Timber Update September 2021
Advice to check the “claim of compliance” on structural timber
Queensland’s timber industry released technical advice reminding builders of the information they must look for when using structural timber and how to maintain relevant records.
Timber Queensland’s Strategic Relations Manager, Clarissa Brandt, said the Queensland timber industry is proud of its record as a responsible supplier of high-quality, fit-for-purpose structural timber products, particularly considering some timber in the industry is proving to be below standard.
“Given there is a broad supply chain including from imports, there have been reports of some timber products being used that had not been properly graded or marked. This prompted the release of an Advisory Note to explain how to check structural timber building products have the correct claim of compliance,” Mrs Brandt said.
“By law, builders and certifiers must check that any structural timber product used on a job complies with Queensland’s non-conforming building product (NCBP) regulations,” she said.
Timber Queensland’s new Advisory Note on Structural Timber Product Identification and Traceability provides examples of the brands, labels, stamps or marks required on a product to claim compliance. Typically, this includes compliance against relevant Australian Standards, Code Mark certification or via a Performance Solution.
Mrs Brandt said if a structural timber product cannot be identified it should be rejected as non-conforming.
“Check the claim of compliance. If it is not correct do not purchase the product or return the delivery to the supplier. Then you need to notify the Queensland Building and Construction Commission (QBCC) of a suspected non-conforming building product, failure to do so is also a specific offence under NCBP legislation,” she said.
Mrs Brandt said builders and certifiers also needed to be able to prove structural timber products used on a job have the correct claim of compliance.
“We recommend taking photos of products, keeping dockets and maintaining files to ensure you can prove to the regulator that you have ‘done the right thing’.”
Timber Queensland went on to remind the building industry they must pass on information regarding product use and application, through the supply chain to the home owner.
“To avoid possible action by the QBCC it is imperative that all in the supply chain, including builders, pass on required information to the ‘next in the chain’, and maintain and file accurate and detailed product identification and traceability information so the use of the product remains conforming for each job,” Mrs Brandt said.
Kangaroo Island to burn again
Kangaroo Island Plantation Timbers (KIPT)https://kipt.com.au has reported that thousands of hectares of its forests will be felled, piled and burned and the company will walk away from the industry following the State Government’s decision to reject plans for a port on the island’s north coast, according to a recent InDaily report.
KIPT last month announced plans to revert 18,6967 hectares of its land to agriculture, a decision that will involve knocking over and burning about 14,500 hectares of pine and blue gum plantations. The decision comes after State Planning Minister, Vickie Chapman, announced that the government had rejected KIPT’s proposal to develop a $40 million port at Smith Bay.
The proposed port was recommended by Minister Chapman’s department that it could be supported, but the Minister vetoed the development due to potential for long-term environmental damage, impact on local businesses and the island’s character.
The company says it is open to salvaging some timber, considering the current timber shortages, but will now shift its focus to converting its estate into farmland.
KIPT has about 14,500 hectares of plantations, about 80 per cent hardwood (blue gum) and 20 per cent softwood pine, which is used to produce structural timber representing close to 10 per cent of the state’s plantations, according to the report.
However, the December 2019 fires damaged about 95 per cent of it burning 210,000 hectares – almost half of the island – across a 612-kilometre perimeter. Following the fires, the company received more than $60 million in insurance payouts and has since been in a race against time to salvage the timber and ship it off the island before it rots, according to the report.
Also announcing his retirement, KIPT Managing Director Keith Lamb, said in the report that the board had been working up contingency plans for some time in the event that Chapman rejected the Smith Bay port.
“Once the decision was made by the minister then the board was ready to execute those plans and that is what it is doing. The issue we have now is the government’s decision to decline the port means there is no chance that any rational investor would back this horse so the company is now in a position where it has to just move on,” he said.
The company’s total estate was about 25,000 hectares in total and included about 14,500 of standing forest, a further 4000 hectares of potential agricultural land and almost 7000 hectares of remnant vegetation, water bodies and streams.
