US copper wire industry in 'depression:' industry official
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,
"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, email@example.com
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