Friday Offcuts – 27 January 2012

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On relaxing over the summer break a number of articles caught our attention. The focus of these was undeniably anti-forestry. We started in this week’s editorial to put our thoughts down on the dire need for the forest products industry this year to pull up its socks - to put communications with the wider community much further up its list of priorities.

We ran out of space. Instead, I’ve included some comments in the anti-forestry media story below. We’d be interested in your thoughts or suggestions and your input to this week’s poll on exactly who should be funding any increased communications efforts. We have included this week an excellent example in the Europe Wood Video story with the Danish Wood Initiative promoting the environmental credentials of wood through video.

This week Plantation Energy, Australia’s largest manufacturer and exporter of densified biomass fuel pellets announced that it was closing its doors after only two years of below average performance. In 2009 the company signed a AU$70 million three year supply agreement (the first for Australia) with a Belgium based power company to supply wood pellets from their WA operation. At the time, the company was confidant and had some ambitious plans of installing and commissioning a further 12 plants around Australia over the next 36 months. Unfortunately, wood fibre supply in Australia, the vagaries of exchange rates, an over-supply in global markets and flat pricing for pellets in Europe (see pellet pricing story below) and increasing competition for pellet supply has derailed this promising business.

Finally we have several stories relating to planning and focus for upcoming events for the Australasian forest products industry this week. Interest continues to be very strong in the Future Forestry Finance 2012 conference series scheduled for early March (remember early-bird rates for registrations close in one week), there’s a story on the array of in-forest harvesting demonstrations being planned as part of the four yearly expo, AusTimber in late March and we have this week a call for interest from our readers in this years, Carbon Forestry 2012 event scheduled for later in August.

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"Who should fund increased communications efforts for forestry in 2012"

Through Individual forest products companies – each issue needs to be addressed at a local level
Collectively at a regional level
At an industry level – most likely through major industry associations
At a sector level – through allocation of resources by a pan-industry body

Major Australian pellet plant closes its doors

Industry in the Great Southern will be dealt a blow when Plantation Energy’s biomass fuel pellet facility closes reports the Albany Advertiser this week. After nearly two years of performing below expectations, the WA Albany-based export company, which set out to produce wood pellets from non-commercial plantations, is expected to close today.

Plantation Energy Australia chief executive Kevin Heydt said the company fell well short of achieving its projected 250,000 tonnes of exported biomass pellets each year since it began operating in 2010. He blamed this on the cost of producing the pellets, which was inconsistent with their international sale price. The operation proved to be uneconomic. Suitable wood fibre from the region from the forestry industry was proving more difficult for the company. This was also coupled with a high exchange rate with their trading partners.

Twenty staff will lose their jobs but the company said that facility could reopen at some later date if the economic climate becomes more favourable. Source: Albany Advertiser

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New Zealand Log Prices - January 2012

Log prices have bounced around over the past couple of months with many saying that this is the sort of behaviour we should expect to see in this market for the foreseeable future. There is still strong demand for New Zealand logs in China even as there are reports of slowing growth. However, the government is trying to cool the rampant property market by building more affordable housing. This is of course doing wonders for the demand for building materials such as timber.

Even with large volumes of logs coming out of the Pacific North West, New Zealand is remaining very strong in the Asian log market. Market share for New Zealand has slipped a little over recent months but volumes have increased and record volumes of logs are being exported to China from New Zealand each month.

January has seen another lift in the CFR price for logs in market. KS logs are now up to US$124/JASm³, KI logs are US$119/JAsm³ and A Grade logs are US$130/JASm³. This is a more substantial lift than seen last month.

China is well balanced heading into the Lunar New Year, off-take is down as expected but so are deliveries. This means port inventories in China are steady at around 2.5Mm³. 0 3Mm is the level that tipped the market over last time. A careful watch on how quickly these inventories grow over the CNY and the impact on the market it could have. It will set the market tone for the next 3-6 months.

