When the fencing season started early this year following the storms that swept through much of the UK in February, there were fears that the surge would be short lived – and as the year developed, for many businesses, those fears proved correct.
“We got the false dawn that there were going to be shortages but it’s been an average to poor fencing season,” a sawmiller told TTJ in August.
The last few weeks of the school summer holidays are always quiet for the fencing sector, followed by a bounce in September as people do work in their gardens before the winter. This, however, looks unlikely this year. The fencing supply chain is generally well stocked and, with even more timber sitting on quaysides, there is no incentive to keep buying, especially with the likelihood that prices will fall.
“The feedback from our customers is that their yards are full, and prices are going down so why would they buy more for September? We’ve seen the fencing season this year,” said the sawmiller.
The drop in demand was a natural progression from the astonishing sales levels experienced during the Covid lockdowns, when people spent time and investment in their gardens.
“During Covid people spent a lot of money on their gardens and outdoor areas and there is only so much money. If an extra 20% did their gardens during the Covid lockdowns then fewer people are going to do it now,” said the sawmiller.
“It’s not going to be catastrophic but it will be a worse run into Christmas than normal for the fencing industry. It’s because people have more stock at this point than they would normally have and the market is not as good. People are still buying but they’re not buying the volume or buying forward.”
He added that his mill, and other UK sawmills, had reduced production accordingly.
Added to this is the cost of living crisis and a decline in households’ discretionary spending. People with money may still go ahead with expensive garden improvements but it is the smaller, £500-1,500 projects – the bread and butter for many businesses – that are not happening. This is reflected geographically, with businesses supplying more affluent areas of the UK reporting stronger sales. One stockist in such an area said customers were moving away from “short-term economy products” and specifying a better quality panel. He added that slotted timber posts were also slowly increasing market share.
A fencing supplier said the strong demand in April and May fell away to more normal levels of trading and although there was a marked drop in sales of some products, turnover was still higher than pre-Covid 2019.
“We’re now experiencing a natural tailing off because of the sheer volume that’s taken place over the past few years,” he said.
Another supplier said the market felt “far from normal”, although, overall, business activity had held up for him. In July, sales fell slightly on July 2021 but, 10 months into its financial year, the company was up 17% on last year and “perfectly happy with that”.
His customers were booked up through to March next year but he acknowledged that with the continuing rising cost of living, it would not take much for end users to start cancelling jobs.
As a result of the generally slower sales, prices of fencing timbers had edged off – a far gentler move than the “stratospheric trajectory” that structural timber prices had taken, said a sawmiller.
“They’ve broadly been static but we’re now seeing some pressure and I think that’s our customers saying ‘the yard’s full, we don’t need anything’,” the sawmiller said. “Some of the bigger users have put on some downward pressure but it’s modest – 2-3% – but I think we’ll see a more widespread downward pressure now.”
A stockist acknowledged the downward trend and he said once his suppliers lowered prices he would pass the reduction on to his customers. He was, however, well aware that if prices dropped dramatically he would be left holding expensive stock.
Although fencing manufacturers may now be paying less for their raw material, their other costs are rising.
“We thought we’d seen the worst of price increases over the last few years with timber going up because of demand. Now timber prices are coming off but we’re seeing increases in other inputs. For example, our wage settlements are higher than we thought they would be this time of year,” said one producer.
To what extent the Ukraine war is affecting timber supply in the UK is difficult to gauge. One stockist had experienced shortages of machined rounds, especially larger and longer sections, which, in the past, had come from Belarus.
Another had “some minor issues” with sizes of stakes.
“We will shortly be sending out an enquiry for our needs for the next 12 months and it will be interesting to see what comes back and if the problems for the Baltic states producers are still ongoing,” he said.
But a sawmiller thought the impact of the war and the sanctions against Russia and Belarus had been exaggerated.
“There’s a lot of talk and hope about it. First it was said there was an 8 million m3 hole in the market, then displacement of logs into the Baltics, but that hasn’t happened,” he said. “There are no solid figures on how much went to the Baltic states as roundwood, converted and sold to the UK. I don’t think we’re at the point yet where we know what the effect will be.”
With the UK’s inflation rate already above 10%, the threat of recession looming and no end in sight for the Ukraine war, the short-term future is even more difficult to predict that normal.
“I have no idea how it’s going to pan out,” said a sawmiller. “From a domestic sawmill perspective I think we’re in for a pretty tough time, but then we can’t complain when we’ve had two-and-a-half fabulous years.
“There’s talk that there might be some timber shortages, including fencing material, in Q4 but I can’t see it. With the volume of stock on the quayside and in people’s yards, and with inflation and the cost of living rising I don’t think we’ll see any change before the new year,” he continued.
“With fencing in particular, it’s a matter of getting in the trenches and surviving the winter.”
