Meanwhile, in general, domestic pallet manufacturers are experiencing lacklustre demand for their products, although March proved to be significantly busier than the first two months of the year for many companies.
The optimists in the fencing sector are blaming the fickle British weather for dampening consumer interest in working on their gardens and, more specifically, on erecting new fences or replacing old ones. They are hoping that the Easter period and forecasts of sunnier conditions in April and May will serve to kick-start the season. The pessimists, for their part, are fearful that the general lack of spending on the high street means consumers have become more cautious and that a poor year for sales lies ahead of them.
The consensus is that the period around Easter will set the tone for the rest of the season. One contact said of the UK fencing sector: “Everybody is on the starting line waiting for the off.” Hopefully, someone has remembered to bring the starter’s gun, he might have added.
For the moment, fencing stocks are currently at reasonably high levels in the UK. One supplier complained to TTJ: “Nobody is chasing me for battens and slats. Customers have still got material in stock from earlier orders.”
As has been widely publicised, many leading DIY sheds are struggling to cope with difficult market conditions; feedback suggests that some are as much as 50% below their own sales forecasts for fencing and other garden-related products. Furthermore, a leading supplier into the DIY sector said that a growing trend in the domestic sector towards Internet/direct sales of garden products will have longer-term implications for major retailers’ warehousing and staffing levels.
Beyond the retail sector, several contacts have reported decent order books for the second quarter because many non-domestic buyers are starting new financial years and therefore have fresh money available for capital expenditure projects. However, most operators said there was still little scope for upward price progress, especially as substantial quayside stocks were still available at low prices. “We have heard offers for 1,000m3 of landed stock – and these haven’t been isolated examples,” said one source.
Sales of standard panel fencing products appear to be relatively weak at present, with some describing conditions as “the worst they have ever seen”. Sawn timber prices, meanwhile, have been termed “consistent to slightly weaker”. However, some other areas of the fencing and garden products market are giving cause for optimism; for instance, good demand has been seen for higher-quality domestic fencing panels, with home-owners continuing to be influenced by TV gardening programmes and “not just looking at price any more”. Several contacts also reported growing demand for “garden rooms” – in other words, outdoor living areas serving as summerhouses or workshops. Larch Lap, for example, has recently extended its range in this area and reports a promising early response.
Round fencing
Meanwhile, demand for round fencing “has been going from strength to strength”, with particularly strong orders from the key farming and landscaping sectors.
On the news front, the BS 1722 consultation document covering all types of fencing is likely to be published in April, TTJ was told. The document will include, among other things, details of new treatment standards for preservation.
Pallet manufacturers have also been adversely affected by the slow start to the year for many of its leading consumers. More worryingly, some leading users – notably in the building trade – are expecting conditions in their sector to remain fairly flat throughout 2006. And along with many other industries in the UK, pallet manufacturers are also feeling the pressure of rising energy costs. A leading producer noted: “We have been seeing fairly massive hikes in our electricity costs – they have recently gone up 48% at one of our plants.” However, he also noted that the pace of business had picked up in March following quieter trading conditions in January and February. “Customer feedback is now generally more positive,” he said.
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“Everybody is on the starting line waiting for the off” |
Another prominent pallet manufacturer went even further by suggesting that March had provided his company with one of its busiest periods in many years. However, he acknowledged that orders had been concentrated on heavy-duty, long-life pallets – not least because of the emergence of new competition within that particular market place. He suggested that other areas of the market appeared flat and that prices had weakened slightly in the first quarter. “We have got business but we have still had to drop prices,” he added.
A number of UK sawmills appear to have seen an improvement in demand for pallet timber because of reduced availability from some areas of northern Europe. One contact suggested that firming prices in Scandinavia for pallet, fencing and case-making timber could have a beneficial knock-on effect for UK mills. On the downside, however, volatile energy prices have influenced production schedules among leading co-products consumers, leading to slight weakness in sawmillers’ revenues from residue sales.
In another development with broader market implications China is said to be interested in developing a public pallet pooling system and, in this context, has invited EPAL to make a presentation on its quality monitoring activities at a conference in Shanghai this September. Indeed, EPAL has recently taken away a manufacturer’s licence for selling poor quality and unregulated pallets, although an appeal is expected to be lodged.
Meanwhile, the ISPM 15 phytosanitary standard for wood packaging has been rated a success by the Forestry Commission’s head of plant health Roddie Burgess. To date, the UK has received no notification from any trading partners of its ISPM 15 pallets being rejected or quarantined for any reason. The UK’s swift response to ISPM 15 and “a good working relationship with industry” had been key factors in this encouraging start for the standard, he said.
Industry calls for measures to help stamp out fraudulent marking have led to the development of statutory instruments which, if approved by the appropriate ministers, could come into force by June this year. Under current proposals, the instruments will provide powers of entry and the right to seize and destroy equipment used in fraudulent ISPM 15 marking activities. Guilty parties could face fines of up to £5,000 if the measures are adopted in their current state.
Destination China
In other ISPM 15 developments, the Forestry Commission has confirmed its intention to cease issuing phytosanitary certificates relating to wood packaging destined for China. This move, which took effect from April 3, is based on the fact that the commission has heard of no instances of goods being prevented from entering China for lack of one of these certificates.
Meanwhile, over the last couple of months, the US authorities have been ordering the re-export of all shipments in situations where it has not been feasible to separate ISPM 15-compliant from non-compliant packaging. According to current feedback, the US is still aiming to move to full enforcement of the ISPM 15 requirements from early July.
Meanwhile, additional alternative treatments to the ozone-depleting methyl bromide route are being assessed as part of an ongoing review of ISPM 15. Any revisions to the standard are likely to be adopted in 2008.
For its part, leading pallet manufacturer Scott Timber Group (STG) has suggested that the ISPM 15 situation remains “volatile” and that constant monitoring of developments is required. The comments were made following moves by Australia to reverse its decision and require all wood packaging materials used in air cargo to be ISPM 15-compliant. The guidelines also require materials to be bark-free and, if fumigated, the exposure time must be 24 hours as opposed to 16 hours.
According to STG’s business development director Alan Moir, the importance of ISPM 15 to customers is reflected in the fact that the group is producing more than two million accredited pallets a year.