India has a sufficient inventory and now needs this to drop before there will be any lift in demand. It’s expected that prices for February could also lift again but at the least should remain at current levels. However, once again the Chinese New Year could have an impact on the market and force inventories to go high.

Sea freight rates out of New Zealand have remained soft for the past month in-line with global freight prices. Over the past month shipping rates have plummeted with the Baltic Dry Index now below 1000 for the first time since January 2009. This index is an indication of global trade activity; low shipping rates indicate surplus shipping due to less demand for freight services globally.

The Agrifax Log Index is up again this month as prices between regions closed up slightly. While some regions experienced no change or even a drop in prices others had significant gains. There is a possibility that the lift in log prices this month could be undone next month should inventory levels in China swell over the Lunar New Year period. Exports out of the Pacific North West were up in December after a decrease in logs leaving this region in November. These December exports should reach markets in early January and coincide with the holiday period in China.

North Island
  • Domestic: Grades are down $7/t to NZ$5/t, pulping grades show a lift.
  • Export: Grades are down NZ$5/t to NZ$15/t.
South Island
  • Domestic: Grades are down $5/t to NZ$10/t, pulping grades show a lift.
  • Export: Grades are down NZ$5/t to NZ$15/t.
For more detailed reports contact NZX Agrifax at

The Agrifax log price data is a weighted average of prices collected each month from a range of New Zealand log buyers and sellers. Log prices shown in the table will vary regionally and by supplier and should only be used to provide a broad trend of log price movements.
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Forestry Finance Conference features market insights

Two of the global forest industry’s leading market commentators, Russ Taylor of International Wood Markets Group from Vancouver, BC, Canada and Robert Flynn from RISI in Boston, MA, USA have been confirmed to speak at the Future Forestry Finance 2012 Conference Series running in Auckland on 7-8 March and again in Sydney on 13-14 March 2012.

“Having global market updates as part of this key forest products event is one of the main attractions for key senior people from the forestry and the finance sectors alike,” says John Stulen, Project Director for this Forest Industry Engineering Association (FIEA) event.

Mr Stulen says, “We received high feedback ratings from CEO’s and other senior managers in most major forestry and finance companies when this conference ran in 2010, and we’re expecting the 2012 conference series to be even better. All-in-all this high level conference linking the finance and forest products industries offers plenty of information and good networking opportunities for senior personnel".

Both the Sydney and Auckland programmes can be viewed on-line at

Several special discounted offers on registrations this year have also been made available. In addition to early bird rates which close in just two weeks’ time, group discount rates and a special two-for-one discount off advertised conference rates have been set up. Registrations received before the Early Bird deadline also go into a special prize draw – the prize being an annual subscription to: INTERNATIONAL WOOD MARKETS “Monthly International Report” or “Monthly China Report” (both valued at approximately $500)

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Promoting new wood construction innovations

A story detailed in the latest issue of R&D Works details a paper where a theoretical framework on technology transition has been used to analyse emergence of wood-framed multi-storey building systems in Germany, Sweden and the UK. The framework can be applied to analyse the development of wood construction systems in other countries also.

Results showed that, in all countries, the construction professionals seemed to have negative perceptions regarding engineering properties of wood. Similar negative perceptions exist among the general public in Germany and the UK, but not in Sweden.

The wood construction promotional activities in Germany and the UK are directed to all types of houses, while in Sweden multi-storey buildings are targeted. The variations in the promotional measures undertaken partly explained the variations in growth of wood construction system in the three countries. The study showed that market intervention is needed to promote radical or really new innovations such as wood construction.

For full details on the story and link to the study, check out the latest R&D Works Newsletter

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Another great wood video from Europe

In this week's editorial we discuss the value and importance of communicating the "good news messages" that the forestry and wood products industries have to tell in 2012. The results of this week's poll on who should fund any increased efforts in this part of the world will be reported back to readers next week.

