J. Gibson McIlvain is one of the largest importers of top quality FEQ (First European Quality) Teak lumber in the US. Primarily we sell it to boat builders who want vertical grain or quartersawn Teak for the golden color and consistent grain appearance. In the last few years, Teak has become even more popular for home interiors and exterior windows, doors, and trim. Genuine Burmese Teak is the most popular variety as plantation varieties don’t always have the same weather resistance and the quality and color is too inconsistent. This year it seems that getting quality Burmese Teak has been harder and harder because large volumes of Teak were never exported in the first place. The Myanmar government built an enormous new Parliament building that was fitted out with large quantities of Teak millwork. This seems like a small thing but it is a poignant reminder of how the global demand for limited resources can be easily upset. We anticipate supply of Teak this year and into next to be severely limited and thus prices to sharply rise.
The thing is the Teak market has always been volatile. An ongoing economic sanctions against the Myanmar government means that we can not actually buy from them but instead we have to buy from other countries. So already there is a middle man in the mix that will raise the price. Add to this emerging markets around the globe like China and Mexico that are suddenly buying a lot more exotic hardwoods. Moreover, those countries are not as heavily regulated and can more easily buy lumber from any source and any quality. This makes a more attractive proposition to the Burmese saw mill: sell more of all grades and at better prices. This emerging market scenario is something we will be talking about more in the future as Teak is not the only species that is being effected by it.
All of this makes Teak sound like an unattractive business to be in, but the reality is that the species is so far superior to other exterior woods that the market difficulties have just become part of doing business. It requires a lot of diligence, and great relationships in the Far East to navigate the buying process. We will continue to be a major importer of Teak to service our customers but we also want to let our customers know about some of these potential speed bumps that will be changing the market yet again. Its funny how one building can change a global market but the new parliament building is hammering home the message.
At the same time, we continue to consider alternative species and will begin to take a stronger position in these species. Afromosia or “African Teak” is already a strong alternate that we regularly carry and will continue to carry. Some other African species are high on our list and we are already stocking and examining them as potentials.
Have you used a Teak alternate? Will you consider it as the price of Teak climbs?