New Year, price rises imminent. But why?
Updated: Mar 3
Someone somewhere must set an alarm for the new year. This alarm rings merrily and it seems to many that price rises then follow. When you have been in the industry as long as we have you can set you watch by it! We know its coming, and to be fair all our suppliers work with us to give us notice of any intended rises and do their best to keep costs down.
What is often not discussed with the wider general public as a whole is, why? What has caused these increases? Perhaps some just think that their local contractor is just being greedy, but I can reassure you this is not the case.
In 2020 the UK experienced a huge increase in demand for timber, steel and materials required for home improvements. A large percentage of the population were stuck at home and DIY was a popular choice for many to pass the time. The situation was compounded as the pandemic continued through the winter and is set to continue with the UK now in it's third lockdown. Demand for materials is not expected to decline or level out until Q2 of 2021
We are fortunate enough that as we have been trading for 35 years we hold long term relationships with many of our suppliers. They have shown us fantastic loyalty to enable us to continue working with little disruption.
Due to the uplift in demand and a lack of material to meet it this has inevitability pushed up prices. Suppliers have not experienced the 'quieter winter months' which normally gives them the chance to replenish stocks ready for the 'peak season' .The shortfalls are now being felt in Q1 of 2021 and are expected to stay in Q2 of the year.
As the mad rush of stay at home DIY'ers grew, stock levels fell. This was especially apparent with posts, rails and fence panels as more people tried to enjoy their outdoor spaces like never before. Panic buying ensured pushing prices up further and making it impossible for suppliers to meet demand. A 'black market' even sprung up where products changed hands for four times their normal price. Many suppliers have had to resort to supplying trade only in an attempt to keep these men and women in work.
Mills in Lithuania and Latvia shut down for two weeks due to the pandemic which caused them to fall behind and stock levels to drop. UK saw mills were also closed for their annual two weeks holiday in August which simply compounded the issue.
Harvest of timber from the Baltics were also smaller in 2019 due to wet weather.
The second factor effecting prices is BREXIT. It was the word we couldn't get enough of until Covid came along but now with a trade deal agreed it is very much back in fashion. There have been concerns over increased documentation and that this will lead to delays in roll on /roll off transport This had lead to some suppliers pausing cross channel activity to avoid goods sitting at port for long periods. Covid has also played its part as shipping companies place staff into quarantine for 14 days on arrival in the UK.
Steel prices have always fluctuated and complex international trade patterns form part of this unstable market. However right now it seems that its the general disruption of the flow of steel into the country that is causing prices to rise. There is the potential for the demand on UK steel to grow however at it struggles to be competitive with imports there is the potential UK steel could flood the market and cause prices to dip. As of yet we do not know if this will come about.
This is just a brief summery of some of the issues behind the new year price rises, and I suspect there will be more to come. There is very little leeway for companies to absorb these increases, especially as many have additional demands on finances including wages and general running costs. Timber is still available but at an significantly extended lead time. So plan in advance and give suppliers as much notice as you can.