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31 Mount Pleasant, London WC1X 0AD UK
Tel +44 20 7903 2000 Fax +44 20 7837 0976
www.cruanalysis.com
LONDON | BEIJING | PHILADELPHIA | WASHINGTON
Global Cable Market Review
Rob Daniels Principal Consultant, CRU
Presentation to 6th Arabcab Conference
Beirut, 3 4 May 2010
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Presentation Structure
1 2009 Global Market Dimensions
2 Regional Trends
3 Outturn for 2010 and Beyond
4 Some Thoughts on the Future
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Global Market Fell Sharply in 2009
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5000
10000
15000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Winding Wire
Communication
Energy
000 tonnes conductor
Data: CRU
Growth of just 1.2% in2008
Average growth of 5.3%over the period 2003-07.
Fall of 7.7% in 2009
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Fibre Optic Cable Market Continued to Grow in 2009
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10000
20000
30000
40000
5000060000
70000
80000
90000
100000
110000
120000130000
140000
150000
160000
170000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
000 fkm
Data: CRU
Market Collapses in2002
Boom in Long Distance Sector Strong Growth Since 2005
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Global Insulated Wire & Cable Market Worth Just OverUS$122bn in 2009
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80000
120000
160000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Winding Wire
Communication
Energy
US$ million
Data: CRU
2008 market on apar with 2007 dueto little volumegrowth and slightly
lower raw materialprices, but 23.6%fall in 2009 due tolower raw materialprices and lowervolumes
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7000
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10000
Copper
Aluminium
Copper Price Continues its Upward Path
Data: LME
US$/tonne
Copper price forecast:
2010 US$7,300/tonne
2011 US$7,400/tonne
2009 average copper price US$5170/tonne
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World Copper Cable Consumption - Global Market Enters
Recession in Q4 2008
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-16
-14
-12-10
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-6
-4
-2
0
2
4
6
8
10
12
Data: CRU
y-o-y % changeGlobal Recession 2004 Sees Very Strong Growth
The End of 23 Quartersof Continuous Growth
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Power Cable Sector Best Performer After Fibre Optic
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-20
-15
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0
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15
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LV Energy CopperPower
AluminiumPower
Telecom Data WindingWire
Fibre OpticData: CRU
Year-on-year % change in volume in 2009
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Presentation Structure
1 2009 Global Market Dimensions
2 Regional Trends
3 Outturn for 2010 and Beyond
4 Some Thoughts on the Future
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N. America West Europe East Europe N.E. Asia China Rest of the
World
2006
20072008
2009
Year-on-year % change in metallic cable consumption volume
China has Continued to Grow but Big Falls in the
Developed World
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China Accounted For Over a Third of Global Metallic Cable
Output in 2009
Data: CRU
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10
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30
35
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
China USA Japan
Percentage
Shares of Global Production for the Three Largest Producers
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Indian Cable Market Edges Higher in 2009
Data: CRU
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100
200
300
400
500
600
700
800
2005 2006 2007 2008 2009
Winding Wire
Series3Internal Telecom/Data
External Copper Telecom
Aluminium Power Cable
Low Voltage Energy
000 tonnes conductor
The Indian metalliccable market grewby 2.7% in volumein 2009
India could becomethe fastest growingmajor market,overtaking China,in a few years.
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Russian Metallic Cable Production Collapses in 2009
Data: CRU
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50
100
150
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2004 2005 2006 2007 2008 2009
Winding WireInternal Telecom/DataExternal Copper TelecomAluminium Power CableCopper Power CableLow Voltage Energy
000 tonne conductor
Russian metallic cableproduction fell by 34.3%in 2009 to 254,000
tonnes conductor.
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0
500
1,000
1,500
2,000
2,500
2005 2006 2007 2008 2009
Winding Wire
Internal Telecom/Data
External CopperTelecomAl Power Cable
Copper Power Cable
LV Energy
000 t conductor
North American Production Continues to Fall
Data: CRU
North American metallic
cable production fell by22.4% in 2009.
Fibre optic cableproduction fell by 16.5%
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Presentation Structure
1 2009 Global Market Dimensions
2 Regional Trends
3 Outturn for 2010 and Beyond
4 Some Thoughts on the Future
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Outlook for 2010 and Beyond
Whilst the recovery from the global recession remains fragile the fact that mostmarkets have stabilised and some modest growth is starting to be seen meansthat for 2010 was are predicting a 5.9% rise in metallic cable consumption.
