Teak Markets and Pricing Characteristics
Teak hardwood that is delivered to a client or commercial agent at the port of loading, usually maritime, is known as Free on Board (FOB) and the price per log is calculated with these partial transportation costs included. Similarly, some of the key elements taken into consideration when determining the price of teak are the age of the trees and the diameter of the logs. For instance, the average FOB price per cubic meter for medium quality teak logs with a diameter of 20 centimeters is US$200. Meanwhile, once the log reaches a diameter of 65 centimeters, each cubic meter of low-quality teak can procure up to US$900, while high-quality teak is valued at approximately US$1.500 per cubic meter. Likewise, age influences the price of FOB teak logs. Medium quality teak at an age of 10 years is valued at about US$200 per cubic meter. Simultaneously, low quality teak that is 40 years of age can procure up to US$900 per cubic meter in international markets, while the price for high quality teak at age 40 is estimated around US$1.500. Similarly, a determining factor in the quality grade and price of teak logs is the amount of dark heartwood. If teak logs are less than 50% dark heartwood, as opposed to lighter sapwood on the edges of the trunk, their price and grade goes down automatically.
Teak Markets and Pricing Characteristics
Given global preoccupations around the legality and sustainability within hardwood markets in general, another key element within teak trade is proper certification. International Non-Governmental Organizations (NGOs) manage teak certification systems, such as the Programme for the Endorsement of Forest Certification (PEFC) based in Switzerland and the Forest Stewardship Council (FSC) based in Germany. These certification structures ensure hardwood buyers that their products are legally sourced and processed from teak plantations and natural forests that are sustainably managed. Proper certification has become a global standard of corporate social responsibility within the hardwood industry worldwide and benefits companies with access to larger and more profitable markets. Over the coming years, it is expected that more hardwood suppliers in Asia, Africa, and Latin America will standardize the certification of their products and trade, particularly towards North American and West European markets that are becoming increasingly demanding and environmentally conscious. In the case of the United States, the Lacey Act (2008) requires proof of legal sourcing for all wood imports entering the country. Likewise, the European Union Timber Regulation (2013) and Australia’s Illegal Logging Prohibition Act (2012) forbid the entrance of non-certified or illegally sourced wood and wood products into their jurisdictions and markets.