In the mean time, a reader from Europe sent in a video produced by the Danish Wood Initiative that shows in a pretty unique way how wood is the world's most environmentally friendly raw material, how wood harvesting is all part of the forestry cycle and how using wood is advantageous to the environment. Enjoy. Check it out below.

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Carbon Forestry 2012 planned for Australasia

What a year it’s been for those involved in carbon markets. A raft of new legislation, a jump followed by a dramatic drop-off in carbon pricing and then a slow-down in trading. The roller coaster ride has caused plenty of angst for those foresters, emitters and investors with an interest in carbon forestry. Carbon markets, both in Australasia and internationally, have changed dramatically in just 12 months.

Last year over 250 forestry and finance business leaders came together for Carbon Forestry 2011. This was the first event of its type focussing on carbon forestry and carbon trading opportunities. Planning is already underway by the Forest Industry Engineering Association (FIEA) to design the Carbon Forestry 2012 event for Australasian foresters, financiers, investors, carbon traders and brokers and those involved in carbon offsetting. It’s planned to run again in Auckland on 22-23 August 2012.

At this early stage we would be interested in hearing from those companies or individuals that would like the opportunity to present – or be involved in displaying at the August programme. If keen on being involved in this year’s Carbon Forestry 2012 event, please email BEFORE Friday 17 February.

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Harvesting focus for AusTimber 2012

AUSTimber 2012 will be held at Mount Gambier, South Australia, on 29th – 30th March. The Expo is situated on a cleared area surrounded by softwood and hardwood plantations, which will be used for harvesting demonstration. All the active forest sites on the plan are sold. We still, however, have the ability to add more within the overall area of AUSTimber if required.

This, in effect, means that there will be seven harvesting and extraction operations within the pine plantation, five cut-to-length bluegum operations, four tree-length harvesting operations and four in-field chipping operations processing product that will be hauled off the site during the event. There are still a few sites remaining in the static display area both in the open air and forest areas and organisers are encouraging potential exhibitors to be quick to secure the remaining few sites.

Once again, AUSTimber 2012 is showcasing careers in the Forestry Industry, following the success of AUSTimber 2008. At the forthcoming event, in conjunction with the Logging Investigation and Training Association and Tabeel Trading, opportunities will be presented for interested people to experience operating harvesting equipment, both in a simulated and real environment. Exhibitor Enquiries and Registrations are very strong currently and further information can be found at, or by contacting the Administration Manager, Libby Ditcham, on

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New video shows critical perspectives on REDD

Global Forest Coalition and Global Justice Ecology Project have produced a new video entitled A Darker Shade of Green: REDD Alert and the Future of Forests. The twenty-eight minute video, launched today, documents opposition among Indigenous Peoples, forest-dependent communities and environmental justice groups around the globe, to controversial programs that claim to Reduce Emissions from Deforestation and Forest Degradation (REDD) by putting forests into the carbon market. More >>

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Anti-forestry media coverage - comment

Following on from the small piece in this week’s editorial, a number of anti-forestry stories caught our attention over the summer break.

In Australia, just before Xmas, Forestry Tasmania was in the gun again. After working tirelessly with Government, industry and the community to try and make the Tasmanian Forest Intergovernmental Agreement work, it wasn’t the efforts of FT that was catching the media’s attention. Rather, it was another tree sit and advertising taken out by the Wilderness Society and green groups that were getting the coverage. Apparently Senator Brown even took media on a helicopter trip to check out the tree sit from the air. Despite the efforts of FT and quality of information impartially being supplied, it like many other forestry operations and activities appeared to be unfairly treated by the media. Incidentally this week it was protestors shutting a veneer mill that got their fair share of media coverage.

In New Zealand, forestry was also being targetted. Concerned residents were honing in on forestry during and following the devastating flooding in Nelson at the top of the South Island. Comments like; “New Zealand's clear-felled monoculture forestry was destroying the land, its soils and waterways” popped up regularly in coverage of the flooding by the media.

