Global Cable Market Review pptx

31 Mount Pleasant, London WC1X 0AD UK
Tel +44 20 7903 2000 Fax +44 20 7837 0976
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LONDON | BEIJING | PHILADELPHIA | WASHINGTON
Global Cable Market Review
Rob Daniels – Principal Consultant, CRU
Presentation to 6
th
Arabcab Conference
Beirut, 3 – 4 May 2010
Presentation Structure
1 2009 Global Market Dimensions
2 Regional Trends
3 Outturn for 2010 and Beyond
4 Some Thoughts on the Future
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% in
2008
Average growth of 5.3%
over the period 2003-07.
Fall of 7.7% in 2009
Fibre Optic Cable Market Continued to Grow in 2009
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
110000
120000
130000
140000
150000
160000
170000

1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
‘000 fkm
Data: CRU
Market Collapses in
2002
Boom in Long Distance Sector Strong Growth Since 2005
Global Insulated Wire & Cable Market Worth Just Over
US$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 a
par with 2007 due
to little volume
growth and slightly
lower raw material
prices, but 23.6%
fall in 2009 due to
lower raw material
prices and lower
volumes
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
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 % change
Global Recession
2004 Sees Very Strong Growth
The End of 23 Quarters
of Continuous Growth
LV Energy Cable is the Largest Product Sector by Value
LV Energy
37%
Power Cable
30%
Telecom Cable
4%
Data Cable
10%
Winding Wire
13%
Fibre Optic
6%
Data: CRU
Definitions
LV Energy – Rated below 1kV
Power Cable – Rated 1kV and Above
Telecom - External copper telecom cable
Data – All types of cable for data transmission
Winding Wire – All enamelled wire and
covered conductors
Fibre Optic – All fibre optic cables
Total Market Value US$122bn
Power Cable Sector Best Performer After Fibre Optic
-25

-20
-15
-10
-5
0
5
10
15
20
LV Energy
Copper
Power
Aluminium
Power
Telecom
Data
Winding
Wire
Fibre Optic
Data: CRU
Year-on-year % change in volume in 2009
Presentation Structure
1 2009 Global Market Dimensions
2 Regional Trends
3 Outturn for 2010 and Beyond
4 Some Thoughts on the Future
-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
2007
2008
2009
Year-on-year % change in metallic cable consumption volume
China has Continued to Grow but Big Falls in the
Developed World
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
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
Series3
Internal Telecom/Data
External Copper Telecom
Aluminium Power Cable
Low Voltage Energy
‘000 tonnes conductor
The Indian metallic
cable market grew
by 2.7% in volume
in 2009
India could become
the fastest growing
major market,
overtaking China,
in a few years.
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 Wire
Internal Telecom/Data
External Copper Telecom
Aluminium Power Cable
Copper Power Cable
Low Voltage Energy
‘000 tonne conductor
Russian metallic cable
production fell by 34.3%
in 2009 to 254,000
tonnes conductor.
0
500
1,000
1,500
2,000
2,500
2005
2006
2007
2008
2009
Winding Wire
Internal Telecom/Data

External Copper
Telecom
Al Power Cable
Copper Power Cable
LV Energy
‘000 t conductor
North American Production Continues to Fall
Data: CRU
North American metallic
cable production fell by
22.4% in 2009.
Fibre optic cable
production fell by 16.5%
Presentation Structure
1 2009 Global Market Dimensions
2 Regional Trends
3 Outturn for 2010 and Beyond
4 Some Thoughts on the Future
Outlook for 2010 and Beyond
• Whilst the recovery from the global recession remains fragile the fact that most
markets have stabilised and some modest growth is starting to be seen means
that 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, but
for 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 by
growth in many other markets and as a result global demand is forecast to fall by
2.5%.
• We are forecasting that the winding wire sector will see the strongest growth in
2010, with the power cable sector the second weakest after external copper

telecom cable.
• We are forecasting that global metallic cable market growth will peak in 2011
before moderating in 2012 and 2013. For Europe and North America the metallic
cable 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.
-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
Presentation Structure
1 2009 Global Market Dimensions
2 Regional Trends
3 Outturn for 2010 and Beyond
4 Some Thoughts on the Future

Factors that Will Shape Industry Evolution
• The current recession has served to accelerate the rising importance of
Asia within the global metallic cable industry.
• For many parts of the Western World total metallic cable production
volumes are forecast to never regain previous peaks. Thus further
industry rationalisation looks inevitable.
• As the cable industry expands in developing countries, these
manufacturers will look to become more international players as their
home markets mature.
• Increased raw material price volatility is forecast, and so cable
companies will need to be able to cope with this.
• Globalisation amongst customers is also increasing. This is expected to
result in more co-ordinated purchasing by large international companies
which will be looking to take advantage of their purchasing power.
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0
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H1
2002
H2
H1
2003
H2
H1
2004
H2
H1
2005
H2
H1
2006
H2
H1
2007
H2
H1
2008
H2
H1
2009
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.
How Have Other Regions Dealt with Overcapacity?
• In North America, Western Europe and North East Asia companies have had to face
overcapacity in the face of falling demand.
• In North East Asia the industry has stayed with essentially the same structure but market
discipline has been well maintained.
• Even with this market discipline, as the previous chart showed, profitability has in general
been lower than in Western Europe and North America, so CRU believes that the cable
industry in Asia could learn from what has happened in North America and Western
Europe.
• In Western Europe and North America the industry has consolidated to leave fewer large
players 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 manufacturers
remain generalists with a wide product range.
• This presents a potential opportunity for focused specialists to emerge in developing
countries as these markets become more mature.
Reasons to Be Optimistic About Future Cable Market Growth
As the recovery from the recession gathers pace we believe there are a
number of factors which lead us to be optimistic about future growth in wire
and cable demand. These include:
• Growth in wind energy and other green and nuclear energy generation and other distributed
generation.
• 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 cable
to be used.
• Increased investment in the extraction of oil and other commodities in the face of growing
demand 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 appliances
around the world
• Continued investment in telecom networks.
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 6
th
Arabcab Conference
Beirut, 3 – 4 May 2010

Tel + 44 20 7903 2118