The fencing sector can thank the recent St Jude storm for a welcome autumn sales boost.

Some of the UK’s larger manufacturers say the storm’s high winds and resulting fence damage have led to a pick-up in sales, though nothing like previous big storms.

"Demand has really been quite strong, relative for this time of year," said one contact. "The storm has given us that extra boost.

"There has been four to five times the normal demand, which is good. We had just started to stock build and took the decision, before the storm hit, to ramp up production.

"But it doesn’t feel as big potentially as previous storm demand. It is more geographically localised to the northern home counties and the south-east."

The contact reported that storm-related demand from DIY retailer customers was twice that from merchant customers as DIYers immediately bought one-off replacement panels, whereas the merchants are more project-based.

Another large manufacturer agreed that DIY retailers were doing some frantic sales.

"Contractor-based sales are also up but they aren’t flat out," he said, adding that he thought wet weather and tight family finances would postpone larger domestic projects, perhaps until next spring.

The combination of increased storm business and rising raw material costs means fencing suppliers shouldn’t need to reduce prices to sell stock during the normal quieter winter season.

But another manufacturer, based in the south, said he hadn’t noticed any change in demand after the storm. He had seen a good run of business until the clocks changed and "normal" wet and windy November weather arrived.

Better business during the summer and early autumn helped make up for a poor start to 2013.

"We have had a good summer, which has brought us back on track as a business," said one contact.

"We’re probably 1-2% down [on budget] for the year at the middle of October. Going into this part of the year we are quietly confident we will be on track to hit our budget."

He reported a 10% dip in core commodity fencing product sales in the year-to-date, while decorative fencing was 50-60% up.

Other manufacturers corroborated the picture of improving demand.

"We’re seeing signs of encouraging construction activity, a prolonged spell of strong demand and going into November we’re going at full tilt," said another producer serving merchants and fencing contractors.

"We’re seeing a lift in the number of tenders and the outlook for next year is positive at the moment."

Selective price increases

Signs of raw material price inflation are on the horizon and one manufacturer said he was looking at selective product price increases as a result, but nothing wholesale.

A sawmilling contact reported a 5% rise in timber prices over the last six months, with prices starting to move up again. He reported good availability of material from local private forests, counteracting increased costs of Forestry Commission wood.

He thinks the prospect of more larch coming onto the market because of the felling programmes to fight the ramorum disease-affected larch stands would have an impact on the market.

Foresters’ desire to sell more larch, he added, could add pressure on spruce supplies with an inevitable knock-on effect on prices. And, of course, sawmills producing whitewood construction timber will be competing for that spruce material.

"We see a positive outlook with the good demand, but a challenging year in terms of pricing and managing increased costs."

Another fencing manufacturer using imported Nordic redwood reported incremental prices increases and said these were expected by customers.

Raw material price increases in the second half of 2013 are also hitting in the pallet sector and, as a result, one large manufacturer is reviewing its pallet prices.

"We will be increasing prices in Q4, if not Q3, to try to recover the timber price increases. Timber is in short supply as well."

He reported an 8-10% increase in homegrown whitewood prices in 2013 and said he may buy in a greater proportion of Baltic wood if demand for British timber continued to increase.

He predicted the UK housebuilding resurgence to continue into 2014, putting more pressures on supplies of home-grown wood. He added that the emerging picture would be focused more on security of supply rather than just pricing.

"There is a long way to go for pallet demand improvement, but it’s encouraging. For most of the second half of the year the improved demand has been sustained.

"The sawmills are continuing to increase prices and have supply restrictions, so 2014 will be challenging in that regard. There are future price increases to come; it’s about supply and demand."

Another pallet manufacturer reported some demand improvement from construction but buyers were still trying to avoid new pallet purchases.

A reduction in UK pallet production volumes of around 20 million pallets in 2007-2011 shows how cost conscious buyers have become since the financial crisis, with second-hand pallets a popular money saver.

But dynamics could be changing. Pallet buyers’ cost focus and track record of achieving price reductions are under pressure by the simple fact pallet manufacturers need to pass on timber price increases.

Security of supply is becoming a bigger issue, with reports that pallet buyers are doing less calling around trying to secure the lowest price. "They realise prices are going up and some are scared they may not get pallets," said a contact.

The link between increased construction, particularly through the Help to Buy scheme, and the pallet sector’s large dependence on British timber is an obvious concern for the industry.

"It’s getting more difficult to source things; there is a short supply and anything which is non-standard the sawmills aren’t so keen to do."

The contact cited a 10% increase in pallet timber prices in Q3 and he predicted further price increases in the new year.