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predicts house building starts rising a further 9% in 2022.
Besides a shortage of skilled labour, the
key constraint on construction, it added, was the cost and availability of building products and raw materials, “including paints, varnishes, roofing materials, copper, steel and timber”.
As far as timber is concerned, fencing producers generally bear witness to the fraught supply situation. One reported “reasonable supply levels and lead times from main and secondary sawn timber suppliers”, but long delays in machined items, including TGV, loglap and waney lap panels. “In the main, our suppliers have kept up with demand, but we’ve also needed to buy alternative products to convert in-house, such as 22x100 blanks to make featheredge and 75x75 sections to 2ex for arris rails,” said a producer.
One sawmiller said they were operating a “managed volume system”, limiting customers’ orders so they could supply as many as possible. “We’re now seeing some market cool off, but demand, including from the fencing sector, is still at unprecedented levels due to the home and garden improvement boom,” they said.
they wanted, but it shows we’re trying to be supportive. In this environment, the emphasis more than ever is on partnership with customers.” The latter have asked the company why it could not add a third shift to up output. “We’ve explained that’s really not feasible,” they said. “When would we do maintenance and where would we get the trained staff and the logs? Also, what would we do with the co-products? The co-products sector just can’t absorb another shift’s worth.”
“UK sawmills were already running very efficiently, so there was little slack to satisfy increasing consumption. We’d invested to increase our fencing capacity and our overall production is 20% up on last year, but we’ve still had to operate managed volume. We have, however, succeeded in increasing customers’ allocations. Those who might previously have placed orders around 100m3 we’re supplying 110m3 150m3
, . It’s not the 120m3 -
The consequence of the demand and supply imbalance has, of course, been timber prices increasing, as one fencing producer said, “in a way we’ve never seen before”.
“Some sawmills have been raising prices by 7.5% per month and others taking on orders without being able to tell you the price,” said one manufacturer. “To give some certainty to customers we’ve got a price freeze until October on main sawn lines. But we’ve made them aware we’ll be playing catch up on October 1.
“When TGV suppliers asked for a 50% overnight price rise, on top of the 7.5%
Above: Demand for fencing has been driven by a buoyant new build sector PHOTO: TATE FENCING
www.ttjonline.com | September/October 2021 | TTJ
increases requested with each previous order, we did have to increase prices to customers. We put it to them first; would they be happy to try to pass on the increase or should we tell suppliers no thank you. It was a 75/25 split to accept.”
A sawmiller said fencing product prices over the last 14 months had risen by 70-90%. Featheredge boards are up from around £200 to £370-380 and a UC4 post from £220 to £370.
Despite this, until very recently demand continued unabated.
“Regular loads in to our yard, up to five a week, have usually been 95% pre-sold,” said a fencing producer. “Visitors would have been forgiven for thinking we were selling bearers if they came into the yard, as we were devoid of stocks on the ground. “We’ve seen some improvement in the situation lately, but now, of course, the main mills are going on holiday, so for the first time in our history we’re closing for one week, purely to preserve stock.” High prices and long lead times do not seem to have led to any increased consumer switch to fencing in other materials, although the AFI maintains the “significant” migration to more “reliable materials” for ground contact components has continued. Some easing of the market is now reported by fence manufacturers generally, as well as sawmillers. One of the latter forecast further moderation into the autumn. “A customer cited four reasons why we’re going to get increasing push back,” they said. “One was the unexpectedly high cost of holidaying in the UK rather than abroad, curbing consumers’ spending. Then there’s people going back to the office so having less time for DIY. Others are coming off furlough to find their zombie jobs are redundant.
Finally it’s prices reaching that point where consumers ask ‘how much for a fence post?!’.” As a result, they said they saw raw material supply and demand moving more into equilibrium, with growing volumes of timber on the ground.
A fencing producer agreed the market was at or nearing a turning point and was hoping soon to see “improvement in stock levels and stabilising or some reduction in price”. What they were concerned about, however, was the possibility of a sudden radical reset in the sector. “We’re fearful of a complete meltdown as end users either find prices too expensive or go on holiday,” they said. “The danger then is being left with expensive stock we’ll have to sell at a loss.” A sawmiller, however, expected a more measured market readjustment. “I think we’ll see mills stock building and feathering back production, knocking off a shift rather than risk prices tumbling,” they said.
While one producer TTJ contacted has good orders into the New Year, it sees demand gradually dropping back to below 2019 levels. “Having faced the perfect storm driving demand – people at home with spare time, money to spend and good weather – we’re now past the market peak,” said a spokesperson. “So many projects have been done and consumers are returning to spending money elsewhere.” But his company, for one, he added, has come strongly through these challenging times.
“Overall, having this period of demand has increased profitability, helped bring investment plans forward, reduced borrowings and put us in a healthy position for a future in whatever shape it comes,” he said. ■
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