Myanmar: Open tender sale of teak logs for local industries

  • October 21, 2011
  • • Source: ITTO's Tropical Timber Market Report
  • • Views: 2175
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About 500 h.tons of SG5, SG6 and SG7 grades of teak logs were sold on 10th October by open tender to domestic wood product manufacturers. About 100 h.tons of SG5 were sold at an average price of Euro2084 per h.ton. Some 50 h.tons of SG6 were sold at Euro 1770 per h.ton and about 350 h.tons of SG7 were sold at Euro 698 per ton.

In comparison to price levels in the September tender, where average prices were Euro1554 for SG5, Euro 1382 for SG6 and Euro 975 for SG7, the price levels secured during the October sales were good. Unlike other open tender sales, the ‘raw material special sales’ are only for logs that are to be locally processed.

Hardwood market showing signs of weakness
The market outlook is said to still be bleak for Pyinkado. Gurjan (Kanyin) and teak demand is also showing some strains. This is presumably due to a weaker rupee as India is the major buyer of logs from Myanmar. Whenever there is a change in the economy of India it has a direct influence on Myanmar timber exports.
Teak markets in China, Vietnam and Thailand are also not very active but observers say the teak market has always been resilient as is demand for other hardwoods in a world hungry for raw materials.

The ‘cut-less-trees-and-stop-selling-logs’ slogan is having an impact
The ‘cut-less-trees-and-stop-selling-logs’ movement seems to be gaining momentum as a consequence of the public outcry over the Ayeyarwady Myitsone Dam issue. Never before has such an increased awareness in environmental matters been so prominent in the country, say local observers.

The Voice Weekly, a local newspaper, reported that in a recent interview with the Vice Chairman of FREDA, he made special mention of the need to not over-harvest the forest, not to export in log form and to locally produce more value added wood products to create more jobs and increased foreign exchange earnings.

Observers believe that upgrading wood processing technologies and selling more processed products would eventually assist the country towards reaping optimum benefits from its forests.

Strengthening exchange rate a serious concern
Since the beginning of this year, the kyat has appreciated by around 20% against the major currencies and this has threatened export growth and could undermine the country’s efforts to revive the economy.

At around 780-800 kyat to the dollar, compared to more than 1,000 kyat to the dollar twelve months ago the exchange rate has become the focus of attention of the government since the strength of the currency is now adversely affecting the economy.

MyanmarAugust hardwood log prices

Hardwood log prices FOB per hoppus ton Euro per m3
Pyinkado export quality
570
Gurjan export quality
418

Prices are in Euro per hoppus ton FOB (Hoppus ton equivalent to 1.83 cu.m)

Myanmar Teak Log Auction Prices (natural forest logs)
Purchases were made by competitive bidding in September 2011.

Myanmar Teak Log Auction Prices (natural forest logs)

Teak Logs, FOB € Avg per Hoppus Ton
(traded volume)
Veneer Quality
Aug Sep
2nd Quality nil nil
3rd Quality nil nil
4th Quality 4,520
(11 tons)
4,503
(10 tons)
Sawing Quality
Grade 1 (SG-1) 3,108
(36 tons)
3,186
(33 tons)
Grade 2 (SG-2) 2,699
(42 tons)
2,879
(44 tons)
Grade 4 (SG-4) 2,092
(213 tons)
2,092
(216 tons)
Grade 5 (SG-5) Assorted 1,493
(188 tons)
1,554
(133 tons)
Grade 6 (SG-6) Domestic 1,325
(79 tons)
1,382
(110 tons)
Grade 7 (ER-1) 1090
(34 tons)
975
(40 tons)
Grade 7 (ER-1) nil 516
(21 tons)


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.
Prices differ due to quality or girth at the time of the transaction.
Suspension of the controversial Myitsone dam project
In a move which surprised observers, Burmese President Thein Sein has suspended work on the Myitsone dam project. This came in response to growing public concern over the project which, say critics, would threaten the livelihood of those along its banks and would cause considerable ecological damage.

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