Friday Offcuts – 18 November 2011
Click to Subscribe - It's FREE! A story appearing in the Australian media this week unfortunately didn’t paint a glowing picture of the Australian forest products industry. Trends like increasing wood imports, reducing roundwood exports and a drop in housing activity have all been well documented in recent months. A worrying sign though from the recent ABARES stats for the March/June quarters is the dramatic reduction in new planting that’s been recorded. It’s dropped away by over 70 percent in just five years.As pointed out by the AFPA, the passing of last week’s carbon tax isn’t going to do a lot to help reverse the trend. Although the country’s plantations are already contributing something like 20 million tonnes of CO2 equivalent towards meeting the country’s Kyoto target, the constraints that have been placed on harvesting as part of the Carbon Farming Initiative are far too difficult for forestry. The current environment isn’t conducive to either investors or forestry owners to get back into new planting. There may well be interest though in the SA forestry plantations that have just gone onto the market this week. Much better news though from ABARES was the jump in forest products trade from Australia recorded with China. In 2010–11, twenty two percent of the value of Australia’s forest product exports was linked to China. This compares to only 11 per cent four years earlier. The growth in Canada’s trade to China is even more dramatic (a 26 fold increase over this last decade) as detailed in the wood framed construction story below. Another interesting stat from the ABARES report was that New Zealand wasn’t Australia’s largest supplier of imported sawn timber. The number one spot for 2010-11 was taken for the first time by Europe. Finally, registrations from technical foresters from throughout Australia for the two-yearly forest technology series, ForestTECH 2011, on remote sensing, forest estate planning and inventory management continue to flow in. Around 200 foresters on both sides of the Tasman have already registered. The event runs in Albury in less than two weeks now (and a week later in New Zealand). For late registrations, check out details on the event website, www.foresttechevents.com.
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Stats show slowing Australian timber industryIn last week’s issue of Offcuts we provided a link to the latest ABARES statistics for the Australian forestry and wood products sector. Australian Forest and Wood Products Australia chief executive David Pollard said in the Age the figures confirmed the difficult trading conditions for Australian wood products manufacturers.Forest product imports rose by 5 per cent to AU$4.4 billion in 2010-11, particularly wood-based panels and sawn wood imports, up 16 per cent and 10 per cent respectively, according to the March and June quarters 2011 Australian Forest and Wood Products Statistics report. Over the same period, exports rose by 9.4 per cent to AU$2.47 billion, still maintaining Australia's AU$2 billion trade deficit in wood products. Hardwood woodchip exports were up, mainly plantation fibre from Western Australia and Victoria, while roundwood exports rebounded in value by 43 per cent. Other key features were: - New plantation rates decreased, falling by 72 per cent since 2006-07 to 21,000 hectares. - A continued slowing in new housing construction activity. Dr Pollard said a 14 per cent drop in new house construction commencements in 2010-11 clearly showed the difficult conditions and continuing threat to Australia's economic health. "When combined with increased imports of processed products, decreased plantation establishment and the looming carbon tax implications, we have a very difficult trading environment for Australian wood product manufacturing," he said. Building NZ’s wealth through a green economyPure Advantage, the organisation championing a move to a green growth economy says New Zealand needs much more decisive leadership in order to position the country for opportunities in sustainable and innovative niche industries where we can have a natural competitive advantage.To highlight this, leading UK-based global strategic economics consultancy Vivid Economics is preparing a significant macroeconomic report on New Zealand’s green growth opportunities in conjunction with Lord Stern of the London School of Economics with an executive summary released earlier in the week. More >> Characterisation of resin-pocket density
Although resin pockets are a major cause of degrade for appearance grade timber, little is known about how the frequency of type-1 and type-2 resin pockets varies within trees and within rings. In a recent study, data was collected from 15- to 18-year-old Pinus radiata D.Don stands at four sites covering a wide environmental gradient. The research clearly showed that resin pocket density varied markedly in the radial but not the longitudinal or circumferential dimensions. At all four sites, variation in the radial dimension was characterised by an absence of resin pockets in the inner rings and fluctuating densities in the outer rings. The age at which substantial resin pocket formation began ranged from 4 years on the fastest growing site to 8 years on the slowest growing site. For full details on the story and link to the study, check out the latest R&D Works Newsletter
Australia trade with China liftsChina is fast becoming a major trading partner of Australia in forest products. It accounted for 22 per cent of the value of Australia’s forest product exports in 2010–11 ($544.4 million) compared with 11 per cent in 2006–07 ($270 million). In value terms, 15 per cent of Australian imports of forest products ($676 million) in 2010–11 were sourced from China, up from 12 per cent in 2006–07 ($509 million).Wastepaper and woodchips were the major forest product exports from Australia to China in 2010–11. The volume of roundwood and woodchip exports has increased significantly over the past 5 years and particularly since 2009–10. In 2010–11, Australia exported over 1.3 million cubic metres of roundwood and almost 1 million bone dry metric tonnes of woodchips to China. The total value of primary forest products exports to China in 2010–11 was $544 million, of which roundwood accounted for 29 per cent, waste paper for 26 per cent and woodchips for 22 per cent. Paper and paperboard and wood-based panels are the major forest wood products imported from China. Over the past five years, the quantity of paper and paperboard imports sourced from that country was, on average, around 165 000 tonnes per year. The total value of imports of primary forest products from China in 2010–11 was $676 million of which paper and paperboard accounted for 40 per cent and miscellaneous forest products (doors, mouldings and assorted items such as packing cases, picture frames and wood charcoal) accounted for 27 per cent. In addition, China is the major supplier of secondary wood products (such as wooden furniture, prefabricated buildings and printed articles) accounting for $1 billion (43 per cent) of the $2.4 billion worth of all secondary wood product imported into Australia in 2010–11. Source: DAFF/ABARES