We are forecasting that growth in China will slow in 2010 compared to 2009, butfor most other markets 2010 will prove to be a much better year after the sharp
falls in 2009.
In the fibre optic cable sector a slowdown in China will not quite be offset bygrowth in many other markets and as a result global demand is forecast to fall by2.5%.
We are forecasting that the winding wire sector will see the strongest growth in2010, with the power cable sector the second weakest after external coppertelecom cable.
We are forecasting that global metallic cable market growth will peak in 2011before moderating in 2012 and 2013. For Europe and North America the metalliccable market will still not have regained pre-crisis levels even by 2013. The fibre
optic cable market will remain relatively stable in 2012 and 2013.
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-30
-25
-20-15
-10
-5
0
5
10
15
2009 2010F
N. America West Europe
East Europe N.E. Asia
China Rest of the World
Year-on-year % change in consumption volume
Growth Forecast for All Major Regions in 2010
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Presentation Structure
1 2009 Global Market Dimensions
2 Regional Trends
3 Outturn for 2010 and Beyond
4 Some Thoughts on the Future
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Factors that Will Shape Industry Evolution
The current recession has served to accelerate the rising importance ofAsia within the global metallic cable industry.
For many parts of the Western World total metallic cable productionvolumes are forecast to never regain previous peaks. Thus further
industry rationalisation looks inevitable.
As the cable industry expands in developing countries, thesemanufacturers will look to become more international players as theirhome markets mature.
Increased raw material price volatility is forecast, and so cablecompanies will need to be able to cope with this.
Globalisation amongst customers is also increasing. This is expected toresult in more co-ordinated purchasing by large international companieswhich will be looking to take advantage of their purchasing power.
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H12002
H2 H12003
H2 H12004
H2 H12005
H2 H12006
H2 H12007
H2 H12008
H2 H12009
US/Europe N.E. Asia
Average Operating Margin %
The Large US and European Cablemakers have been
Outperforming those from N. E. Asia in the Last Three Years
US/Europe data is average of General Cable, CommScope,Encore, Nexans, Prysmian and Draka.
N.E.Asia data is average of Sumitomo Electric, Furukawa,Hitachi Cable, Fujikura, Taihan and Pacific Electric.
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How Have Other Regions Dealt with Overcapacity?
In North America, Western Europe and North East Asia companies have had to faceovercapacity in the face of falling demand.
In North East Asia the industry has stayed with essentially the same structure but marketdiscipline has been well maintained.
Even with this market discipline, as the previous chart showed, profitability has in generalbeen lower than in Western Europe and North America, so CRU believes that the cableindustry in Asia could learn from what has happened in North America and WesternEurope.
In Western Europe and North America the industry has consolidated to leave fewer largeplayers and companies have become more focussed on specific product sectors rather
than trying to compete in all market sectors.
In Asia there has been little industry consolidation and many of the leading manufacturersremain generalists with a wide product range.
This presents a potential opportunity for focused specialists to emerge in developingcountries as these markets become more mature.
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Reasons to Be Optimistic About Future Cable Market Growth
As the recovery from the recession gathers pace we believe there are anumber of factors which lead us to be optimistic about future growth in wireand cable demand. These include:
Growth in wind energy and other green and nuclear energy generation and other distributedgeneration.
Roll out of smart grids and other investment in ageing grids in the developed world.
Increased grid interconnections.
Introduction of energy efficiency regulations, which will typically require more or larger cableto be used.
Increased investment in the extraction of oil and other commodities in the face of growingdemand and high prices.
Growth in construction of high speed rail networks to compete with air travel.
Increase in the production of electric vehicles
Strong growth in demand for all types of electrical and electronic equipment and appliancesaround the world
Continued investment in telecom networks.
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31 Mount Pleasant, London WC1X 0AD UK
Tel +44 20 7903 2000 Fax +44 20 7837 0976
www.cruanalysis.com
LONDON | BEIJING | PHILADELPHIA | WASHINGTON
Thank You For Your Attention
Presentation to 6th Arabcab Conference
Beirut, 3 4 May 2010
[email protected] + 44 20 7903 2118
mailto:[email protected]:[email protected]