Summary and conclusions

  1. Methodology. The analysis and findings of this working paper are based on national customs data published by the Global Trade Information Services (GTIS, according to the product identification codes of the Harmonized Commodity Description and Coding System (in brief, the Harmonized System, or HS). As export data from Myanmar are not available, the global teak trade with Myanmar in terms of volume and value has been assessed and evaluated based on official trade statistics of the teak-importing countries.

  2. Teak and Myanmar. Myanmar is a teak heavyweight, playing a significant role in the global teak trade. It has the largest area of natural teak forests (almost 50 percent of 29 million ha globally) and is the number one producer of teak logs in the world. Its natural forests produce about a quarter of the globally reported teak log supply, including good-quality teak that sells at comparatively high prices. After India and Indonesia, the country has the third-largest planted teak area in the world (about 390 000 ha), which accounts for more than 40 percent of the global teak trade. However, import volumes vary considerably between countries; for example, Myanmar supplies China and Thailand with most of their teak (81 percent and 99 percent respectively), but provides only a quarter of India’s imports.

  3. Global trade volume and value. Between 2005 and 2014, the global annual trade of teak roundwood was more than 1 million m3 on average; the imports were valued at US$487 million a year, which is about 3 percent of the value of the global timber trade (US$15.5 billion). The three major importing countries were India, importing three quarters (74 percent) of the total trade volume from more than 100 countries, followed by Thailand (16 percent of the total from about 15 countries) and China (10 percent of the total from about 65 countries). Teak imports to Thailand have declined considerably in recent years, from a peak of 6.7 million m3 in 2004 to only 61 000 m3 in 2014. China and India, on the other hand, have increased their import volumes.

  4. Global trends. Since 2000, the global trade in teak logs of the three major importing countries has more than doubled in terms of volume (from 557 000 m3 to 1.2 million m3 in 2014), and more than quadrupled in terms of value (from US$166 million to US$696 million). This increase was mainly borne by India and China. While imports from Myanmar also increased by 27 percent during the observed period, the country’s exports could not keep pace with the rising global demand. Consequently, the significance of Myanmar as a global player in the teak trade declined.

  5. Emerging traders in Africa and Latin America. Myanmar remains the dominant supplier of teakwood, but China and, in particular, India increasingly meet their growing demand from a number of Latin American and African countries. The emerging teak roundwood traders in Africa are Ghana, Côte d’Ivoire, Benin, Togo, Nigeria and Tanzania (for sawnwood). In Latin America, Ecuador, Costa Rica, Panama, Colombia and Brazil (for sawnwood) have continuously expanded their trade volumes since 2000, reaching a peak in recent years, and this trend is likely to continue.

  6. Teak prices. In the observed period, the prices of quality teak logs from Myanmar and plantation teak logs from Africa and Latin America showed an upward trend of 34.5 percent a year on average. However, the markets and prices for these products are fundamentally different. The unit price of quality teak logs imported from Myanmar is higher than those for imports from other countries, notably in the Indian market. Here, the unit price of teak logs from Myanmar started at US$615/m3 in 2005 and reached a high of almost US$1 000/m3 in 2014. Imports from Africa and Latin America displayed a slow increase, from about US$320/m3 to US$430/m3 in the same period.

7. Demand and supply. The global demand for teak is expected to grow and will continue to be governed by trends in the Asian market. The exceptional qualities of teak wood, such as appearance, strength, durability and hardness, make it the preferred material for a wide range of applications. The world market in particular India and China will continue to absorb the available teak supply, and the rising prices seen from 2000 to 2014 are likely to continue. The growth in international demand for general-utility teak has broadened the traditional supply base from natural forests in Asia to include fast-grown, small-diameter plantation logs from Africa and Latin America. At the current average prices of US$6001 000/m3 for high-quality logs and US$350500/m3 for low-dimension plantation logs, teak is already one of the most expensive hardwoods in the world.

8. The future belongs to teak plantations. The supply of quality teak logs originating from old- growth natural teak forests in Myanmar will decline as a result of the log export ban that has been in force since 1April 2014, the declining harvestable area in natural teak forests and the deteriorating quality of naturally grown teak. This has led to increased interest and investment in establishing and managing teak plantations. It is more than likely that in the future, the world’s supply of teak wood will depend on the production of tropical teak plantations. Where good management practices are applied, plantation teak has improved, and there could well be an increasing overlap in quality between natural and plantation-grown teak in future years.

9. The log export ban in Myanmar has had a distinct impact on the Chinese and Indian markets; in China, which imports 80 percent of its teak from Myanmar, it triggered a rapid increase in the demand for high-quality logs, coupled with a sharp rise in teak prices from about US$750/m3 at the end of 2013 to almost US$2 000/m3 in January 2014. India only imports a quarter of its teak from Myanmar however, it is impossible to ascertain the impact of the ban, and the available data for India does not suggest that it has provided a market opportunity for African or Latin American exporters. This is probably because the end-uses and markets of Burmese and African or Latin American teak are fairly distinct.

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