Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Richard Wesolowski – Sidoti & Company.
Richard Wesolowski – Sidoti & Company
[audio break] metals here in the third quarter but can you discuss the general trend in your hollow pricing? Are you just entering the meat of the competitive pressure or are you already deep into it or is it mostly behind you?
Gregory Kenny
You didn't come on for the first segment so I heard what's happening on hollow pricing and that's all.
Richard Wesolowski – Sidoti & Company
That's the gist of the question.
Gregory Kenny
Volumes are very weak. We're seeing Europe weaken further and the U.S. and Canada seem to be bouncing along at a pretty low bottom. Some signs of life overseas. The competitive pressure really depends upon the market and the behavior of those competitors, but broadly, I expect capacity utilization down as low as we've seen it, we'll continue to feel sharp pressure and obviously it's compounded because we've had, not only do we have a wire and cable demand globally down probably 30% from prior year, which obviously would back our capacity utilization down into the 50% or possibly 60%, which are very low numbers.
But we also now have seen aluminum go from $0.70 to $0.90 and we've also seen copper spike up dramatically over the last couple of weeks so we're trying to raise price. Obviously if you don't recover these kinds of movements, its suicide and people can't survive that. But we expect that as we saw in the last cycle, this takes time and now we're dealing with very fast movement in a 50% to 60% capacity utilization environment.
Again, that depends of the product and the market, but broadly, it's way off. So I think we're in that pricing trough and I hope it gets better. We work every day to get paid fairly for our product, but I think it will be sloppy for awhile.
Richard Wesolowski – Sidoti & Company
Am I correct in assuming that that 3Q earnings guidance should be considered atypically low relative to what you would otherwise expect in this recession owing to the lag in pricing relative to metals?
Gregory Kenny
We really haven't seen in my lifetime a recession that looks like this, but as I've been doing this since the early '80's and I've seen at least three different slowdown and nothing looks quite like this. But I think the third quarter in the last period has always been a bit weaker than the second, though I think there was actually one year where it was a bit stronger. But generally it's the second strongest quarter of the year.
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