 2007, increased imports of premium-grade toilet tissue from China and Indonesia undercut prices of local rivals and caused material injury to the Australian industry. Most of the imports in question were marketed by the Australian supermarket chain Woolworths under the 'Select' brand and came from Asia Pulp & Paper's (APP) tissue plants in China and Indonesia. For more information on the decision see www.customs.gov.auSource: RISI
Rising costs and slowing demand impact on MDF
Economic uncertainty and slowing consumption are negatively impacting global demand for MDF. In 2008, global MDF capacity rose by an estimated 4.3 million m3 to 57.6 million m3 (32.5 billion sf) and new capacity coming on-line in 2009 (along with that announced for 2010) could theoretically push global capacity to 66.2 million m3. According to analysts, for 2008-2010 there are plans for as many as 80 new lines. However, given the ongoing global economic distress and constrained access to capital, actual start-ups will likely be much fewer.
China continues to build on its position as the world's largest MDF producing country, rising by 1.75 million m3 to 18.6 million m3 of capacity in 2008 and maintaining its 32% of global capacity. With the decline in China's furniture and laminated flooring industries, Chinese MDF panel producers are choosing to close inefficient plants, seek out customers manufacturing for domestic consumption, or (for the more modern Chinese mills) diversify into export panel markets.
In second place was Europe, up 1.4 million m3 to 18.4 million m3 in 2008 (+8.0%), with the majority of the expansion occurring in Russia and Turkey. No new lines were installed in the EU, and one line in Romania was converted from MDF to particleboard in 2008. Looking out to 2010, European capacity is projected to reach 20.6 million m3, with stagnant growth anticipated in the EU and further expansion likely in Russia and Turkey (subject to market conditions and availability of investment capital).
"Other Asia," led by Korea, Malaysia and Thailand, took third position at 6.5 million m3, unchanged from 2007, followed by North America with a capacity reduction of 390,000 m3 to 5.6 million m3 (-6.5%). Coming in fifth was South America, with 1.3 million m3 of new capacity to come on-line in Brazil and (to a lesser extent) Chile, raising the regional capacity to 5.3 million m3 (+31%). In 2010, there are plans for one Chilean producer to build a new mill with capacity of 500,000 m3, whereas there are no further expansion plans for Brazil.
The North American situation appears to be the most affected by the negative market conditions, with one Canadian mill and two U.S. mills closing indefinitely/permanently in 2008. Although the industry operated at about 78% of capacity over the first ten months of 2008, indications are that volumes have dropped off sharply in the last two months and are likely to remain low into Q1/09. There is speculation that more mills may be closed indefinitely and announced new start-ups for 2009 delayed. Source: International Wood Markets Group, www.woodmarkets.com
Biochar to assist in fighting climate change
Biochar, similar to charcoal used by pre-Columbian Amazonian cultures to boost crop yields, could help the fight against climate change by securely locking carbon away in soils for thousands of years, according to the December-January issue of ECOS magazine. Biochar is made by heating woody waste at high temperatures without oxygen, a process that also produces biogas and usable "bio-oil", renewable energy sources. The stable black carbon-rich solid left after these are captured can remain in soil for up to 5000 years.
Used in agriculture, it could increase crop production and reduce emissions of greenhouse gases such as carbon dioxide and nitrous oxide from fertilisers. Biochar appears to be especially effective as a soil additive for rehabilitating contaminated soils and boosting crop yields on marginal land. Prominent climate change figure, Professor Tim Flannery, has publicly advocated biochar's potential, stating it; "provides a unique, powerful solution, for it allows us to address food security, the fuel crisis and the climate problem, and all in an immensely practical manner." Source: CSIRO
Gunns Tasmanian mill faces yet more hurdles
Australian Environment Minister Peter Garrett last week announced another hurdle for Gunns to overcome in their bid to build a AU$2.2 billion pulp mill in Tasmania. Even though the company said it could now begin construction on the plant the government now wants more studies of the pulp mill's impact on marine life before it grants the last three approvals in a series of 16 environmental tests that have been laid out by the government. Mr Garrett also said that if the plant gets federal approval but exceeds the allowable operational limits under the Environment Protection and Biodiversity Conservation Act 1999, it could be fined more than AU$1 million per offence.
