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Stone price warning

Throughout much of this year, the main topic of conversation amongst importers and distributors of natural stone paving has been the imminent prospect of hefty price rises and their impact on the trade. The reasons for the price rises are multiple, but shipping has been a major factor, and with the oil price currently edging towards $100 per barrel, we've probably not seen the last increase in shipping costs. Almost every importer consulted has reported shipping costs that have doubled or trebled in just 12 months, from around $800-$900 per container to $2,500-3,000.

Following discussion with a number of contractors over recent weeks, it has become apparent many fail to realise the scale of the price increases the industry is facing, and when the discussion is extended to the major suppliers in the trade, a good number of them are similarly concerned that the message just isn't getting across and some contractors risk being seriously under-priced on jobs next year unless they take note now.

Over the past week Pavingexpert.com has spoken to many of the most important suppliers, to gauge how they saw the industry developing over the next 12 months or so.


stonemarket Geoff Moulton, Sales and Marketing director for Stonemarket told me,
"As you will be aware we are to go up 8.8% on concrete and Trustone products and up to 18% on our other natural products such as Marketstone.
Both, I would agree significant increases. However we have approached it in two ways. The root cause of the large increase in natural entry level product is haulage something no importer is immune from. This has added something just short of £3.00 per square metre to entry level stone, all of which we have absorbed over the year.

This has given us little choice but to pass on some of this in the Jan 08 increase as we expect further increases through the year, and would wish to hold our price as long as possible. Having said that on our Trustone range we have taken the decision to calibrate all our range including the features. This will give us more (square metres of stone) to a container and help dilute the haulage increases, and thereby lower the overall level of increase. There are also significant benefits to the installer, who will be able to rely more on screeded beds.

Concrete products are also facing substantial cement and aggregate price rises. Overall, I do feel we could see a straightening of the market with natural stone seeing several pounds of increase at entry level, while concrete products may not rise quite so much, which could give the cast concrete market a much needed shot in the arm."


global stone Paul Childs, Global Stone's marketing consultant states,
"The cost of shipping from both India and China has increased significantly over the last 12 months due to the sustained growth in demand for shipping from this region of the world. In addition, the majority of shipping lines have reduced the capacity of the containers available from 27 tonne to 20 tonne, exacerbating the situation.
Global Stone have been working closely with our suppliers to limit the scale of increase that we have to pass on to our customers. The market research that we have conducted has confirmed that the natural stone paving market will continue to enjoy significant growth during 2008. Natural stone remains the first choice paving material for garden designers, landscapers and consumers due to its durability, natural colour and the atmosphere it can create inside or outside the home.

The price point of natural stone paving within the market remains very competitive as stone prices have not increased for over four years where as concrete products have seen significant annual price rises over recent years due to the increased cost of raw material."


CED Michael Heap, MD at one of the country's largest importers, CED based in Essex, points out that the practice of pricing both stone and shipping in US dollars has also had an impact on the cost to everyone in the trade. With a weak US dollar and the pound and the Euro being so strong in comparison, every drop in value of the dollar forces up the price to European consumers.

midland slate Steve Saunders at Midland Slate and Tile, who supply much of the stone to builder's merchants chains is slightly more optimistic.
As I think everyone is aware shipping has doubled in price this year. Four GRI's (General Rate Increases) have come in at various times and stayed each time, the first time for many years this as happened.
However, we feel shipping costs have falling slightly over recent weeks which may be due to the fact that containers and vessel space is readily available because everyone is holding large stocks due to bad weather in July and August.

We have a very good relationship with our suppliers who we know give us excellent purchasing rates. However we are being told certain products will increase in price for next year, something in the region of 5%.


Some suppliers have been feeding through price increases on a "as-it-hits-them" basis, while others have been absorbing them until the annual New Year revisions, but the scale of increases that are in the pipeline are going to come as a shock to some contractors, with some suppliers openly quoting price rises of almost 30% as of January 1st. Others have managed to keep the increases more reasonable, but even so, the days of cheap imported stone are drawing to a close.

rock unique Chris Van Halewyn at independent importer Rock Unique based in Sevenoaks expects a similar scale of price increases to other suppliers, and raises an important point about just who benefits from these rises.
"The huge increase in shipping costs will inevitably push up the price of stone products, in general by £3 to £6 pounds per square metre. Like many in the industry I have absorbed the inching up of prices over the last few years but can no longer do so. I have always paid a fair price for product that I know to be ethically sourced (see blog). It seems unfair that an overwhelmingly large proportion of the increase in price is due to demand driven price increases in shipping costs, resulting in windfall profits for shipping companies, rather than to the Indian workers.

One of the consequences of higher shipping prices may be that more expensive products will be seen as better value for the perverse reason that the instead of being, say, 3 times the prices of the cheapest products they'll end up being only twice the price -despite being more expensive in real terms. The other effect is that mid value products from elsewhere in the world (including Europe and UK), as well as value added products from India, that are less affected by transport increases will be able to more effectively compete on price with what were much cheaper far eastern products. That said, even at higher prices Indian sandstone will still represent fabulous value for money for an excellent product."


marshalls Rory Kendrick, Managing Director for Natural Stone Paving at Marshalls Natural Stone, echoes the concerns raised by Rock Unique:
"In the past year the industry has seen significant price increases relating to the import of natural Indian sandstone materials. The key elements of this are a 5 - 10% increment in production cost and inland haulage, plus the doubling of shipping overheads for a 20ft heavy duty container in to UK ports.

Due to this we can foresee the consumer and installer really having to start to evaluate their material choice. As well as considering the issue of whether it is ethical sourced and its carbon footprint, cost for the first time in this market could increase demand for a high-quality reconstituted stone product.

However to maintain the levels of market share we are proactively working alongside our sole Indian supplier to improve production and product. This year we have introduced a stunning Diamond Sawn Stone in our Haworth Moor range and re-engineered existing products. A good example of this is calibrating the product range to ensure quick and easy installation; saving the installer time and cost on site."


bradstone Bradstone is increasing the price of Indian stone from January 2008 as a result of a significant increase in shipping costs over the past 12 months.

Neil Richardson, Divisional Director for Domestic Products, said:

“We regret the increase, but Indian stone has been at unsustainable prices and it was inevitable prices would have to increase to reflect the true cost of sourcing ethically-produced natural stone.”

Overall, the general impression is that prices are going to increase by more than most contractors realise. Most suppliers readily expect four or five quid per square metre, with possible more increases over the course of the year. Those with a hand in concrete products quietly anticipate some renewed interest in those materials that have suffered badly over the past decade as the imported stone ate into their traditional market.

The era of cheap natural stone may be drawing to a close. Make sure you're not under-pricing those jobs for the spring!

ruler

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