NEW YORK Encore Wire
Corp. is positioned to meet improving demand in the
construction industry, although the company anticipates that it
will be a slow recovery, chief financial officer and vice
president Frank Bilban told AMM.
"The bad news is that the
building wire industry, which is part of the construction
industry, is probably still in one of the worst depressions in
decades," Bilban said. "The good news, however, is it started
about six or seven years ago, so weve got (those) years
January statistics from the U.S.
Census Bureau support the argument that the domestic
construction recovery has legs. Building permits for private
homes increased 1.8 percent to 925,000 in January from 909,000
the previous month, and while housing starts dropped 8.5
percent to 890,000 from 973,000 in December, last months
housing starts were still 23.6 percent higher than 720,000
starts in January 2012.
"I think we are seeing signs of
lifegreen shoots, if you willthat may indicate that
the worst of the winter is behind us," Bilban said.
McKinney, Texas-based Encore is
"poised to do quite well in the upcoming cycle," he said,
pointing to the companys new aluminum wire facility in
McKinney, which began producing in the fourth quarter.
President and chief executive
officer Daniel Jones noted during a conference call with
analysts last week that aluminum building wire sales hit 5
percent of the companys total wire sales in the fourth
quarter, and he expects that number to increase over the next
two years (
amm.com, Feb. 21).
Aluminum sales "certainly could
increase," Bilban said, although he declined to offer capacity
numbers or production goals as all of the companys major
competitors are private and therefore "get to look completely
under our skirt" as Encore is public.
Encore made the decision to
branch into aluminum wire after researching its customers
Aluminum substitution in wire is
an ongoing trend, given the cost difference between copper and
aluminum. Copper prices are currently close to $8,000 per tonne
compared with less than $3,500 before 2005, whereas aluminum
has mostly traded between $1,500 and $2,500 per tonne in the
Bilban is not convinced that the
price differential will stay that wide forever, however. "Since
2005, theres been a big difference. Aluminum and copper
prices have a pretty big spread right now," he said. "But I
dont think it will last forever."
Cash copper traded at $7,865 per
tonne in the official session on the London Metal Exchange Feb.
25 vs. a cash aluminum price of $2,004 per tonne.