Friday Offcuts 12 May 2017
On a much more positive note, tonight, the Southern Wood Council in conjunction with the industry training organisation, Competenz, are planning for another huge turnout from local logging contractors, forestry companies and transport operators from throughout the lower South Island of New Zealand. The function is the 2017 Southern Wood Council Forestry Awards. It’s the one time every year where the forestry industry is able to celebrate the success of those that have achieved formal training qualifications over the year. Through a series of nine major awards, the industry’s top performers are also going to be recognised. Later this evening, around 350 forestry companies, contractors and their families will be meeting in Dunedin.
Last Tuesday, the Victorian Government handed down its 2017-2018 State Budget. Included in the announcement was AU$110 million that's being set aside for plantation establishment in the Latrobe Valley. The Australian Federal budget was presented one week later on Tuesday this week. It included measures to assist home buyers to get onto the property ladder, a boost in infrastructural spending and AU$1.2 billion for a skills fund to provide for new apprenticeships. For forestry, the Government fulfilled its pre-election pledge. AU$4 million has been set aside to set up a National Institute for Forest Products Innovation. AFPA says work’s already underway to establish two key nodes of the Institute in Launceston, Tasmania and in Mt Gambier, South Australia. For the kiwis, although the delivery of the Budget is still a couple of weeks away, an additional NZ$74.6 million in funding for Business R&D was also been announced this week.
Finally, for those looking to attend the two-yearly harvesting event, HarvestTECH 2017, if you’re looking to save a few pennies, discounted early-bird registrations FINISH today. Already close to 350 forestry and logging companies have registered so far. One of the two field tours has already been filled. Just a few remaining spaces as of this morning are left on the FGR Field Tour planned for the day before the conference, Monday 19 June. It’s expected, like 2015, that the event this year will be sold out as well. If interested in booking a space, registrations and further details can be found on the event website, www.harvesttech.events. Enjoy this week’s read.
This week we have for you:
Institute for Forest Products Innovation gets green lightThe Australian Forest Products Association (AFPA) has congratulated the Turnbull Government for honouring its pre-election pledge of AU$4 million in Tuesday night’s Federal Budget to establish a National Institute for Forest Products Innovation. AFPA CEO Mr Ross Hampton said work was already underway to establish two key nodes of the Institute in Launceston, Tasmania and Mt Gambier, South Australia.
“This investment is recognition that in a carbon constrained global economy in which renewable resources are at a premium, the forest products industry can play a key role in Australia’s innovation agenda,” Mr Hampton said.
“With commitments from state governments and industry over time, the Institute has the potential to become the focal point of a strategic network of research ‘nodes’ that reflect industry priorities, and reinforcing the good work being done in other industry-led R&D efforts.
“AFPA looks forward to working with the Federal Government and other partners to ensure that the Institute becomes a permanent fixture in our industry’s R&D landscape,” Mr Hampton said.
Northland forestry worker shortage acuteA global demand for logs and competition for workers in New Zealand’s primary industries have left Northland with an acute shortage of labourers in the forestry sector- a situation that may delay planting and harvesting of trees.
At least 50 workers to perform a variety of jobs such as machine operators, planting, and tree pruning across the region are needed immediately and some forestry contractors are already looking to hire from the Pacific Islands and Philippines. Forestry contractors began experiencing the shortage two years ago but it has now become dire.
Kevin Ihaka, owner of Forest Protection Services in Whangarei which does planting and pruning of mostly pine forests on behalf of forest owners throughout Northland, has just placed a job advertisement for 15 more workers. He said the situation was critical for contractors as a lot of trees were ready to be harvested.
Mr Ihaka, who is on the Forest Industry Contractors Association board, said labour shortage was more prevalent in Northland and Gisborne and he feared jobs such as planting and harvesting may not get done or could be delayed if more people were not recruited on time. Read more.
Australian drone regulations need tightening Senator saysA Coalition senator is calling on Australia’s Federal Government to toughen up laws on the use of small drones. Queensland senator Barry O'Sullivan said he feared a "catastrophic" accident was possible if measures to govern the use of drones that weigh less than 2 kilograms were not considered immediately.
