ORLANDO, Fla. The
domestic wire rod market will continue to get a boost from
growth in private and residential construction, but larger
infrastructure projects will be a little slower in getting off
the ground this year, market participants say.
Positive growth is being seen in
smaller construction projects, with housing permits increasing
1.8 percent in January to an annual rate of 925,000, the
highest level since June 2008, according to attendees at the
American Wire Producers Association (AWPA) annual meeting in
Orlando, citing U.S. Census Bureau data. Spending on
nonresidential construction, however, grew only 1 percent in
2012 from the previous year.
"Just this morning, weve
already gotten some mixed news that I view as largely
positive," Ken Simonson, chief economist for the Associated
General Contractors of America, told the AWPA meeting Feb. 20.
He said that while housing starts and building permit figures
show there was a pullback on the multifamily side, there
continues to be "spectacular" gains in both permits and starts
for single-family homes.
Total construction spending is
likely to be up 5 to 10 percent in 2013 over last year,
Simonson said, with private nonresidential construction likely
to be up 10 to 15 percent and residential construction up 10 to
15 percent. But spending on public construction projects is
likely to be down 2 to 5 percent, he said.
The outlook for growth in 2013
for some larger infrastructure projects is rosy, Simonson said,
with increasing shale gas plays and the Panama Canal expansion
project likely to lead to growth for the steel industry.
Natural gas has "tremendously
diversified effects on construction and on manufacturing," he
said. "Downstream (for the wire industry), it seems every week
there are new announcements about plants that are being built
to process natural gas liquids, steel plants that are using
natural gas as a fuel, power plants that are replacing
coal-fired plants, enormous export terminals and, perhaps most
pervasive, the possibility that well soon see fueling
stations across the country."
Overall construction spending
was up 9 percent in 2012 compared with 2011, Simonson said.
Sectors with stronger growth in spending included power and
natural gas, with 11-percent growth to $94 billion, and
transportation, which saw a 14-percent increase in spending to
Some market participants
expressed skepticism about the positive outlook, however,
pointing to Census data showing a 4-percent decrease in highway
maintenance spending in 2012 compared with the previous
"I continue to see slow, steady
growth," a wire fabricator source told AMM. Housing
starts are positive, but bigger projects have continued to lag,
"I think its going to be a
second-half-of-the-year issue," another wire fabricator source
told AMM. "Im not bullish on roads or
infrastructure. Our roads got a D-minus (rating from the
American Society of Civil Engineers) and its not
improving. Our roads and bridges are just horrible."
Simonson echoed the sentiment.
"The medium-term outlook beyond the next few months is not at
all healthy for highway spending," he said.
AWPA meeting attendees said that
a Congress crippled by partisan wrangling could continue
putting off the issue of repairing the infrastructure.
"I think budget talks are going
to weigh on people if Congress continues to punt this down the
road," the second wire fabricator source said.