UK demand for fencing generally held up well in 2019 but, as the new year gets under way, there are various factors that could disrupt the mood.
Over the autumn and winter, the falling price of timber has been a significant factor to watch. For much of 2019, fencing timber was sheltered from the falling prices affecting structural timber, which dropped around £50- 60/m3 over the year, but that changed in the fourth quarter when fencing timber prices fell about £10/m3.
“The pure fencing mills had a good year; log prices were high and they were making money so they didn’t feel the same need as the construction mills to push down the log prices,” a sawmiller told TTJ. “That meant domestic logs remained more expensive than they should have for longer than they should have and now, as we hit this correction, it’s a rude shock to the fencing mills.”
Those mills that can produce both construction and fencing timbers have moved away from the supply-driven structural timber market and more heavily into the latter, resulting in price drops on products made from very expensive logs.
“The fencing mills were insulated for the first 10 months of 2019 so it hit them very hard, very quickly, whereas for the construction mills it was a more consistent and gradual downward slope from the start of the year,” the sawmiller said.
“Fencing doesn’t stop over winter, but it does slow significantly so the pure fencing mills have to compete and knock £20-30/m3 off in one go.”
One fencing manufacturer told TTJ it was a “constant battle” to hit the right price for fencing products. His company had bought stock for Q1 and set its prices so would not benefit from any reduction in lower raw material costs until Q2.
“I’m hoping for further reductions in timber prices,” he said.
Some fencing manufacturers reported a long-term trend in the decline of sales to garden centres which cannot compete with the cheaper prices builders merchants offered.
“Builders merchants and local manufacturers are selling it at the same price as the garden centres are paying for it,” TTJ was told.
The fencing sector is hoping Q1 and the traditionally busy Easter period will bring good business but, of course, the weather is always a factor in fencing sales. One manufacturer estimated that a winter storm could give a 70% boost to demand for replacement panels but, at the time of writing, the UK had not seen widespread wind damage and the need for immediate remedial work. The flooding in northern England in November last year may have damaged fencing but property owners’ priority will be to restore their homes to a liveable condition before they tackle their gardens.
Another contact was optimistic that demand in Q1 and Q2 would be healthy, and he was particularly buoyed by more people specifying and buying product treated for Use Class 4 ground contact. Although the standard had been around for many years, demand had “coughed and spluttered” and gained a little more traction each year. In 2019, however, there was noticeable growth.
He was even more encouraged that customers’ interest was so strong that they were willing to pay the slightly higher upfront cost despite the falling market.
“In addition to our long-standing commitments, we have a number of major new buyers switching to UC4 product for 2020,” he said. “It’s finally getting that head of steam where people realise it doesn’t add much to the overall cost of the fence and it provides certainty of what the product does.”
He urged the trade to communicate these product lifetime benefits to customers.
“Decking is a great product but as a trade we’ve driven the value down and the quality down and now people are buying plastic composite decking which is four times the price of timber,” he said.
He also encouraged manufacturers to highlight that some product is deliberately “misdescribed” as UC4 and does not actually meet the rigorous standard. “I’ve had two instances this week where someone believed they were buying a UC4- guaranteed product and they were not. The mill or agent had not been direct about the wording they used; ‘treated with a UC4 solution’, or treated to a UC4 cycle’ is not the same as a guaranteed 15- or 30-year product,” he said.
Suppliers needed to continue to raise awareness because such practices could undermine the market, he said.
Brexit may not have a direct impact on day-to-day trading for fencing but the deadline extensions and uncertainty have been frustrating for businesses.
One manufacturer said he had wanted Brexit to be “done and dusted by now” but he was hoping the January 31 deadline would be adhered to so “we can get a bit more stability back into business”.
“We’ve been given Brexit deadlines and you try to work to them, then all of a sudden it changes. The ports are piled high with goods because people have bought in bulk and now you can’t move to bring in more. This will impact on timber prices,” he said.
Consumer spending was also affected by the uncertainty as people were holding off on improving their gardens until they had a clearer picture of when Brexit would happen and its impact on their finances.
A sawmiller also hoped that January 31 would bring an end to the uncertainty.
“If we leave the EU on January 31, even if it’s without a deal, that’s a certainty and we know what’s going to happen. At the moment you can’t put a plan in place when you literally don’t know what’s going to happen.
“Whether you’re a leaver or a remainer it’s the uncertainty that’s been doing more damage than either leaving or remaining in the EU,” he said.
