No to pines
OPINION: Forests planted for carbon credits are permanently locking up NZ’s landscapes, and could land us with more carbon costs, says the Parliamentary Commissioner for the Environment (PCE).
The nature of global currency has changed since 2004. Everyone has had a currency devaluation and now most countries are in a narrow band, Taylor told the recent ForestWood 2016 conference in Auckland.
New Zealand had a wider currency advantage for a while, now it is narrowing, he said.
"So it is all coming back to almost where we started. We can't really give away anymore in currency; we've got to work hard in the market," he said.
In the global economies the organisation tracks, everything is relatively flat.
"The global economies are holding but there is some vulnerability here and there," he says. "China is flat and certain segments are up and down."
But the big US wood market has been growing at 5%. That is keeping a lot of the supply inside North America, taking up the log exports and lumber exports.
Russia, US and Canada have the greatest impact on the wood market in terms of production. China and India are the countries with the deficits so they need imports.
Canada's timber harvest is falling markedly. British Columbia has been losing 20% since 2005 because of diseased trees. Quebec has been losing 35% since 2004. A Canadian himself, Taylor said Canada's industry will be a lot smaller.
Many other countries also have restraints on supply, logistics and environment.
But foreign currency fluctuations are changing the dynamics.
"If I gave you this presentation say two and a half to three years ago I would have been saying Russia's cost structure is out of control, their infrastructure is terrible, they can't find workers... forget about Russia, they've got nowhere to go," he said.
"Today it is quite different. The devaluation of the ruble has been a game changer – it has changed everything.
"Even though the export pacts are still in place and some of the WTO regulations are in there, they are able now to reinvest in their industry because they are making money.
"A big rebound is occurring. The government has well over 100 prairie investment projects. A lot were sidetracked for a while because of the economics of doing business in Russia but now some are being dusted off and coming back into place. That will result in more capital investment in Russia for processing all different products."
He keeps hearing rumours of a possible reduction in the export sanctions against Russia. He has heard it three different times from three different people.
"That would be a negative factor for NZ log exports because you would have a cheaper competitor," he said.
"The Russian silviculture programme is allowing an immediate increase in the allowable annual harvest in some regions of about 20%."
In China the construction slowdown is slowing the demand for timber but the value added sectors such as furniture are growing. More pine is being used in that sector.
Although there is a slowdown now, there will be increases in the need for imported logs and sawn wood to China.