Last September, the Civil Aviation Safety Authority (CASA) relaxed rules around the use of small drones. They can now be used without registration or a remote pilot's licence but operators must abide by general aircraft rules, including keeping away from flight paths.
Senator O'Sullivan said he feared regulations were removed too quickly. "These people have got these pieces of tin with no training, no proficiency — up they go," he said. "We do not even have rules about whether they are intoxicated or not. There is nothing."
Senator O'Sullivan, who investigated aircraft crashes in his earlier career, is worried an amateur could fly a drone into a crop duster or even a passenger jet. "If the two come into contact with each other, the result is probably catastrophic," he said.
To date there have been no collisions between drones and manned aircrafts in Australia. The Australian Transport Safety Bureau's Stuart Godley said the chance of a catastrophic event was "very low" but added it was difficult to determine who owned the drones that were causing problems.
"The fact that most of them are above 1,000 feet and most of them are in capital cities, in particular Sydney, and that the weekends are overrepresented, suggests that these are probably amateurs flying for fun," he said.
Beginner or enthusiast, here's what you need to know about how to operate a drone safely and what laws you need to follow.
A Senate inquiry is investigating drone regulations and safety, but Senator O'Sullivan wants the Infrastructure Minister Darren Chester to consider re-introducing regulations immediately. "I am calling on the [Infrastructure] Minister to turn his mind to this immediately and to put some interim regulation in, if necessary, as a stop gap until a Senate inquiry has finished its work, until CASA has finished their considerations," he said. Crossbench senator Nick Xenophon backed that call.
Infrastructure Minister Darren Chester said it was unlikely anything would change. "I am not going to second-guess the experts. I am not going to second-guess the outcomes of the drones safety review that was announced late last year," he said.
"We need to balance the risk here. We need to listen to the expert advice but also not stop a developing industry from flourishing."
Source: ABC News
New head for National Timber Durability & Design Life CentreA leading researcher from the world’s largest university wood and forestry program is to be appointed as Foundation Fellow for Australia’s National Centre for Timber Durability and Design Life.
Professor Philip Evans will take on the position while maintaining an ongoing role as BC Leadership Chair in the Faculty of Forestry at University of British Columbia – an arrangement which enables continual knowledge sharing and access to multiple sources of research funding.
A strategic initiative of the industry group Forest & Wood Products Australia (FWPA), the Centre is a partnership between industry, academia and government. It was launched late last year and is based at the University of the Sunshine Coast.
The Centre is designed to put Australia at the forefront of international best practice, and use an evidence-based approach to ensure design guides and standards remain world class in the light of climate change, new engineered timbers and changes in building design.
“As Foundation Fellow, I’m there to establish the Centre and set the initial research direction, which will be handed over within five years or so to a new generation that we will train,” he said. “If you look around the industry, we’re not getting any younger. It’s essential we train talented young people in the field – the value of that to this industry is immense”.
“Through a network that the Centre will establish, we will have access to some of the brightest minds in the best universities in Australia and around the world. This Centre is a fantastic opportunity to make a difference and apply the knowledge I have gained over the last 33 years.”
The Managing Director of FWPA, Ric Sinclair, said Professor Philip Evans was a perfect fit for the role. “Phil is heavily engaged with industry, and is a world-class operator, with experience in the UK, North America and Australia,” he said.
“Phil worked at The ANU between 1985 and 2001 and is still an Honorary Professor in the Department of Applied Mathematics at the ANU. He is an Australian citizen and knows the Australian industry very well. Many of his former students went on to become today’s industry leaders.
Ric said the Centre would initially focus its efforts on the development of evidence-based data, systems and tools to underpin consumer confidence in the performance of timber products. Over time, the Centre would also create world-leading predictive models to enable architects and building specifiers to more easily choose the appropriate timber products for specific end uses and tasks, he said.
The Centre’s founding partners include the University of Queensland and the Queensland Department of Agriculture and Fisheries, however, its work will be national and international in scope.
