When it comes to timing, Sir Bob Jones certainly has the knack. With his widely publicised move to have a major commercial building in Wellington designed using wood for earthquake resistance, he has again affirmed his shrewdness for timing of commercial decisions. It is now catching on around New Zealand. 

Just as Jones has chosen a mainly wooden structure for his office tower rebuild in the central business district of Wellington, developers up and down the country are moving quickly to capitalise on the benefits of engineered wood structures. As the engineers and architects leading the wood renaissance know, there are two key reasons why wood is soaring in popularity. 

First and foremost, the engineering of wood for structures has grown rapidly as technology has made it more economical to manufacture large beams and panels for commercial buildings. More and more developers are recognising the advantages of cross-laminated timber (CLT) – the new wonder product for both flooring structures as well as walls, both with excellent earthquake resistant properties. 

The second major breakthrough has come with more commercial acceptance of the need for sustainable materials to be used in office towers. Leading edge research in nearby Australia has confirmed that people working in wood buildings are happier and more productive than those in traditional concrete or steel structures. 

“People tell the researchers they just feel better and more energised when working in spaces enclosed in real wood,” says John Stulen, engineer and conference director for the third annual Changing Perceptions engineered wood conference. 

With this rapidly growing industry-leading conference running for the third time, Stulen and his team at Innovatek say they are delighted to have a technical conference programme that’s now 100% devoted to engineered wood projects in New Zealand. 

“Over the past two years, we were fortunate to hear from leading engineers and project managers from Australia and Canada. Each time our audiences have asked for more New Zealand commercial projects, so we’re delighted to showcase exactly that this year,” says Stulen. “We were overwhelmed with the response to our call for speakers this year – all local projects.” 

The conference has grown since 2016 and now attracts a wide audience of architects, engineers, developers, quantity surveyors and specifiers, as well as building officials and leading specialist trades focused on commercial buildings, like electricians, plumbers, heating/ventilating/air conditioning specialists and leading practitioners. 

The Changing Perceptions Conference is full one-day programme on 28 August 2018 at the Distinction Hotel in Rotorua. The event begins with an evening reception on 27 August. 
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The softwood lumber and log imports by China have more than tripled over the past ten years. In particular, the imports volumes of lumber have outclassed those of log during the past two years. This is in accordance with the latest Wood Resource Quarterly (WRQ) Report published by the Wood Resources International.
The limited domestic resources continue to put China as a major importer of forest products including lumber, logs, chips, pulp and paper. The country’s import volumes of softwood lumber and logs touched new record in 2017, despite slowdown in house construction sector. According to WRQ, China emerged as the world’s top importer of logs during the previous year. Also, China is only next to the U.S. in terms of total softwood lumber imports.

Over the past two years, there has been a significant jump in imports of softwood lumber. The lumber import volumes during the year exceeded logs by nearly 36%. This is a major shift from the past, when there were more log shipments than lumber entering the country’s ports. The total imports of softwood lumber and logs have surged higher by 3.5 times in round wood equivalents (RWE).
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WRQ Report notes that the supply sources have changed dramatically over the past five years. The softwood lumber shipments from Russia into China have more than doubled. The shipments from Nordic countries too have recorded notable jump. On the other hand, imports from North American region have declined during this period. With regards to log supplies, Australia became the major supplier, with volumes nearly tripling from 1.6 million cubic metres in 2013 to 4.2 million cubic metres in 2017. The U.S., Canada, Russia, New Zealand and Australia continued to remain as the top five log suppliers in 2017, accounting for nearly 92% of all log imports during the year.

The log and lumber supply chain to China and Chinese wood markets overall are entering a whole new phase. This is especially evidenced by the dramatic reduction in China’s domestic timber harvest and the Chinese government’s crackdown on polluting mills in a mandated policy to improve air and water quality. What this means is that traditional Chinese industries are being closed or curtailed, slowing demand for logs and expanding the demand for lumber. In response, China’s supply chain is morphing and adapting in a variety of ways to meet the country’s growing demand for wood products. 

It appears the Chinese government has a long-term strategy to ensure that the country’s wood demand continues to be met. Of particular note is the One Belt/One Road initiative, aimed at developing extensive transportation links to key supplying countries around the world. By developing such a supply chain, China is better able to access those countries’ “cheap” raw materials (i.e., inexpensive relative to the high levels to which global log and wood products prices are headed). 

The strategy of the Chinese government may be a simple one: delay harvesting its own timber in favour of expanding domestic plantations. The goal would be to increase its own internal timber supply for use later when it is truly needed (and by which time global supply will have become even more expensive). In short, China is opting to pay global market prices now to purchase its raw materials, transporting its purchases home via its increasingly well-developed and efficient supply chain to the rest of the world. In future, as these raw materials become scarce and/or more expensive, the country will have placed itself in a strong position to make the switch to utilizing its domestic plantations and other internal resources. 

