As the number of cases and deaths worldwide continue to grow, many of us are now living under some form of lockdown. Looking beyond the human tragedy, global economies and all types of industrial activities have been severely impacted, and metallic wire and cable industry is no exception.
The global wire and cable market is in turmoil, driven by a pronounced weakness across all cable end-use sectors. With automotive manufacturers temporarily shutting plants, construction projects delayed, and industrial activities grinding to a halt, the collapse in cable demand is not limited to any single region, but widespread. Indeed, CRU forecasts total global cable demand to contract sharply this year, at a rate only previously seen during the Global Financial Crisis (GFC).
CRU have downgraded our cable consumption forecasts across all regions and over the entire forecast horizon. The change primarily reflects the virus-induced slowdown in manufacturing and construction activity. Looking at specific regions, ‘Rest of the World’ and Europe have seen the largest percentage downgrades, with 2020 demand being cut to near double-digit declines.
Covid-19 will not equally impact all cable end-use sectors. CRU expects automotive demand to be the most severely hit, with consumer demand remaining weak over the medium term. Construction and industrial sectors are expected to follow, with the utility sector, expected to be the most protected sector. As a result, LVE cable demand will be the most affected, accounting for nearly half of the total 2020-2024 downgrade.
Looking forward, it is important to highlight that we do anticipate a recovery in world total cable demand next year in our base case. However, we do not expect cable demand to reach 2019’s level until 2023, in terms of conductor tonnes.
Optical Fibre: Covid-19 stifles cable demand in 2020
The overarching impact of Covid-19 relates to a unified sharp pullback in demand across all regions, with the exception of the US. The collapse in demand can, by large, be attributed to Covid-19 related disruptions to cable deployment plans with carriers globally facing restrictions and reduced availability of skilled labour.
With regards to China, the heavy-handed restrictions and lockdown measures implemented by the central government have paid off as the country has begun to return to some form of normality as of early-April. Whilst we have witnessed a significant year-on-year reduction in both cable supply and demand in Q1, following ‘new infrastructure’ centric stimulus measures, we believe much of this ‘lost ground’ will be made up in H2.
Covid-19 induced weakness is certainly true for the European market as a whole. Whilst the impact to demand may vary from country-to-country across the continent, CRU understands cable deployments in specific markets such as France, Spain, and Italy to have fallen sharply in Q1. Subsequently, CRU have significantly revised down our 2020 cable demand forecast.
India is another key market that has seen pronounced downgrades in total 2020 forecast optical cable demand. The strict lockdown imposed on 25 March greatly impacted the fibre industry, both from a demand and supply perspective. As a result, deadlines for large-scale connectivity programs like the BharatNet scheme have been extended into 2021 and it looks almost certain now that 5G spectrum auctions will also be postponed until next year.
Meanwhile in the US, cable demand started the year on a strong footing. Reversing the trend witnessed in late-2019, CRU understands cable deployments to have grown more than 5% in Q1. Expectations are for a marginal contraction in demand in Q2 in response to tightened measures and limitations on deployment capacity. However, an uptick in investment and the protected nature of the industry will support healthy growth in the US this year as a whole. Indeed, CRU expect the US to be one of the best performing regions this year in terms of optical cable demand.
We cover the above and more detailed research in our Metallic Wire and Cable Market Outlook and Telecom Cables Market Outlook. Here we include demand, supply (plant by plant), trade and price forecasts for the next five years broken down by major regions and countries.
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