NZ$74.6m to further grow business R&DNew Zealand’s Science and Innovation Minister Paul Goldsmith has this week announced an additional NZ$74.6 million in funding through the Innovative New Zealand programme in Budget 2017 to meet the growing demand for Callaghan Innovation’s research and development (R&D) Growth Grants.
“Encouraging business R&D helps high-tech, innovative Kiwi companies to bring products and ideas to the market sooner, which has significant benefit for export revenues,” says Mr Goldsmith.
“The rise in demand for Growth Grants is a positive sign that businesses are increasing their investment in R&D. This additional funding means a total of NZ$657.2 million is now available over four years through the Growth Grants programme.”
The new funding in Budget 2017 follows on from the NZ$761.4 million investment in Budget 2016 through the Innovative New Zealand package, and continuing investment in science and innovation over a number of years.
New data released earlier this year by Statistics New Zealand showed a significant jump in the amount Kiwi companies are spending on R&D. In the two years to 2016 business R&D increased by 29 per cent and Callaghan Innovation grant recipients increased their own R&D spending by 46 per cent.
“New Zealand companies invested NZ$356 million more on Business R&D in 2016 than they did two years prior, lifting expenditure to the highest level since records began,” says Mr Goldsmith. Read more.
Russian costs improve making industry more competitiveFollowing on from last week's analysis of the changes being made in the Russian forestry industry, we include this week a review by WOOD MARKETS on the major cost reductions being seen in Russia and the potential impact that this will have on their log and processed lumber exports.
With major cost reductions arising as a result of the ruble’s devaluation, the Russian industry is now formidable, in stark contrast to the tough situation it faced in 2012–14, e.g.,
- On a U.S.-dollar basis, Russia now has a competitive supply chain in terms of timber harvesting, hauling costs and processing (i.e., larger and more modern sawmills);
- The Russian industry is making high margins and investing in:
- New, modern logging equipment (typically Scandinavian/some U.S.)
- New, modern sawmill equipment (typically European)
- Value-added: kilns, planers, moulders, etc.
- Logistics costs (within Russia) are also favourable due to the weak ruble. Russian road and rail infrastructure are “okay,” but logistics costs rise outside of Russia (in U.S. dollars); and
- With a weak ruble, the economic log-hauling radius has been expanded to include forests with higher volumes of coniferous timber.
For decades, the economic timber supply in Russia has been moving further away from sawmills: most coniferous forests have been logged heavily and there is a sea of remaining hardwood timber located near sawmills. In addition, no investments have been made in forest roads, leading to steady increases in the hauling distance from forest to sawmill. The situation facing typical Siberian sawmills can be summarized as follows:
- Typical log hauling distance to sawmill: 120–150 km
- Lowest delivered log costs in world = excellent costs at best mills (US$18/m3)
- Sawmills very profitable
- Typical log hauling distance to sawmill: 200 km
- Delivered logs to sawmills dramatically higher (US$60/m3)
- Unfavourable sawmill cost position and weak earnings
- Typical hauling distance: 250 km (including up to 600 km by river)
- Delivered logs to sawmills are now dramatically lower (US$35–$40/m3) at best mills
- Sawmills very profitable
In terms of logistics, Russian log and lumber exporters are able to use the country’s railway system to access markets in China. On the other side of the border, the Chinese government has invested heavily in rail infrastructure at its land ports to accommodate daily trains from Russia carrying logs, lumber, oil and other commodities. This has facilitated rising exports of logs and lumber from Siberia by land. Simultaneously, lumber exports from western Russia by ocean container have increased dramatically since the beginning of 2015.
An export tax on Russian softwood logs (starting at 13% and going up to 25%) has been a major financial incentive for Russian companies to process sawlogs in their own sawmills. In turn, this has driven sawmill investments with an eye to processing more logs with a greater throughput (in an attempt to lower milling costs). As a consequence, more traditional lumber and “squared” lumber (cants) are being exported to China instead of logs (as a means to avoid the export tax). This is highly evident when lumber exports (increased to roundwood equivalent volume) are added to log exports to China. Russia’s total export volume to China is still rising, but comprising more lumber and fewer logs.
