At the global level the insulated metallic wire and cable market is set for another year of slow growth. The major concerns at the start of the year over Chinese growth have been replaced with uncertainty in Europe associated with the British referendum on exit from the European Union.
Although the outlook for the near term has not altered significantly, we have yet again reduced our overall estimates for consumption for the remainder of the forecast period." writes Andy Simmonds, editor, Wire & Cable Outlook, CRU in the latest edition of the quarterly Wire & Cable Market Outlook Report.
The impact of 'Brexit' on the UK will be much larger than that on the EU, and even less on the wider global wire and cable market. CRU's revised base case forecast sees volume growth only modestly lower in the near term, though some value impact through currency movements is likely. More generally, the Brexit vote is an acute reminder of the capacity for politics to throw economies and financial markets into turmoil.
In contrast CRU upgraded their forecast for the fibre optic cable market on the back of continued strong demand in China and improved outlook for Western Europe and North America. Despite the growing supply shortages, which are pushing up prices, and increasing lead times, close to double digit growth is still expected globally in this market. CRU expects this strong performance to continue in H2 and as a result we are now forecasting that globally this market will grow by 9.6% this year.
The average price of copper in 2016 is now forecast to fall by 14.4% and the aluminium price forecast to fall by 8.6% and hence CRU is expecting that the total value of the global insulated wire and cable market will fall by over 4%. This would take the market back below the 2010 level, and would mean that the market value will have fallen for five consecutive years since 2011.
A detailed review of the global cable market with a range of detailed statistics can be found in CRU's Wire & Cable Market Outlook, which was published on 2nd August 2016. The report also covers two regions of the world in more detail in each issue with the regions in the latest report being Japan and South America.
In Japan, wire and cable production fell by 2.1% in 2015, following three years of relatively steady growth. Three of the largest drivers, LV energy cable, copper power cable and winding wire, saw a decrease in production of 3.8%, 0.6% and 2.7% year-on-year, respectively. Building wire, vehicle wire and appliance wire constitute the major areas of the LV energy cable sector, and whilst housing starts are showing an increase five months in a row between January and May 2016, automotive light vehicle production is now forecast to fall again following the earthquake in Kyushu.
Localised political and economic instabilities in Brazil and Venezuela meant a contraction in wire and cable production of 6.0% year-on-year to 614,000 tonnes conductor, all other markets remained positive. The economic crises in Brazil and Venezuela are affecting the entire region's cable market, as both countries also have been significant participants in intra-regional trade for many years.
The recession in Brazil has caused significant cutbacks in telecom network construction programs, causing the country's demand for optical cable to decrease by 36% from 4.7 million fibre-km in 2014 to 3 million fibre-km in 2015. This decrease was enough to cause the total for South America to fall by 9%.
Despite the slump in Brazil's production and demand, it remains the region's largest producer, consumer, exporter, and importer of metallic cable and optical cable. This is mainly by virtue of the sheer size of Brazil's economy, which represents almost half of South America's combined GDP.
CRU published the latest edition of its quarterly Wire & Cable Market Outlook Report on August 2, 2016.
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