Easter usually marks the start of the fencing season in the UK, but this year an early lift in demand took the sector by surprise.
“I spent January and February saying to customers it’s nice to have a normal year again, and then boof!” said a sawmiller, referring to the sudden rise in orders.
After the buying frenzies during the Covid lockdowns, by late Q3 and into Q4 the fencing market fell back to more normal, seasonal levels.
“It was mad up until November; the yard was so empty people thought we had closed. Some customers had to buy from more public retail outfits and grabbed what they could, paying 30-50% more than our price,” a trade supplier told TTJ. “But the brakes were applied in November and our secondary mills suddenly had two or three loads to give us rather than one and, as predicted, there was even a small price reduction.”
This sudden change in gear meant in January some in the sector had overbought and were sitting on expensive stock.
“2022 could have been a tough year for UK mills. Q4 was pretty grim as customers had enough wood until the end of the year and started 2022 with high stocks. If we had a normal Easter season with high stocks, it would have been challenging,” a sawmiller told TTJ.
It is not, however, a normal season.
The storms that swept through much of the UK in February kickstarted demand early and were then quickly followed by Russia’s invasion of Ukraine and the subsequent sanctions on products from Russia and Belarus. The war, in particular, created what one veteran timber trader said was the biggest spike in demand for fencing in his career. Another told TTJ he could be selling more fencing but was constrained by capacity.
The volume of UK imports direct from Russia is relatively small but timber from Russia and Belarus is finished in other countries, such as Latvia, and just how much is unknown – and that uncertainty is fuelling the rise in buying and prices.
“The price reduction of Q4 has gone back on, and earlier than usual,” the sawmiller said, adding that prices would continue to rise.
“Pallet wood prices went up 10% on April 1 and that’s unusual because they usually work on quarterly prices. I can’t even guess what the price will be in June. We’re taking orders but will tell people the price in four weeks’ time,” he said.
Prior to Easter a supplier said the Russian sanctions had not yet had an impact but his company, and the industry as a whole, were bracing themselves.
“UK sawmills have plenty of material on the ground, to the point it should put downward pressure on pricing but they can see a materials shortage coming so they’re holding their nerve,” he said.
In addition to demand influencing prices, the fencing sector, like all businesses, is facing dramatically higher costs and inflationary pressures. One fencing outlet said his main supplier’s energy costs had doubled in January. Added to this is the ban on the use of red diesel for all but agriculture, horticulture, forestry and fish farming, effective from April 1. Now regular diesel must be used for all diesel vehicles and machinery, adding around 60p per litre.
“I’m advising customers to build at least 5% into any quotes but if inflation continues and we end up with Ted Heath-style 25%- plus, then prices will go up by far more,” he said.
Another manufacturer said prices were going up throughout the supply chain – wire up 20%, hardware fittings 7%, concrete aggregates 9% – so he could no longer stick to just an annual price increase and had stopped producing a printed brochure.
And the rising cost of living for consumers leads some in the fencing sector to question whether the current level of demand is sustainable. There’s also the view that after two years of Covid restrictions and garden improvements, people will now be desperate for a holiday.
“Ninety per cent of our customers are concerned about the sustainability of the upswing because of the cost of living crisis,” said a sawmiller. “I think it will be a short, sharp fencing season. It’s not going to stop completely but it will be April to June.”
With the war in Ukraine, rising inflation and the cost of living crisis, making a forecast about the coming months is almost impossible.
“Normally I’m not shy about predicting but I genuinely don’t know,” said the sawmiller. “The last two years were driven by an increase in demand but this is a shortage of supply and that’s always more challenging. We’re confident about the next two months so let’s get lots of wood out over that period rather than worry about the summer.”
A supplier thought demand would dip as consumers’ priorities changed. “There’s been so much done in gardens and people will want to holiday abroad rather than sit in the garden wrapped in three layers, plus the cost of living will have a massive impact on a lot of people,” he said. “We’ve had a good start and will ride that to year end, but it’s what happens next year that’s the question.”
Another supplier, however, had experienced less of a slowdown last year and was more confident that a busy fencing season lay ahead.
“We thought demand would be high but we’re still surprised, and we think it will be extremely high for the remainder of the season,” he said. “There are inflationary pressures on incomes but two things will drive demand: those with larger gardens who still have money to spend, and there’s still some reluctance for people to travel so they’re staying at home and investing in their gardens.”
The economy is important but the weather has a big impact on fencing demand, he added. “The sun shines and people spend money on their gardens,” he said.
Demand from housebuilders would also continue, although at a slightly lower level than the post-lockdown surge when the construction industry resumed work.
Another supplier was enjoying a healthy order book and predicting sales would be up 20% in value this year, which gave him confidence. He did, however, believe the UK could go into a recession in Q3 and Q4, although he hoped to be proved wrong.
Warehouse capacity and transport could also put constraints on business. To mitigate potential supply issues, one supplier TTJ spoke to was holding more stock than usual at this time of year and was considering renting more warehousing.
“It’s a massive challenge because fencing is a low-value, high-space product. Really you want to run just-in-time but we’re having to operate in a different way,” he said.
While haulage problems may no longer be headline news, the HGV driver shortage still exists. One supplier said getting product to Scotland, Ireland and south-west England was particularly difficult.
“If there’s a wagon going to the south-west it almost becomes a bidding war. We’ve had loads planned and then pulled because the transport company subcontracted to do it has been offered a higher rate,” he said.
A merchant who supplies square-edged fence posts was happy with demand, but not with some importers attitude to ensuring supply of UC4 treated timber.
“There’s an appalling lack of clarity and ambition to provide preservative-treated materials in accordance with the requirements. There’s no appetite from that part of the trade to announce what they’re doing. When you push them you think they don’t even know themselves,” he said. “It means merchants have to carry the can because we transfer the goods from the trade to customers. If it’s not UC4 we have to tell our customers and advise them on what measures to take.”
He dismissed as ridiculous the argument that it costs money and would make importers less competitive.
“The biggest cost is the timber, not the preservative, and everybody should be doing it anyway,” he said.
It was particularly disappointing, he added, when there were “so many good examples in the timber industry where we’ve raised our standards”.
