arabcab presentation cru

8/8/2019 Arabcab Presentation CRU

1/24

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


2/24

Presentation Structure

1 2009 Global Market Dimensions

2 Regional Trends

3 Outturn for 2010 and Beyond

4 Some Thoughts on the Future


3/24

Global Market Fell Sharply in 2009

0

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


4/24

Fibre Optic Cable Market Continued to Grow in 2009

0

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


5/24

Global Insulated Wire & Cable Market Worth Just OverUS$122bn in 2009

0

40000

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


6/24

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

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


7/24

World Copper Cable Consumption - Global Market Enters

Recession in Q4 2008

-18

-16

-14

-12-10

-8

-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


8/24


9/24

Power Cable Sector Best Performer After Fibre Optic

-25

-20

-15

-10

-5

0

5

10

15

20

LV Energy CopperPower

AluminiumPower

Telecom Data WindingWire

Fibre OpticData: CRU

Year-on-year % change in volume in 2009


10/24



2 Regional Trends




11/24

-30

-25

-20

-15

-10

-5

0

5

10

15

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


12/24

China Accounted For Over a Third of Global Metallic Cable

Output in 2009

Data: CRU

0

5

10

15

20

25

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


13/24

Indian Cable Market Edges Higher in 2009

Data: CRU

0

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.


14/24

Russian Metallic Cable Production Collapses in 2009

Data: CRU

0

50

100

150

200

250

300

350

400

450

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.


15/24

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%


16/24



2 Regional Trends




17/24

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.


18/24

-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


19/24



2 Regional Trends




20/24

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.


21/24

-5

-4

-3

-2

-10

1

2

3

4

5

6

7

8

9

10

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.


22/24

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.


23/24

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.


24/24

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]

arabcab presentation cru

Documents