BNZ Carbon News Carbon has continued to trade broadly downwards over the last couple of months, finishing at NZ$13.40. NZUs are at a slight premium to CERs, currently trading at NZ$12.40. The low price of carbon at the moment is driven largely by developments in Europe, the lack of demand for carbon credits as the economy slows couples with a low Euro, allows carbon to be imported into New Zealand at discount rates. Prime Minister John Key and Environment Minister Nick Smith announced the National Party’s environment policy last week, and have given some very clear signals as to what awaits the NZ ETS if National return to power. National have indicated they will slow the implementation of the ETS broadly in line with recommendations from the ETS Review Panel. The scheme is currently legislated to step up to full obligations for emitters on 1 January 2013, however, the review panel has recommended a phased approach. National’s policy adopts the recommendation that an emitter is required to only purchase units to cover 67% of their emissions in 2013, 83% in 2014 and 100% in 2015, but opted to maintain the fixed price at NZ$25 until 2015, rather than increasing it steadily over the next 3 years as recommended by the panel. The introduction of agriculture to the ETS will be reviewed again in 2014 under National, and will only be included in the scheme if new technologies are available to enable abatement, and if international progress has been made on reducing emissions. This is contrasted with Labour’s policy that agriculture should join the ETS as planned on 1 January 2013 with a 90% of 2005 emissions allocated to the sector in the form of NZUs. Perhaps the most interesting announcement from National is the introduction of offsetting from January 2013. Offsetting will allow owners of pre-1990 forests to re-plant an alternative but equivalent block of land upon harvest, freeing up land-use change. Currently a pre-1990 forest must be replanted (or allowed to regenerate) on the same piece of land to avoid carbon obligations. The move will, however, likely mean that the second tranche of NZUs to be allocated to the owners of pre-1990 forests comes under review. Across the Tasman, the Australian senate passed the Australian carbon legislation last week. The move will see a carbon tax at AUD$23 per tonne introduced from July next year, with a move to a full emissions trading scheme in July 2015. The vote passed with a majority of 36 to 32, however Tony Abbott, leader of the opposition, is still vowing to repeal the legislation should he take power in 2013.  2011 Awards magazine now online
The 2011 Australian Timber Design Awards magazine is now available online. It showcases this year's winners in all categories, with photos of all entries -- winners and non-winners alike. It’s a great source of ideas for anyone thinking of designing in wood or of entering the Awards in future years.The Australian Timber Design Awards has been honouring excellence in timber design for twelve years. Entry is open to architects, builders, designers, engineers, interior designers and landscape architects. Visit www.timberawards.com.au to view winners from 2011 and previous years. Carbon Conscious to plant 10m treesCarbon forest sink company Carbon Conscious will plant about 10 million native Mallee eucalypt trees in Western Australia's wheatbelt next year after Origin Energy exercised about $30 million worth of planting options. Carbon Conscious, which develops forestry plantation projects to deliver carbon offset credits, said that Origin had recommitted to a deal with Carbon Concious made in 2009.Carbon Conscious said the exercise of the options by Origin represented Australia's first major bio-sequestration investment since the Clean Energy Act was passed earlier this month. Carbon Conscious said Origin had committed to exercising the 2012 component of the commercial forestry options granted to Origin in the 2009 agreement. They would also bring forward the 2013 contract plantings into the 2012 planting season. The planting of 10 million trees in 2012 represents a fivefold increase on the previously anticipated planting for 2012, Carbon Conscious said.  Forestry linked to Elders lossElders has forecast an improved performance during the current fiscal year after posting a substantial loss due to the decision to sell its forestry business. The company reported a net loss of AU$395.3 million for the 12 months to September 30, which was worse than the AU$217.6 million loss in the prior corresponding period.Shares in the company fell almost six per cent to a record low 24 cents after the loss was announced, in which Elders said no dividend would be paid for another year. "The results are obviously heavily impacted by the complete and impending divestment of unprofitable and cash consuming operations, particularly our forestry," Elders chief executive Malcolm Jackman said. The company expected to "substantially complete the forestry divestment" and reduce debt and interest significantly with the proceeds. Elders said on October 3 it would offload its struggling forestry business in a staged divestment. Mr Jackson said some AU$26 million worth of land sales had been executed to date, adding that the company would update the market as further properties were offloaded. Independent panel's inquiry clears Sino-ForestThe independent committee investigating Chinese timber producer Sino-Forest Corp. said it found no evidence of fraud at the company and emphatically rejected allegations by a short-seller that sent shares down 75%. The claims by research firm Muddy Waters LLC, which said Sino-Forest was a "near total fraud" and a "Ponzi scheme," were among the most explosive in a string of accusations against Chinese companies. The Canada-listed Chinese timber company says its report—the result of a $35 million, five-month investigation—found that the company owned all the timber it claimed, valued it correctly and had not carried out any questionable transactions. |
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