Outlook for 2022
Well 2021 has been an interesting year, maintaining stock levels has been extremely difficult and increases in raw material prices and the huge increase in shipping costs worldwide has seen prices of all construction material rocket to levels never seen before, please see graph below showing the increase in shipping from china, this is reflected throughout the whole world. Looking ahead I would say to all our regular customers expect more of the same for 2022, raw material prices have stabilised to some degree but shipping is still rising throughout the world but especially in India and China where the majority of imported landscaping material are sourced.
We would advise all of our trade customers to leave themselves a good margin on materials when quoting as they are set to increase again in the final quarter of 2021 and into the first quarter of 2022, hopefully things will then start to settle down but is very difficult to guarantee considering the current state of the world.
Container ship orders have reached an all time high, reaching 229 vessels currently under construction, but the first of these vessels is not set to be finished until 2023, so there is the possibility of price increases well into 2023 and even beyond, so be prepared for the worst.
Landscaping timber such as softwood and oak sleepers are also seeing some considerable increases in cost, this is mainly due to the rapid increase in demand for these materials after lock downs were removed, which has seen demand reach all time high levels pushing the price up considerably. We are expecting further increases over the coming months as we are hearing some of the large producers such as Slovakia have reduced there production in preparation for large price increases late in 2021, but this is just speculation so fingers crossed things have now started to stabilise.
Imported Canadian oak sleepers have also been hit with the tightening of regulation on imported timber from non European countries into the UK after Brexit. All new oak has to be free of sap wood and heat treated in the country of origin to remove the possibility of insect infestation, which is also set to increase the cost and reduce the supply of these materials over the coming months and into 2022. Please see link below from Forestry UK, regarding the tightening of imported timber regulations:
A change in the market
Increased demand in Porcelain Paving has continued throughout 2021, with nearly 50% of our paving sales now being Porcelain. This is only set to increase into 2022, when the price of imported natural stone especially from India will be priced above most of our porcelain paving equivalents. This increased demand for Porcelain paving is not unfortunately isolated to the UK market, as demand for these products has drastically increased through the world. This coupled with the massive increase in shipping costs from the East, has left Porcelain Manufacturers under great pressure to produce in much larger quantities than has been seen before, this massive increase in demand is going to result in extremely long delays in the supply of these products into the UK, so expect delays throughout 2022 from a number of unprepared suppliers.
How we are mitigating these problems for our customers?
A lot of these problems are completely out of our hands, but what we can do is increase our stock holding dramatically to help smooth out some problems everyone has been facing. From the Last quarter of 2021 into the first quarter on 2022 we are looking to double our stock hold of Porcelain paving to levels of around 40,000 sqm. This will not guarantee stock will be available at all times, but will go to some way to improving the situation. These orders are already in place and will start to arrive with us from early November 2021. Please expect a lot of the porcelain products to change over this period as we are moving our supply to different manufacturers to increase the quality of the products and to ensure supply can continue at the current price levels.
Sandstone is a completely different picture however, as everyone in the industry is aware prices of these products has been rising throughout 2021 and the worst of it is still to come I'm afraid, unless there is some improvement in shipping costs in the final quarter of 2021, which is very unlikely. I would expect normal calibrated sandstone paving to be reaching close to £35 per sqm early in 2022 and I don't expect to see any possibility of reductions throughout 2022. This I'm sure will lead to even more people using Porcelain, which will help reduce the pressure on supply, so hopefully it will be more readily available than it was throughout 2021 but just a lot more expensive.
Heading into the final quarter of 2021 we have seen the production of UK sourced timber improve and lead time reduce dramatically. We are going to take advantage of this situation and stock up all our branches with Softwood sleepers in preparation for the spring season to ensure we are holding sufficient stock to meet the needs of our trade customers, as the demand world wide for timber will increase again next year and we are expecting timber supplies generally to be very difficult as the 2022 season progresses.
In general its not looking great in terms of material supplies for the first half of 2022, but we are better prepared now and going forward and we hope to minimise the disruption to all of our trade customers, and offer you all the best possible products at the most competitive prices, when you need them. We would just urge our customers, much as they did this year, to think ahead and place orders early, ensuring you are realistic with your customers about possible price increases between time of quotation and commencement of the works. There is the possibility of things improving from the middle to end of 2022, with shipping prices stabilising and post covid demand on the material supply chain easing, but it's yet to be seen.
Finally I would like to say a big thanks to all our loyal customers who have supported us through another difficult year and we look forward to offering an even better service to you all in 2022.
The NST team
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