In an outdoor magazine the Editor thumbed through there were several “anti-plantation forestry” letters that stood out. In one the headline read “Stop Pillaging the Trees”. The opening sentences read; “I always wonder why you do not hear much protest about one of New Zealand’s major environmental disasters – plantation pine trees. Nobody seems to speak up about this kind of destruction. Has anyone noticed how much damage is done to our mountains?” The letter goes on to talk about mountains being stripped bare and topsoil being ploughed under and pushed away. The contributor was particularly irate that nobody appeared to be concerned about the extent of erosion that was being caused by plantation forestry.

The coverage - a snapshot of just some of the “anti-forestry” news that appeared in the media over the break - is just the tip of the ice berg. I think it's a trend we're all aware of. The inability to provide concerted, consistent and well thought out national and regional communications to the wider community largely stems from not understanding or agreeing on the messages that should be relayed. Inadequate planning and resourcing probably also plays a big part.

Like the coverage over Xmas, we seem to be reactive to issues as they arise rather than actively "going on the front foot". As foresters, if we think about it, we also tend to address these issues from a scientific angle rather than trying to capture the "hearts and minds" of the wider community. Let’s learn from the approach being used so effectively by other industries and the “activists”. We have an incredibly positive story to tell.

In addition to developing long over-due pan-sector strategies to drive the forest products sector forward this year, let’s take a much closer look at our communications efforts as an integral part of these new strategies. Let’s use 2012 as the start point for positively improving our communications - singing from the roof tops the positive messages that we've all got to share - both individually and collectively.

How do we do it - we'd be interested in your thoughts in this week's Offcuts poll.

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Canada-U.S. extend softwood lumber agreement

Canada and the United States have agreed to extend their agreement on softwood lumber by two years. Trade ministers from both countries made the announcement on Monday at a ceremony in Washington, D.C., assuring some level of peace in what has been the most serious irritant in the generally good relationship between the two countries.

Under the 2006 lumber agreement, the U.S. agreed to stop imposing duties designed to deter unfair practices, and Canada agreed to apply export charges and volume limits on U.S. shipments when wood prices fell below a certain level. The agreement is being extended without changes, according to a statement from the U.S. Trade Representative’s office.

The countries decided in December that an extension of the current seven-year agreement would be preferable to new negotiations. With the extension, the deal will be in force until 2015.

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Are you doing good things with energy?

Entries are now open for the 2012 EECA Awards, the event that recognises excellence and innovation in energy efficiency and renewable energy in New Zealand. There’s a category for all – including large and small business, community, transport, innovation, renewable energy, and public sector projects.

Previous winners include some of New Zealand’s largest corporates, to small owner-operated firms and community partnerships. It could be a great way to win recognition and celebrate your energy achievements. Entries close Monday 20 February 2012, with the awards ceremony in May. To enter or find out more, visit the EECA Awards website

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First US cellulose nanofibrils pilot plant

The University of Maine’s Forest Bioproducts Research Institute is building a pilot-scale plant for manufacturing cellulose nanofibrils (CNF), a wood-based reinforcing material that is increasingly of interest to researchers worldwide looking for super-strong materials that could replicate synthetic plastics.

The pilot plant, which is being funded by a US$1.5 million grant from the U.S. Forest Service, will be the only one of its kind in the nation, and will serve as a source of the material for those who want to explore the uses of cellulose nanofibrils (CNF). Currently, researchers and industrial companies who want to buy the material purchase it from sources in Japan and Germany.

For more details please visit:

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Industrial wood pellet prices flat in Europe

As a result of global wood pellet supply significantly exceeding demand during the last two to three years, industrial wood pellet prices in Europe have been flat to decreasing slightly on a euro basis. Prices increased from €115/tonne in July 2007 to €140/tonne at the beginning of 2009. Since then, they have declined to a low of €125/tonne at the end of 2010, and have increased slightly to €133/tonne at the end of 2011.

