The volatility of the international Teak lumber market.
J. Gibson McIlvain is among the top US importers of FEQ Teak. While historically, most of our Teak customers have been boat builders, we’ve seen an increased demand for this fabulous golden-hued species for use in home interiors and exteriors. The same weather-resistant quality, consistent grain patterns, and fresh, vibrant coloring make it ideal for applications from trim to decking. For boat-builders and home-builders alike, the most popular variety is, by far, Burmese Teak; however, sourcing it has become more difficult, since the Myanmar government’s Parliament building used up a large portion of what would have been exported last year. The now limited resources have created a dilemma with the increasing demand for Teak.
The increased pricing that comes with growing demand and decreased supply should be no surprise to those long familiar with the lumber industry: Teak has always been a volatile species. The reason? Ongoing economic sanctions against the Myanmar government require US suppliers to purchase Teak from a middleman, rather than directly from the government. As always, the presence of additional parties cause higher pricing. With lesser regulated nations like China and Mexico now players in the exotic hardwoods market, Burmese saw mills have the potential of selling any grade from any source.
While a lesser species might not be worth all the red tape that Teak requires, this species boasts such high weather resistance and attractiveness, that it really is worth our while. Continuing to supply our customers with Teak requires relationships in the Far East, diligent research, and creative problem-solving skills. While we have no plans to discontinue such efforts, we cannot avoid the road blocks that are thrown into our path.
In 2012, a Burmese election provided yet another game-changing scenario for the Teak market. The results have meant replacing a military regime with a more democratic leadership. This good news for the Burmese people, long oppressed by military rule, could also mean good news for Teak suppliers: As a result of the political shift, the European Union has lifted sanctions against Mynmar; our hopes are that the US will follow suit, showing our nation’s support for this positive new direction.
We’re hopeful that the suppliers with which we have decades-long relationships will continue to help us keep up with our current supply channels. Of course, we also hope that we can do so without increased price or competition. However, the new government-imposed 50% tax on Teak logs and sawn lumber will be sure to cause some change, sanctions or not: Even for European suppliers who can now purchase Teak directly, the price continues to climb.
Since Teak is already an expensive species and the effects of a global economic downturn still apparent, dramatic cost increase may have negative market-wide results. One result we’ve seen so far is increased interest in alternative species such as Afromosia.