Timber fencing manufacturers will be reflecting on a good Easter trading period, buoyed by superb warm weather.
After a less than stellar 2018 in the fencing trade which also saw raw material shortages and price inflation, now we are seeing good levels of fencing demand and downward timber price pressure.
Some of the large manufacturers TTJ spoke to declared trading “very strong”.
“We benefited from the milder weather seen in February this year,” said one company.
“People ventured in to their gardens earlier and we saw the season start long before Easter. The clocks changing, some storm demand and glorious weather over a later Easter has meant we’re seeing a more normal seasonal pattern – albeit with a steep ramp up in demand.”
The contact reported that Storm Freya in March storm led to a 60% increase in demand in the weeks following the storm.
The industry is seeing huge growth in sales through internet retailers across all categories. In 2018 over 70% of one company’s business came from online retailers.
“In the peak of 2018 we were doing nearly 3 deliveries a minute to UK customers’ homes on a single day and we look set to exceed that this year,” said the company.
Prices
While the turnaround in timber price inflation has been welcome, looking back over the last 12 months still reveals a period when manufacturers saw timber price increase up to 40%. Wood availability and competition for softwood fibre with the construction sector, the biomass power generation industry and from cardboard manufacture for packaging (supporting the rise of online shopping) have all been factors over this period.
But prices peaked in the closing months of 2018 and there is also now a situation with a glut of imported softwood on quays due to a combination of stockpiling for a no-deal Brexit and lessening of demand in some other global markets.
“There have been no price increases in the spring for the first time in 5-6 years,” said one fencing component supplier.
“C24 graded carcassing is now the same price as sawn treated fence posts. It’s £230/ m3 for treated fence posts and we are trying to get £240/m3 for C24. I very much doubt whether pricing will go up at all this year, down if anything.”
He described fencing as pretty buoyant in a much more manageable situation.
“This year has really improved,” he added. “The week after Easter was really busy as a lot of people went out in their gardens. “Last year was a funny year, it felt busy and was frantic at times because of the shortages. But volumes were down.”
The trend of people trading up to a more premium fence panel continue. The recent storm saw an increase in demand for stronger featheredge and closeboard panels.
“We’re also seeing a switch to higher priced more decorative panels as consumers are making a more considered purchase to enhance their boundaries,” said one supplier. This includes panels designed specifically to reduce noise.
Pallets
Brexit has brought some confusion and uncertainty as regards compliance with plant health regulations aimed at stopping the spread of forest pests in wood packaging.
Currently, UK pallets exported to the EU do not need to be ISPM15 compliant (treated and marked). But in the event of the UK leaving the EU in March 2019 without a deal, they would need to be, with products possibly subject to official checks either upon entry to the EU or after entry.
However, the UK is not demanding the same with pallets entering from the EU as it wants to minimise impact on trade flows.
“Our customers may have to take the risk of shipping products into the EU [without having the pallets heat-treated],” said one UK pallet manufacturer. “It’s a mad situation.”
The lack of UK heat treatment capacity would obviously prove a problem should the EU follow through on checks in the event of a no-deal Brexit.
Elsewhere, a downward move in standard pallet timber prices from the Baltics in Q1 and in homegrown product in Q2 has resulted in a cumulative price reduction of about £10/m3 in 2019.
“Demand has been OK but a bit softer than we would have liked. Q1 is always difficult to read. We had a good Easter due to the warmer weather so we got some pull-through in the building products sector.”
The Brexit impact had been a factor, the contact admitted.
“By the end of last year and into Q1, customers were filling their warehouses with stock and there was always going to be an adjustment on that. With the lack of warehouse space people have slowed their production a bit.”
