Markets for our two key products: more information

Initially we are focussing developing hardwood industries in the regions. This means growing durable timber for domestic processing, targeting both domestic and international markets where there is already evidence of strong demand. 

Ground durable posts and poles

NZDFI eucalypts can produce ground-durable posts and poles for New Zealand’s burgeoning viticulture and horticulture sectors.  Producers are already facing increased problems associated with CCA-treated posts, in particular with their disposal. Sustainable/organic producers also need an alternative to CCA-treated radiata pine posts and poles.

The origins of the NZDFI were based around the perceived potential for a durable hardwood post and pole market in Marlborough vineyards, which now total close to 30,000 hectares. Vineyards have approximately 600 posts per hectare, so there are already over 18 million posts in use in Marlborough alone. Mechanical grape harvesting leads to high breakage rates of the brittle softwood posts (estimated at 3% of posts/year, or 540,000 posts/year just for replacements in Marlborough). Durable eucalypt posts are harder and less brittle than softwood posts, and can be disposed of e.g. as firewood or chips with no environmental problems.

NZDFI began working with vineyard owners in the early 2000s, and between 2006 and 2009 deployed 1400 durable eucalypt posts in a number of vineyards and orchards in Marlborough. After a decade in service, performance of the posts was good, with minimal decay. Read our report here.

A recent review of markets for posts (Altaner 2020) concluded that average wholesale prices for naturally durable posts on the international markets are some NZ$700/m³, whereas No. 3 CCA treated pine posts on the domestic market have a value of NZ$380/m³.

Another recent project researched the market for CCA-treated timber in the primary production sector (van Bruchem, 2020). Three techniques were used to estimate the size and possible value of the CCA-treated wood market for NZ’s primary industries. The report estimated post demand by farming, viticulture and the apple and kiwifruit sectors is 300,000m³ annually. The annual value of this market is estimated at $210-240 million based on retail value of $700-800 per m3.

Engineered wood products

Engineered wood products such as laminated veneer lumber (LVL) and cross-laminated timber (CLT) are in increasing demand both domestically and internationally, as the construction industry turns to engineered wood as a material of choice, especially in high-rise and modular buildings.

New Zealand based companies already manufacture laminated veneer lumber (LVL) and plywood from radiata pine with these products currently delivering the highest export unit value for any forest products processed in New Zealand. To the end of June 2017, annual exports of some 61,000 cubic metres of product were worth over $127 million.

LVL is a high-value product which could contribute to increased export earnings if producers had access to a suitable forest resource. LVL is a structural product and its price is coupled to mechanical performance (i.e. stiffness). Only the stiffest (best quality) radiata pine logs can be used in LVL production. However, LVL manufacturers struggle to source enough high stiffness logs and even those produce only an average grade commodity LVL product (11-12 GPa valued at $800/m³).

Durable eucalypts produce timber and veneer which is much stiffer than radiata pine and therefore offer an alternative for LVL producers. NZDFI researchers from the University of Canterbury School of Forestry are working with engineered wood manufacturers in New Zealand (Juken NZ Ltd and Nelson Pine Industries). Good progress is being made on understanding the practical aspects of incorporating eucalypt veneers into their products to produce ‘super-stiff’ products which will command a market premium.

Other potential markets

We have also identified a range of other potential markets for durable eucalypts, both domestic and international, and worth many millions of dollars annually (see the NZDFI Strategy 2020-2030 document, p5-6). These include high-value indoor and outdoor furniture, interior joinery, cross-arms for power poles, and structural timber.

In terms of exports, a key opportunity for durable eucalypts, especially those with rich colour, is in the substitution of tropical hardwoods such as teak and rosewood. China alone is expected to import 170 million m³ pa hardwoods over next 30 years, and together with India, accounts for some 80% of world tropical log imports. The international market for rosewood is apparently worth more than the trade on ivory, pangolins, rhino horn, lions and tigers put together (e.g. see http://www.unodc.org/unodc/en/data-and-analysis/wildlife.html)

International consumers are already looking for more environmentally sustainable alternatives, and many countries are now limiting imports to timbers produced sustainably. Durable eucalypts will meet these requirements.

Research at the School of Forestry is also looking at the potential for extracting essential oils as a bi-product of eucalypt timber production.

International market opportunity: NZ-grown hardwoods substituting imports

The graph below illustrates the opportunity available to NZ timber growers if they are able to gain access to markets currently supplied by imported timbers. The graph shows the differential between prices received for sawn softwood timber exports (i.e. lumber going over the wharf), and hardwood and softwood lumber imports. The five-year average unit value difference of imported softwood lumber (much of which could be substituted with home-grown durable hardwoods) over exported radiata lumber is some $822 per cubic metre.