The modernization efforts that have facilitated increases in Russian sawmill production have resulted in a greater volume of kiln-dried, planed and higher grades of lumber being shipped to China for further processing. In addition, there have been some huge investments in kilns, planers and remanufacturing equipment to produce more kiln-dried, planed and higher-grade lumber on the Chinese side of the border. This allows Chinese companies to ship higher-valued lumber much further inside China (at cost savings), as opposed to heavy and lower-valued logs or green lumber.
As an example, in Manzhouli at the China–Russia border, an “industrial park” has been constructed that features over 800 kilns to dry Russian lumber before it is shipped onward to destinations throughout China; also planned for this particular industrial park are 300 Chinese sawing lines that will process Russian logs into lumber for further value-added processing. This particular industrial park is just one of several, and more are planned: in fact, some Chinese state-owned companies are looking to integrate their entire supply chain, i.e., from forests in other countries to the end user in China, including processing mills in China and other offshore countries.
Within China, there continues to be an expansion of high-speed passenger rail and freight service. As well, the country is embarking on its Silk Road Belt Plan that will offer improved rail and ocean infrastructure from Europe/Russia to China. This developing project will connect 19 railway lines in Europe and Western Russia with China for land travel, and will also offer an ocean transit time of as little as ten days.
Source: International WOOD MARKETS Group, www.woodmarkets.com
Key appointments for new Fire and Emergency NZAppointments have been made to three leadership positions at Fire and Emergency New Zealand, the new organisation that brings together the country’s urban and rural firefighters on 1 July 2017 into one service.
The Chair of the New Zealand Fire Service Commission Board Paul Swain says the Board is delighted to appoint Rhys Jones as Chief Executive of Fire and Emergency New Zealand, Paul McGill as the National Commander of Urban Fire and Emergency operations and Kevin O’Connor as the National Manager of Rural Fire and Emergency operations.
“Rhys Jones, as a former Chief of the Defence Force, led a large, complex organisation through a period of change. He is an experienced leader with a deep understanding of both career and volunteer forces, and brings a services background to the job. His experience, skills and character make him an ideal appointment.”
“Paul McGill is an experienced firefighter, officer and leader with 37 years’ service in the New Zealand Fire Service - 15 of those on the frontline before he moved into several senior roles. He is currently Chief Executive and National Commander of the New Zealand Fire Service.
“Kevin O’Connor is currently National Rural Fire Officer leading the National Rural Fire Authority (NRFA). He has had a long involvement in rural fire throughout his career in the Department of Conservation and the NRFA since 2014.”
Mr Swain says all three appointments are of the highest calibre. “We are on track to bring together 40 rural and urban fire organisations on 1 July to create a world-leading, integrated, well co-ordinated and funded fire and emergency service in New Zealand.”
All three will take up their new roles on 1 July 2017. In the interim, Mr McGill will continue as New Zealand Fire Service Chief Executive and National Commander, and Mr O’Connor will continue as National Rural Fire Officer. Read more.
Photo: Appointments from 1 July 2017: Paul McGill (National Commander Urban), Rhys Jones (Chief Executive) and Kevin O’Connor (National Manager Rural).
Logger woes could topple B.C.’s softwood lumber industryForestry, it's one of B.C.’s biggest money makers. With record lumber prices, you might expect the softwood industry to be booming. Instead, it’s going through a series of tough times, forcing an increasing number front-line loggers to throw in the towel. And as Lauren Pullen reports it has local logging associations worried about what the future will hold.
It’s one of B.C.’s deep-rooted money makers, but there’re some big concerns about the future of the softwood lumber industry. The United States’ plan to implement a tariff on Canadian exporters, the bulk of which are in B.C., is just one blow to the already bruised sector. B.C.’s logging associations are meeting in Vernon to talk about the outlook of the industry and they’re specifically focusing on the struggles facing front-line contract workers.
