The normal spring boost in the fencing sector has become almost irrelevant this year. In fact, one manufacturer told TTJ he could do without the recent warm weather, as demand has been high for the past five months.
The series of storms over the winter has created a major boost for fencing manufacturers, with damaged fencing needing to be replaced around the country. Several producers have recently added shifts, recruited extra workers and signalled investment in machinery.
But this boost to sales at a time of generally increasing demand for timber products has created its own raw material supply headaches, with everyone scrambling to secure what timber they can and some customers inevitably facing long lead times.
In the most extreme cases, some smaller fencing manufacturers have reportedly had to send their workforce home because of timber supplies running out.
"It’s quite remarkable really," said one large fencing producer. "This even eclipses 2007 in terms of the sheer volumes. I can count four or five real peaks in demand in supplying retailers over that four-month period."
It’s not just lap panels that are in demand, but featheredge boards and components too and the contact said his fence panel sales in January and February were up 170% on a year earlier. "No-one is building stock ahead of Easter, it is all servicing the sales. Before we deliver, the product is already pre-sold."
Without normal stocks in place for Easter, the tight supply situation could be exacerbated if a new wave of warm weather pushes demand up another notch.
"Out of stock" has been a common sight in DIY stores, with some manufacturers addressing the problem by focusing their product on key hub stores. Rationing and weekly product allocations for customers are normal. "This is on a par with those big storms in the past," said another producer. Since late October, every sales week has been well above forecast for him.
"Most of our stockists are way up on the volumes of products they had from us a year ago."
Another company predicted high demand would extend for six months, and had no plans to ease off production.
Several contacts TTJ spoke to had planned for fencing timber prices of £150-160/m³, but strong demand and log shortages were pushing this higher, in some cases up to £200/m³. One manufacturer said he had been quoted €250/m³ in Europe for square timber blanks for fencing production.
It is difficult to see such astronomic spot prices disappearing any time soon, with demand remaining high across a broad range of timber products.
"We have moved our prices up [for fence panels and components] but it still doesn’t feel sufficient because the round log prices are double-digit increases compared to two to three months ago," said the manufacturer. Another manufacturer is bringing increased focus on supplier countries which have not had storms and he is relying on long-term supplier relationships to keep prices relatively stable. "We’ve been buying material from everyone and anywhere. If you are sourcing just from the UK I think you would be stuffed."
He said his lap panel prices had risen 7% and featheredge products 10% so far in 2014. "It’s unrealistic that stockists will get everything they want to buy," he added. The first spell of warm spring weather earlier this month lifted decorative fencing sales. "Trellis went bonkers last week," the contact added, with trellis sales doubling in a period of two weeks.
Another producer said replenishing stocks of home-grown fence posts was a struggle "because we want pine and so does the rest of the world". He is working closely with suppliers to ensure he is a preferred customer but even then is not always getting what he wants, necessitating production flexibility – cutting 6×6 posts down to 3×3 for example. With sawmills able to sell all they can produce, demand is also difficult to fulfil for featheredge fencing, so the contact is buying imported product.
He is taking steps to increase capacity by buying extra sawing machinery and recruiting extra workers.
"Prices are going to go up again. The sawmills are all very concerned about what prices they should be tendering at; there is a lot of uncertainty."
Timber prices put pressure on pallets
Soaring timber prices are creating talk of "unprecedented" times for the pallet sector. The FEFPEB pallet timber price index shows a sharp increase to 150 for the UK in the fourth quarter of 2013. Meanwhile the Pöyry pallet timber price index showes a 15% increase over the past three quarters Q2-Q4.
UK pallet industry body Timcon has warned that an already tight raw material supply could be worsened by a spike in fencing and construction timber demand following the winter’s severe winds and flooding. Non-standard sizes of timber have been most affected as sawmills have improved yield and higher prices in alternative sectors.
Timcon’s comments were seized on by the plastic pallet sector, which issued press statements advising pallet buyers they needed to switch from timber to plastic. Timcon hit back by saying the plastic sector was exaggerating the situation, there was actually no shortage of timber pallets and the wooden product was still much cheaper than plastic. "The price increases have been gathering momentum," said one pallet producer. He quoted current prices of £145-150/m³ for standard pallet wood.
He wasn’t seeing any large increases in pallet demand, but construction sector business was better. He expressed frustration that some operators were cutting pallet prices to maintain production levels. "We are getting to the point where prices are going to attract interest from overseas mills," he said.
Several operators report they have managed to secure pallet price increases but they question whether this can continue much further if raw material inflation continues.
