Reflecting continued economic distress, Denali Intelligence?s T&D Market Index decreased 5.5 percent in the first quarter of 2009 (see Figure 1). Leading the downward pull were underlying commodities, including a 26 percent decrease in crude oil and continued sharp decreases across all base metals. Energy costs posted declines, and diesel fuel prices fell 26 percent in Q1. Metal and energy prices have retreated on eroding demand, both domestic and international. A slow U.S. economy and production cuts in China continued to drive market softness in all base metals, with aluminum seeing the sharpest declines.

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The overall unemployment rate reached 8.5 percent in March, up markedly from 7.2 percent in December 2008. Though more stable than at year-end, the financial markets continue to be questionable, which exacerbates recessionary forces. In turn, these market forces place even more emphasis on corporate cost restraint.

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Looking to 2009, Denali Intelligence expects the T&D Market Index to reflect continued price flattening overall for materials and a slight rise for services as a result of increased heavy construction in response to economic stimulus measures, with an overall decrease of 4 percent on the year.

Market Forecast

• Recessionary forces are expected to continue and intensify, with economic forecasts indicating the United States will begin to recover in mid- to late 2010 at the earliest.
• The Energy Information Administration forecast for 2009 global oil demand was revised down by 1 million barrels per day after a reassessment of gross domestic product assumptions and much lower-than-expected 1Q09 demand data. The pace of contraction is similar to early 1980s recessionary levels.
• The U.S. unemployment rate is forecasted to increase to 9.3 to 10.1 percent in mid- to late 2009.
• Reflective of recessionary and slowing T&D project loads, the Denali Intelligence T&D Market Index expects a 4 percent decrease in 2009 before flattening out in 2010. Services will remain flat across the outlook period, but materials will show resilience.

Denali Intelligence provides subscription-based, category-specific market intelligence designed for utilities sourcing professionals. While the free, abbreviated version of the T&D Market Index offers topline insight regarding 12-month T&D price trends and forecasts, Denali Intelligence subscribers receive detailed trends and forecasts for each of the 11 critical spend categories, as well as the company?s analysis of supply market risks and trends specific to the T&D organization. Call for the full version of the T&D Market Index or other reports at 888-824-8866 or e-mail info@denaliintelligence.com.