“Over 90 per cent of timber harvesting in British Columbia is done by contractors. If they’re not healthy and not financially viable, we’ve got a problem in this industry,” Truck Logging Association (TLA) executive director David Elstone said. “If we can’t get the logs out in a sustainable fashion…we won’t be getting the logs out.”
Both the TLA and the Interior Logging Association (ILA) say contractors have quit the business. “It’s very hard for contractors,” Wayne Lintott, ILA general manager said. “Some of the guys logging now are making the same rate as they were 10 to 15 years ago.”
“Over the last five to 10 years or so, contractors have gone through tough times, have not been able to rebound and repair our balance sheets,” Elstone said. “It leaves us in a more tenuous situation. There’s businesses on the line, businesses that are waiting for change, hoping for change.”
The logging associations hope that change comes from the provincial government, which has launched a Contractor Sustainability Review to try and figure out why the front-line workers are floundering. It’s too soon to say if there will be any impact on jobs, but Clarence Baggett, who ran his own logging business for nearly 50 years, said he’s a prime example of the deteriorating workforce. Baggett said he had no choice but to close his contracting business because he just wasn’t bringing in enough money.
Logging associations are questioning why the industry is in such a tough spot, considering Canada is reporting record lumber prices. They’re hoping the province’s review will provide some answers. There’s no timeline on when it will be complete. Logging associations warn the entire forest industry is at risk if the situation doesn’t turn around.
Note: Retaining and attracting skills back into logging is going to be addressed by New Zealand logging companies at the upcoming HarvestTECH 2017 event running in Rotorua on 20-21 June.
No need for delay in forest planting in NZNew Zealand forest owners are saying the government needs to get extra forest planting under way and not wait until next year for a report to be presented on climate change.
The Minister for Climate Change, Paula Bennett, has announced the Productivity Commission will report back in June 2018 with recommendations for achieving a lower carbon economy, to enable New Zealand to achieve its Paris Agreement commitment of reducing greenhouse gas emissions from 2005 levels, by 30 per cent, by 2030.
The Forest Owners Association President, Peter Clark, says the time to start acting on sequesting carbon out of the atmosphere, by using trees, should begin now. “The government is already supporting the up-take of electric vehicles without waiting for the Productivity Commission. There’s every reason to get the same impetus for tree planting, especially on farm and M?ori owned land.”
“I agree, it might make sense for the government to take time to carefully work out a process to bring agriculture into the Emissions Trading Scheme for instance. But if you want to lock up carbon dioxide, which is already in the atmosphere, there is only one option. It’s a no brainer. It doesn’t need a year to think about it. The answer is to get on and help get more trees planted. The recent Vivid Economics report on the need for up to nearly doubling the current 1.7 million hectares of New Zealand’s plantation forests was quite clear on this,” Peter Clark says.
The Vivid report stated “planting new forests is the only technology currently known and implementable on a large scale that has the capacity to remove large amounts of carbon dioxide from the atmosphere.” Peter Clark says the planning must begin now to ensure labour availability and sufficient volume of seedlings to plant out these extra trees.
“As it is, if there is going to be any meaningful expansion of planting, then it’ll take another year to build up seedling capacity, which will result in planting out in 2019. The government timetable will add at least an extra two years to that. More if legislation is required. That’s far too long a delay, especially when you consider that, even on the most rapid government timetable, it would then take until at least until 2026 to grow trees big enough to become effective carbon sinks.”
Peter Clark says there are specific things the government could do now around the Emissions Trading Scheme to encourage earlier planting. “It could signal that if it was to allow imported carbon units, then they would not be linked to forest carbon units here. We’ve already seen the fiasco from importing basically bogus credits from the likes of Russia and Ukraine in the past, and we don’t want that again.”
“It would also be unfair if the government were to bring in an ETS regime that penalised anyone who planted before the government worked out its ETS rules, and so the government ought to signal a level playing field now.”
Peter Clark says the government could lead by example in planting more trees itself – at least in the short term. “We are talking about a huge change in our primary industries here. I absolutely agree we need to plan this all carefully, especially infrastructure with local government. But that’s no reason to delay making a start now, rather than wait for another couple of years to get going.”
