CHINA HAS GROWN AS CONSUMER, PRODUCER, AND NET EXPORTER

Domestic W&C Tonnes Rose 15% in 2009

The upshot of China’s trends in energy, construction, appliances, automotive, and information and communication technology industries was a 15% increase in China’s domestic consumption of wire and metallic cable, in terms of unit quantities – tonnes – in 2009. This figure does not include the harnesses, assemblies, or other connector-related value-added that is included in the “8544” harmonized code of international trade statistics. The only product area in this segmentation that is showing a negative trend in 2009 is copper-based external telecom cable, which dropped 32% last year due to the dominance of wireless and optical fiber technologies in telecom applications. The strongest growth was in aluminium power conductor, which rose 21%, followed by low-voltage power cable, which rose 20%. The latter segment includes the building-wire products used in new residential and industrial construction.

Prices Cause Value to Drop

The fluctuations in copper and aluminium prices during 2009 resulted in lower average prices for metallic cables for the year, and an overall decrease of 4% in China’s domestic market for wire and cable. When totaling consumption in terms of market value, fibre optic cable can be included. The fibre optic segment is comparatively small (about 10% of the metallic cable market value), but it had strong growth 2009. The highest growth product segments were fibre optic cables, and metallic cable for internal telecom and data, rising 74% and 75% respectively in 2009. External telecom cable was the worst performing product segment in terms of market value as well as tonnage, dropping 44% in value.

In 2008, China’s wire and cable production was 24% of the worldwide total, and its consumption was 22% of the worldwide total. Net imports for most wire and cable product segments into China are insignificant. The exception is winding wire. China’s winding wire imports amounted to US$0.5 billion in 2008. Except for this the data for production and consumption in these product segments shows that China exported about 9% of its wire and cable production in 2008. This percentage remained fairly stable over the last five years, fluctuating between 9% and 10% from 2004 to 2008.  This means that China’s domestic market grew at about the same pace as its production and its exports.

In 2009, the percentage of exports dropped to 7%, reflecting the effect of the recession in China’s export markets and the comparative strength of its domestic wire and cable market. With little downside in the domestic demand forecast, China should be able to recapture its past business and restore its role in world exports, considering its cost structure and its relationships with joint-venture customers and key investors.