Why is teak so valuable?

Teak has been used for 100's of years because of its hardness and durability. A natural oil occurring in teak wood makes it very resistant to pests and rotting and in turn this led to its popularity in boat building, a popularity which continues today.

Natural teak takes approximately 20 years to reach a suitable size for harvesting and commercial use. Some recently developed teak hybrids grow more quickly and take 15 years to reach a size suitable for harvesting.

Teak, however, is not a perishable commodity and the teak can be allowed to grow on beyond the 15 or 20 years and then harvested. In the meanwhile the trees have grown further and become even more valuable.

An interesting and little discussed fact about teak trees is that after felling the stumps will grow again and typically these stumps grow faster and produce more of the very valuable dark heartwood.

Currently milled teak fetches about six times the price of pine wood, four times the price of cherry wood and twice the price of mahogany.

A number of factors come into play in pricing teak:

- Growth Rate: teak is slow growing

- Supply: currently more than 95% of the world's teak comes from non-sustainable jungle sources. As world opinion has moved against the logging of our jungles supply of teak has fallen.

- Demand: teak remains in high demand and is particularly popular in the emerging economies of China and India.

World opinion continues to move against logging our jungles and Australia is currently considering making the import of illegally logged timber a criminal offense. Other countries look sure to follow Australia's lead.

Demand for timber is linked to world population growth and demand for teak will continue to increase inline with the world population growth. Demand will be further fueled by the emergence of new economies where teak is particularly popular.

Timber has been a steady performer over the last century and has typically out performed inflation by 3.2% per annum. Teak as a niche product has outperformed timber. Until sustainable teak production fills the demand for teak, teak looks to increase even more strongly in price over the medium term