Source: Forest Owners Association
NZ Carbon Market updateCarbon prices continue to languish in the low $17’s as many emitters remain side-lined ahead of this month’s surrender date. Sellers are equally absent mainly because many feel prices at $17 are too low. Seasonally it’s often quiet between the return date of 31 March 31 and the surrender date of 31 May 31 as many portfolios go into lockdown.
There are some interesting potential market movers over the coming months starting with the May budget later this month. Whilst the market doesn’t expect any carbon announcements in the budget – we don’t write this possibility off completely given the major announcements last year around settings.
We do expect advice to be given to the minster by the end of June around the phase II ETS changes. The MfE has been meeting with market participants in recent months on these matters. We don’t expect anything to be released initially and any changes that are to be implemented won’t occur until at least 1st quarter 2018.
As many are aware – there is a general election in September which could have a major impact on carbon pricing if we have a change of government. All of these fundamentals lead us to be a buyer of carbon at present levels. We see little downside risk given there really isn’t momentum to send these markets lower. We do expect the US/Trump to make some announcement regarding the Paris Agreement later this month but our view is they won’t with draw as it would be seen as very isolationist.
Tasmanian forest industry growth plan releasedThe influential Ministerial Advisory Council (MAC) on Forestry has delivered its growth strategy for the industry to the Tasmanian Government — highlighting the growth in private plantation resources, and reinforcing the industry's future as one led by the private sector. The plan, delivered to the Government in March, predicts the most significant growth in private plantation forests — which already provide more than half of Tasmania's annual wood harvest.
Public resource, or the forests managed by the state-owned Forestry Tasmania, is the main supplier to the sawmilling and veneering industries, and the specialty timber sector. In October, the Government announced Forestry Tasmania would be downsized and revamped in an effort to stem its financial losses. The Advisory Council plan said growth would be contingent on ensuring the Forestry Tasmania was "financially stable, commercially-focused and fully compensated for all community flow-on benefit".
It also recommends an "understanding of the environmental, social and economic implications, prior to any decision of Parliament on changes to the production forest estate (increases or decreases)". Contentious legislation to open up 350,000 hectares of forests earmarked for protection for logging is in limbo before the Tasmanian Legislative Council.
The Ministerial Advisory Council plan stresses community expectations about forest management and environmental practices must be met. The commitment of current and future governments to an agreed and durable approach to industry policy is essential in establishing an operational environment that is conducive to investment and development, the report states. It also recommends the Government shoulder funding for road infrastructure, rather than Forestry Tasmania, and the industry work on better branding in order to charge more for timber.
The State Government has welcomed the report and plans to respond in due course. The Strategic Forest Industry Growth Plan report has been in the works since the Advisory Council was created in early 2014, shortly after the Liberal Government came into power.
China’s plan to cut shipping emissionsEvery year, over 60% of the world’s seaborne cargoes and 30% of the world’s shipping containers pass through China’s ports, creating an air pollution problem Beijing is now trying to solve.
The country is also home to seven of the world’s top 10 ports, so shipping is becoming a major source of air pollution in cities, such as Hong Kong, Shenzhen and Shanghai. An estimated 18,000 premature deaths in China in 2013 were caused by air pollution from oceangoing ships.
So, it’s encouraging that in 2016 the government started phasing-in regulations forcing ships to use fuels with 0.5% sulphur content while at berth and near major Chinese ports. This low-sulphur fuel contains 80% less sulphur than standard marine fuels and using it at berth can dramatically reduce air pollution and public health risks.
The new Domestic Emission Control Area (DECA) regulations are an important step towards reducing shipping pollution. The government first implemented the regulations in Shanghai and three other ports in the Yangtze River Delta last April, then in Shenzhen in October. Beginning this year, fuel switching at berth was expanded to eleven core ports, including four in and near the heavily industrialised Beijing-Tianjin-Hebei (Jing-Jin-Ji) region.
