ABOUT TO MORE EXPENSIVE GLASS PRICES

Just as other parts of the fenestration supply chain begin to bed in some stability, we are still seeing volatile conditions in the glass part of our market, with multiple warnings that the cost of glass is going to rise further in the coming months. Inflation looks like it’s here to stay for a while yet.

Glass prices to rise

In what is becoming a trend of upfront commentary, Clayton Glass issued a news release via its website to explain why the cost of glass is very likely to be going up in the next few months. But I will paraphrase some of the areas they mention.

The first place to start is the war in Ukraine. Russia has essentially turned off the gas taps to Europe in response to sanctions. According to Clayton Glass, 20% of the cost of glass production is gas. The UK only buys a very small percentage of its gas from Russia, somewhere around 4% or so. However, the taps being turned off to Europe have sent the cost of wholesale gas soaring across the board. That then filters down the supply chain as higher production costs.

Again on the energy front, the crippling costs of gas and electricity are hitting businesses hard. Companies across the country, including within our sector, are now being hit with eyewatering increases in energy bills as their fixed-term contracts come to an end. New fixed-term deals are becoming harder to find, and it’s worth remembering that the energy price “cap” only applies to homes and not businesses.

New Prime Minister Liz Truss has promised a package that will be announced tomorrow which will spell out the help for both households and businesses to try and limit the damage of future increases, but for some companies where contracts are already finished, that help will come too late.

The energy surcharge, which was introduced by the major glass systems companies, now accounts for 25-30% of the additional cost of glass, according to Clayton Glass. That surcharge has risen sharply to 24p/kg and is forecast to rise further.

Wage inflation is now being mentioned more often. Companies are raising wages to help their staff with the cost of living. But this then feeds into the general inflation spiral, and companies have to pass on those wage increases to their own customers to be able to pay for it.

The long and short of it is there are at least half a dozen issues in play right now and all are contributing to rising costs of glass production. So even if there is a generous energy price package announced on Thursday by Liz Truss, it may not be enough to stem the momentum of inflation in our sector.