Large pellet exporters to Europe (e.g., Canada, the U.S., the Baltics and Russia) tend to sell to the industrial market, while many European producers must sell to the higher-priced domestic wholesale market (+25%–30%), and the even higher-priced domestic “bagged” DIY/retail market (+50%–55%).

A very important factor in the global production/consumption equation is the fact that the European market consumes about 85% of the world’s pellet production. This means that most large producers in non-European countries rely heavily on the European industrial pellet market.

Source: International Wood Markets Group,

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Global sawlog prices fall for first time since 2009

With weaker demand for lumber around the world, sawlog prices fell in a majority of the 21 markets tracked by the Wood Resource Quarterly (WRQ). The Global Conifer Sawlog Price Index (GSPI) declined in the 3Q for the first time since the 1Q/09.

With a few exceptions, prices fell in both local currencies and in US dollar terms. The only region that saw any substantial price increase in the 3Q was British Columbia, where prices were up 5-7 percent from the 2Q. This region has benefited from higher lumber exports and production has gone up during 2011.

The biggest price declines the past quarter occurred in Japan, Sweden, Poland and Russia; prices were down between 6-12 percent from the 2Q/11. The three latter countries are major exporters of lumber, and shipments to European markets and Northern Africa have fallen this summer and fall.

Wood costs have gone down for many sawmills throughout the European continent in the 3Q, mostly due to slowing lumber sales and an expectation of lower lumber production levels during the winter months. In the Nordic countries, there were a number of announcements of curtailments for the 4Q/11 and the first quarter of 2012.

Although sawlog prices fell in a majority of the ten countries in Europe covered by the WRQ, they were still higher than the third quarter last year. For most markets, log prices have come up between $15-25/m3 during the past 12 months, with only Western Russia and Norway seeing minor price increases.

Many of the continent’s sawmills are currently paying close to the highest sawlog prices seen in at least 17 years, and this is occurring at a time when lumber prices are far from any record highs, and are even declining in some markets. Because of the weakening lumber demand, it can be expected that log prices will soften in the coming months.

Source: Wood Resources International LLC,

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Buy and Sell

...and one to end the week on...Brian

A man walked out to the street and caught a taxi just going by. He got into the taxi, and the cabbie said, "Perfect timing. You're just like Brian"

Passenger: "Who?"

Cabbie: "Brian. He's a guy who did everything right all the time. Like my coming along when you needed a cab, things happen like that to Brian, every single time."

Passenger: "There are always a few clouds over everybody."

Cabbie: "Not Brian. He was a terrific athlete. He could have won the Grand Slam at tennis. He could golf with the pros. He sang like an opera baritone and danced like a Broadway star and you should have heard him play the piano. He was an amazing guy."

Passenger: "Sounds like he was something really special."

Cabbie: "There's more. He had a memory like a computer. He remembered everybody's birthday. He knew all about wine, which foods to order and which fork to eat them with. He could fix anything. Not like me. I change a fuse, and the whole street blacks out. But Brian, he could do everything right."

Passenger: "Wow. Some guy then."

Cabbie: "He always knew the quickest way to go in traffic and avoid traffic jams. Not like me, I always seem to get stuck in them. But Brian, he never made a mistake, and he really knew how to treat a woman and make her feel good. He would never answer her back even if she was in the wrong; and his clothing was always immaculate, shoes highly polished too. He was the perfect man! He never made a mistake. No one could ever measure up to Brian ..."

Passenger: "An amazing fellow. How did you meet him?"

Cabbie: "Well, I never actually met Brian. He died. I'm married to his widow."

And on that note, have a great weekend. Cheers.

Brent Apthorp
Editor, Friday Offcuts
PO Box 904
Level Two, 2 Dowling Street
Dunedin, New Zealand
Ph: +64 3 470 1902
Fax: +64 3 470 1904
Web page:

This week's extended issue, along with back issues, can be viewed at

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