Metal fabricators face lower '09 demand, pricing: report (from Metal Bulletin)(subscription required)

CHICAGO 15 January 2009 22:10

While facing lower demand and pricing in the near term, metal fabricators could benefit from any increase in government-led infrastructure spending, according to an industry review of basic materials markets by McGladrey Capital Markets LLC.

The middle-market investment bank based in Costa Mesa, Calif., said in its research report that such spending "is expected to cause an increase in demand for metals and an improved outlook for these commodities in 2009 and 2010."

Metal fabricators operating in the medical, communications, life sciences and defense segments were somewhat insulated last year compared with those serving the automotive, heavy construction and retail electronics segments, according to McGladrey's analysts.

The global economic slowdown is impacting raw material prices, with steel, copper and other metal pricing declining significantly over the past three months, they said, adding that raw material prices "are expected to remain weak throughout the first half of 2009 as economic weakness leads to lower demand in most manufacturing sectors."

The metal fabrication market saw growth of 4.5 percent in 2007 and 1.7 percent in 2008, but is expected to see a 1.9-percent contraction this year before inching up 0.5 percent in 2010, according to the review