Fort Lauderdale, Florida (Platts)--14Nov2012/454 pm EST/2154 GMT

The US construction industry -- the lifeblood of sellers of copper wire used in building -- is not in recession, but in a "depression," a top copper wire industry official said Wednesday.

Copper wire sales volumes had plunged 50%-60% on the back of the US construction slump, said Frank Bilban, vice president-finance at producer Encore Wire, at the American Copper Council meeting in Ft. Lauderdale, Florida.

"We're bumping along at the bottom," said Bilban, referring to the current state of the US economy. "The key is getting people to buy houses and the key to that is people having jobs."

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The US economic crisis that began with the mortgage meltdown in 2008-2009 was "remarkably bad in terms of shedding jobs," he said.

And growing unemployment lines in the US are continuing to slam the US housing market and biting into demand for construction related products like copper wire, Bilban said.

For example, residential construction, which Bilban said typically rebounded before commercial construction, was still down 1.4%, despite the fact that the US government pronounced the recession officially over in 2011.

Overall, the US copper wire industry in 2012, similar to last year, is "flat to 10% down," Bilban said.

But there are some scattered signs that things are improving for the embattled industry, Bilban said. Housing starts are beginning to trend upward, he said.

"That's the good news," Bilban said. "[The housing market ] is slowly but surely recovering," he said. But on the downside, while US housing starts were at an annualized rate of about 500,000, typically about 300,000/year in housing starts "disappear," when new building projects are abandoned, he said.

Also on the positive side, Bilban said, while full-on construction might not be booming, in building repair/remodeling "the forecast is a lot stronger." Also, builders' inventories are now at record lows, he said, in the event of a consumer demand uptick, builders will have to restock.

Meanwhile, Bilban said Encore Wire had weathered the hard economic times by having all of its operations in a single location, which he said helped reduce freight and trucking costs and also minimized the risk of damaged goods and helped reduce inventory requirements.

Offering another key strategy for the company, Bilban said: "We try to enter any market with a higher price than what's out there now."

Then, the focus shifts to one of "value added" in Encore's products. The cost of the company's raw material -- copper cathode -- was "overwhelming the majority of our costs," he said.

--Laura Gilcrest, laura_gilcrest@platts.com
--Edited by Richard Rubin, richard_rubin@platts.com

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