Myanmar: MTE announces price freeze on timber

  • November 21, 2008
  • • Source: ITTO's Tropical Timber Market Report
  • • Views: 1626
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The Myanmar Timber Enterprise (MTE) has announced that the current list price, which has been in effect since August 2008, will apply until 31 March 2009. The announcement, made on 10 November 2008, also suggests that the MTE may adjust the allowable felling and supply to ease buyers’ current problems. Buyers are expecting to see some quantity adjustments in the coming tenders. Major importers, particularly India, China, Thailand and Pakistan, have been facing difficulties with supply and prices. It is expected that buyers and sellers will have to make some concessions to address the current market situation.

Reports from Myanmar indicate that the current economic crisis has been causing some uncertainty among timber dealers. India, which is a major consumer of teak, was said to have fallen behind in purchases and shipments. Indian buyers noted exchange rate problems and credit facilities as some of the factors the factors affecting their purchases and shipments. As it has been reported, the negative economic effects of the credit crunch are being felt in India as well.

The tender prices fell during the past few months. Earnings from tender sales are less than 16% of MTE’s total annual exports. More than 80% of revenue for MTE has been from direct sales (with fixed prices) during the past three years.

Some analysts feel that selling higher quantities of teak to meet annual revenue targets could backfire on both buyers and sellers. Prior to the price freeze, some dealers had argued that a sharp reduction in prices could have affected buyers with heavy stock. Similar recommendations were made in the past and often proved wrong, as teak from natural forests is only a negligible fraction of the world’s timber trade. As such, demand always seems to be good. Analysts were usually not able to consider all the variables involved in predicting the effect of lowering prices on demand.

November is the end of the felling season and the start of the trucking season in Myanmar. Timber has started to come down to Yangon depots in trucks and barges. As a result, analysts suggest it is not practical to reduce supply at this point in time, in order to recoup expenses.


Myanmar Log Prices (natural forests)
Teak Logs, FOB
€ Avg per Hoppus Ton
(traded volume)
Veneer Quality
Sep
Oct
2nd Quality
5,458
(6 tons)
5,468
(6 tons)
3rd Quality
4,587
(9 tons)
4,442
(14 tons)
4th Quality
3,428
(44 tons)
3,494
(41 tons)
Sawing Quality
Sep
Oct
Grade 1 (SG-1)
2,574
(191 tons)
2,456
(152 tons)
Grade 2 (SG-2)
1,950
(531 tons)
1,800
(478 tons)
Grade 3 (SG-3)
1,671
(31 tons)
-
Grade 4 (SG-4)
1,817
(487 tons)
1,621
(330 tons)
Grade 5 (SG-5) Assorted
1,651
(661 tons)
1,644
(469 tons)
Grade 6 (SG-6) Domestic
1,273
(365 tons)
1,233
(331 tons)
Grade 7 (ER-1)
1,108
(190 tons)
1,069
(220 tons)
Grade 8 (ER-2) -
-
Hoppus ton=1.8m³; All grades, except SG-3/5/6, are length 8' x girth 5' &up. SG-3/4/6 are girth 4' &up. SG-3 grade is higher than SG-4 but with lower girth and price.

Logs, FOB € Avg per Hoppus Ton (traded volume)
Pyinkado (export)
431 (210 tons)
Gurjan (keruing-exp) 238 (70 tons)
Tamalan --
Taungthayet --
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