As this is written, the current price of aluminium sits at $3265 per ton. That is a whisker away from hitting a record high. So just as some parts of the market and supply chain that connect with fenestration appears to be settling down, aluminium is running red hot.

Aluminium to hit $4000

It looks like we won’t just be seeing new highs, but breaking a whole new pricing barrier. Banking giants Goldman Sachs predict that within 12 months the price of aluminium will hit $4000. They see that price due to ongoing supply chain disruption around the world and surging demand for the product.

For the fenestration sector, this is going to pose a problem. It does seem that in some areas the market may be settling down a little. Glass prices have come down ever so slightly, and the pace of resin increases has slowed. If you’re an aluminium systems company, or you make hardware, or you use aluminium within your wider product range, these raw material prices are going to cause you concern.

Even at prices around $3300, we’re going to see inflationary pressure. At $4000 that pressure will be even higher. Yes, you can hedge, but if you hedge now or in the next few weeks you’re still going to be buying at higher prices. Those prices will then filter down the supply chain to fabricators, installers and then on to the homeowner who is ultimately the one who will have to pay those higher prices.

The prediction of aluminium hitting $4000 within the next 12 months indicates that higher prices and inflation in this part of the market is going to be much longer-term than many had hoped. Businesses in the aluminium part of UK fenestration need to be acutely aware of the risk of rising prices for a longer period of time and work that into their plans for the rest of 2022.

Year of rising prices

Whilst we are seeing the pace of rises in PVCu and resin slow down, albeit not fall back, and glass prices seemingly levelling off, there are other things in play which will keep the foot down on the inflationary peddle.

The cost of aluminium is one of them. The rising cost of gas and electricity is another. We have just seen a huge 54% price increase in the price cap when it comes to household bills. But remember that businesses are not protected by a price cap and manufacturers of all kinds have felt every single penny of increase since they began. This has led to situations such as Pilkington which has seen their monthly energy bills rise from £1m to a staggering £8m per month. Increases like that have a huge impact on any business and will stifle any plans that were made prior to having to pay these bills.

We have been warned that prices for utilities will continue to rise further, with the price cap for homeowners rising again in October. As you can imagine, businesses won’t be able to absorb these costs and these increases will be passed on down to the supply chain, where again, the homeowner will be the one to pay the higher cost.

Another factor to consider is the rising cost of labour. We are all acutely aware of how short we all are when it comes to skilled people in fenestration. What the industry is now doing is poaching from each other, using higher wages as the bait. We’re not bringing in fresh hands to take the strain, instead, we are simply recycling the same people round and round the same industry. This is not a healthy use of the labour force and will only add further pressures not only on the costs to a company to attract staff but on the labour force overall.

I do think 2022 will be a year where we see prices continue to rise. I don’t see them being at the same pace as last year in certain areas, but as I have explained above, some parts of the industry will continue to be hit by a sustained rise and we all need to factor this in when we look at what we are charging our customers for our products and services.

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