...and one to end the week on...so, just how hot is it?
Since it's the beginning of the year we'll finish with a longer one - but a brilliant one - sent in by one of our Australian readers. Excuse the language but it's needed to provide the atmosphere. It's an excerpt from a pom's diary. For any who have travelled to some parts of Australia over summer, it still holds true today.
Diary of a Karratha Summer (by a Pom)
August 31st: Just got transferred with work into our new home in Karratha, Western Australia now this is a town that knows how to live!! Beautiful sunny days and warm balmy evenings. What a place! I watched the sunset from a deck chair on the verandah It was beautiful. I've finally found my home. I love it here.
September 13th: Really heating up. Got to 35 today. Not a problem. Live in an air-conditioned home, drive an air-conditioned car. What a pleasure to see the sun everyday like this. I'm turning into a sun worshiper.
September 30th: Had the backyard landscaped with tropical plants today. Lots of palms and rocks. What a breeze to maintain. No more mowing lawn for me. Another scorcher today, but I love it here.
October 10th: The temperature hasn't been below 35 all week. How do people get used to this kind of heat? At least today it's kind of windy though. But getting used to the heat is taking longer than I expected.
October 15th: Fell asleep by the pool. Got 3rd degree burns over 60% of my body. Missed 3 days of work. What a dumb thing to do. I learned my lesson though. Got to respect the sun in a climate like this.
October 20th: I missed Kitty (our cat) sneaking into the car when I left this morning. By the time I got to the hot car for lunch, Kitty had died and swollen up to the size of a shopping bag and stank up the $3,000 leather upholstery. I told the kids that she ran away. The car now smells like Wiskettes and cat s***. I learned my lesson though. No more pets in this heat.
October 25th: The wind sucks. It feels like a giant ******* blow dryer!! And it's hot as hell. The home air-conditioner is on the blink and the AC repairman charged $200 just to drive over and tell me he needed to order parts.
October 30th: Been sleeping outside by the pool for 3 nights now. ******* $600,000 house and we can't even go inside. Why did I ever come here?
November 4th: It's 38 degrees. Finally got the ol' air-conditioner fixed today. It cost $1,500 and gets the temperature down to 25, but the humidity makes the house feel like it's about 30. Stupid repairman. I hate this stupid place.
November 8th: If another wise-arse cracks, "Hot enough for you today?" I'm going to ******* throttle him. ******* heat! By the time I get to work the car's radiator was boiling over, my clothes are soakin ******* wet, and I smell like baked cat!!
November 9th: Tried to run some messages after work. Wore shorts, and sat on the black leather seats in the ol' car. 1 thought my ******* a... was on fire. I lost 2 layers of flesh and all the hair on the back of my legs. Now my car smells like burnt hair and baked cat.
November 10th: The weather report might as well be a ******* recording. Hot and sunny. Hot and sunny. Hot and ******* sunny. It's been too hot to do anything for 2 damn months and the weatherman says it might really warm up next week. Doesn't it ever rain in this damn ******* place? Water rationing will be next, so my $5,000 worth of palms just might dry up and blow into the ******* pool. Even the palms can't live in this ******* heat.
November 14th: Welcome to HELL!!! Temperature got to 41 today. Now the air conditioner's gone in my car. The repairman came to fix it and said, "Hot enough for you today?" My wife had to spend the $2,500 mortgage payment to bail me out of jail for assaulting the stupid idiot. ******* Karratha! What kind of a sick demented ******* idiot would want to live here?
December 1st: WHAT????? This is the first day of Summer???? You are ******* kiddin!
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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