“The company is leaving salvage open but its main thrust for now is to focus on reversion – pushing the trees, heaping them and burning them.”
KIPT said its 2021 results would reflect a write-down in the value of its Smith Bay wharf site of $12-$14 million from $18.2 million and the re-evaluation of its biological assets from $5.9 million to zero.
“Government has had more than 100 years to make some crucial decisions about setting aside land for future development and when you look at Kangaroo Island, the only part capable of development for a port that is not in a marine park or a national park is Smith Bay. Any company that decided it was going to go forward with a proposal to build something in a marine park is asking for trouble – we avoided that yet now the minister has decided it is still unsuitable so there is a real issue for the future of the island. How can the island thrive when it doesn’t have access to modern infrastructure?” Mr Lamb said in the report.
Mr Lamb said pushing the trees over would begin immediately while the burning was unlikely to start until at least April next year. He said the company was yet to decide whether it would manage the agricultural land itself, lease it out or sell it off.
The building industry has flagged the fire-affected Kangaroo Island timber as a possible solution to the state’s timber shortages.
KIPT began using SeaLink’s ferry service from Penneshaw to Cape Jervis in February to begin trucking softwood logs to the mainland. The loaded trucks then drove from Cape Jervis to Port Adelaide where KIPT has established a depot to store timber before it can be on-sold to local sawmills or shipped overseas. However, the quantities have not been enough to make a significant dent in KIPT’s stockpiles or reduce the pressure on supply, according to the report.
Mr Lamb said the company had been trying to establish alternate routes for shipping logs off the island for 18 months including via Kingscote and American River.
“We are very mindful that South Australia has a timber shortage and we have 300,000 tonnes of high-quality structural timber that would make 10,000 homes. We are very mindful that there is great interest in salvaging it but at the moment we cannot get it off the island economically so that is where the challenge lies. We are still doing the harvesting right now but we are down to one truck a day on the ferry because it is a wintertime service and we need to be doing 10 trucks an hour, not one truck a day. We need substantial assistance to get some activity going through Kingscote … but so far we have heard nothing.”
Canada: Production curb, prices sink
At least one mill in Western Canada was forced to curtail its production due to plunging lumber prices and soaring log costs, according to a recent Bloomberg report.
Conifex Timber Inc. has announced that it will temporarily slow production at its sawmill in Mackenzie, British Columbia, due to an “unprecedented collapse in lumber prices” and will curtail production for two weeks starting late August.
It seems that North American lumber companies may have added too much production too quickly, as demand cools and prices for the construction material plunge, according to the report. In the last 12 months prices quadrupled to record highs but now the price of lumber has sunk about 70 per cent since May. Now that DIY purchases have dropped and the lumber rally has priced out some buyers, building a home in the US is more expensive than ever.
Earlier this year, lumber producers were swimming in profits after banks offered rock-bottom borrowing rates during the pandemic leading to a house-building boom. This was exacerbated as locked-down home owners spent money on do-it-yourself renovations, according to the report.
It was then that sawmills increased production and announced large investments to expand capacity in the US South, where timber plantations are plentiful and log prices are lower.
It seems that more mills will now follow Conifex’s lead with additional curtailments in the near future.
Greg Kuta, Westline Capital Strategies Inc. Chief Executive Officer, which specialises in lumber-trading strategies, said if mills do not slow production, they will need to decide how much of their first-half 2021 profits can be thrown away while awaiting higher prices.
“The market is still over-supplied relative to demand. The supply-side needs to be addressed for price stability and future price appreciation,” Mr Kuta said in the report.
US lumber futures are trading around $470 per thousand board feet, after reaching more than $1,700 in May.
CIBC Analyst Hamir Patel said in the report that producers in B.C.’s key Interior region are now “underwater” with regional mill cash costs around $525 to $575 per thousand board feet in the second half of 2021, with an estimated 14 per cent of North America’s lumber comes from British Columbia.