But regulations are only as good as their enforcement. Promisingly, China has been vigorously enforcing them. Read more
Global engineered wood market to reach US$41.2 bnThe global engineered wood market is estimated to reach US$41.2bn by 2022, growing at a compound annual growth rate (CAGR) of 24.8 percent from 2016 - 2022. North America and Europe account for nearly 70 percent of global engineered wood production and will continue to maintain high CAGRs, according to a new report from market research firm Allied Market Research (AMR).
Demand for engineered wood is driven by the industry looking for alternatives to concrete and hardwood to conserve energy, speed up construction, cut labour cost, and reduce waste. Stringent regulations with regards carbon emissions and rapid deforestation are also likely to propel the adoption of engineered wood. Despite the reservations engineered wood has proven to be a huge commercial success said AMR research analyst Yogiata Sharma.
The market is expected to move at a higher pace in Europe and North America, owing to high disposable income and widespread awareness. Developing regions such as Asia-Pacific, Latin America, and Africa will also exploit their vast forests for timber and raw materials for various engineered wood products.
Between 2015 and 2016, countries in Asia-Pacific such as Japan, Indonesia, and India led the engineered wood market, as they are the main exporters of raw materials to North American and European countries. India is one of the emerging markets in Asia-Pacific engineered wood industry, currently accounting for 10 percent of the Asia-Pacific engineered wood market share. It is estimated to have the highest CAGR of around 25 percent from 2016 - 2022.
Brazil and Chile show significant growth and are expected to grow with double-digit CAGRs and witness entry of a number of market players. The engineered wood market is segmented based on the type of product, wherein plywood and glulam collectively account for nearly 54 percent of the global market, and with cross-laminated timber expected to grow with the highest CAGR of nearly 30 percent during the forecast period. Non-residential construction will lead the market, due to increasing construction of multi-storey building and bridges globally.
US lumber prices reaching 13-yearContinued increase in US housing constructions, growing demand for wood, high lumber prices, imposed import tariffs on Canadian lumber, and a strong US dollar are recent market developments that will impact forest products market dynamics in 2017, not only in North America, but on other continents as well, reports the Wood Resource Quarterly (WRQ).
The US Department of Commerce announced on April 25 preliminary countervailing duties (CVD) on Canadian lumber imported to the US. The rate range for Canadian lumber producers, taking effect on May 1, 2017, were set from 3.0 to 24.12% with an average of about 20%.
The announcement of the high tariffs did not come as a surprise and will probably not increase lumber prices over the next few months, as many lumber traders in the US had already accounted for a higher cost for lumber shipped from its neighbour in the north.
Higher costs of housing, changes in log and lumber trade flows and upward price pressure on sawlogs in the US are some of the likely mid-term impacts from the new tariffs. These repercussions become more likely if the high temporary CVD rates become permanent and the anti-dumping duties (expected in the end of June) are substantial.
Canadian lumber is very important to the US market, accounting for 32% of total lumber consumption in 2016. Overseas importation of softwood lumber from Europe, Latin America and New Zealand has gone up for four consecutive years with 2016 import volumes being 2.5 times higher than those in 2012, however, they still only account for five percent of total imports to the US.
Despite the past few years’ substantial increase in overseas lumber supply to the US, import volumes in 2016 were still only 24% of the record high volumes of 2005. It is noteworthy that with the predicted rise in demand for lumber in the US in 2017, both domestic production and imports need to increase to meet the higher consumption levels. Even if overseas imports bounced up to their 2005 record highs, import volumes from Canada would still have to be higher than in 2015 to meet expected demand, according to the WRQ (www.woodprices.com).
Canada will remain a large and very important supplier of softwood lumber to the US market in the future but Canadian lumber companies will continue to diversify into new markets in Asia, Europe and the MENA countries (Middle East and Northern Africa). Source: Wood Resources International LLC, www.woodprices.com
Buy and Sell
... and one to end the week on ... a fishy story
A Customer at a local delicatessen marvelled at the proprietor’s quick wit and intelligence.
And on that note, have a great weekend. Remember, mothers day is this Sunday - on both sides of the Tasman. Cheers.
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