With these goals in mind, Chinese state-owned companies appear to be focused on developing their global supply chain as a means to become highly positioned in offshore countries in the short-term and for the future. Therefore, despite paying higher open-market raw material prices, this highly strategic plan will lead to more efficient logistics. It will also encourage increased offshore production for export to China. 

Also, with this objective in mind, further strategic investments are likely to be made in overseas timberlands and some primary processing plants to supply China via the One Belt/One Road initiative. At the same time, China’s pace and volume of purchases, which will encompass a wide variety of raw materials, will be strategically timed around pricing developments, i.e., the Chinese government will invest what it needs, when it best serves the country, in order to meet its aggressive long-term supply objectives. 

With returns on investment considered less important than having a diversified and accessible forest resource in the future, most of China’s domestic forest plantations feature a mix of eucalyptus, poplar, Chinese fir and masson pine. It will take 20 years to grow coniferous plantations, so any future incremental supplies from these sources will not be ready until 2035 (excluding any new coniferous plantations already established), dictating a need for rising volumes of imported softwood logs and lumber for an indefinite period of time. 

Of further interest are the considerable developments taking place at the major land ports at China’s northern border with Russia. Team members from both FEA Canada and FEA USA have visited these regions as part of the field investigations for a new, upcoming multi-client report — China’s Import Demand for Softwood Logs and Lumber to 2022 (subtitled The Changing Supply Chain in China with a Focus on Russia’s Industry/Export Potential). It has become clear that things are very dynamic in both northern China and Russia. 

First, it has been reported that Chinese banks have up to RMB300 billion (US$50 billion) available to spend on forestry and mill investments in Russia (RMB20 billion, equivalent to US$3 billion, have been spent thus far). Second, there are more block trains being organized from Russian and/or northern Chinese land ports to transport lumber to strategic destinations within China. Third, log and lumber production in Russia (by both Russian and Chinese sawmills) is expanding. 

Other key dynamic include Chinese companies increasing their access to Russian timber by paying for open-market logs (i.e., they can pay more because their sawmilling costs are lower than those of many Russian mills), and Chinese sawmills in Russia increasing their output and sending green lumber to processing plants in northern China — thereby bypassing the Russian log export tax — for extensive value-added processing. These developments have enabled a wider reach of Russian higher-valued lumber or components that can be shipped further in China and are already beginning to cause some displacement of European and radiata furniture grades in southeastern China (with more expected). 

Source: Russ Taylor, Managing Director and Jane Guo, China Office Manager, FEA Holdings – Canada Inc
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Import/Export Wood Purchasing News (February/March 2018 issue) provided an overview of major developments in shipping in 2017 and how they may affect prices and container trade in 2018.
The number of large shipping lines has continually decreased through acquisitions and mergers. In 2017 Maersk acquired Hamburg-Süd. Cosco bought OOCL after absorbing China Shipping in 2016. The three Japanese carriers KLINE, NYK and MOL have announced they will merge to become ONE (Ocean Network Express). In the end three major alliances will represent approximately 85% of the global container trade in 2018.
At the same time ocean freight rates have been at record low levels. Rates are not expected to increase much in 2018, despite the shipping line mergers. This is in part because carriers are ordering larger vessels, which can hold up to 4,000 containers more than the ships they will replace. Without an increase in cargo, the larger capacity will help depress freight rates.

Source: ITTO/Fordaq

.​New Zealand exported a record volume of logs to China last year as Asia's largest economy clamped down on harvesting its own forests, and the future points to constant or better demand in coming months, according to AgriHQ's latest forestry market report. 

The country shipped a record 18.8 million cubic metres of softwood logs overseas in 2017, up 18 percent on 2016, with exports to China jumping 29 percent and accounting for three-quarters of the total. 

New Zealand cemented its position as China's top source of softwood logs last year, with its share of the market lifting to 36.3 percent from 34.7 percent. China's overall demand for softwood logs increased 10 percent to 31 million tonnes as the country clamped down on harvesting its own forests and reduced tariffs on imported logs to meet demand in its local market. Upcoming changes to government regulations which will allow for Chinese buildings to be designed using New Zealand wood grades and sizing are likely to further stoke demand in the future, AgriHQ said. 

"Virtually all information coming out of China has pointed towards constant or better demand for NZ logs in the coming months," AgriHQ analyst Reece Brick said in his February Forestry Market Report report titled 'Optimism ever-present for exports'. 

Brick noted Chinese government policies and regulations are "particularly encouraging" for the New Zealand log market. "China is looking at becoming more sustainable. This has already slashed the amount of logs being harvested from native forests, while tougher enforcement of pollution policies are already clearing out the number of old and inefficient wood processors," he said. 

"The newest announcement has come in the form of building regulations. As of August this year, radiata pine specifications will be included in the Chinese Code of Design, allowing buildings to be designed using NZ wood grades and sizing. The immediate impact of this change is still somewhat of an unknown, but there’s no doubt it will only be positive for NZ exporters in the long-term." 

Source: BusinessDesk