What’s hot and what’s not in 2020? Wire and cable top 10 themes for the current year
Our friend Chenfei Wang from CRU Wire and Cable gives us an insight on which will be the top 10 themes of this current year. We will see how they turn up against expectations in the upcoming months.
1. China’s electricity grid investment will remain static
Chinese grid investment suffered a contraction of 9.6% in 2019, compared to the previous year. The country’s utility sector consumes approx. 1.9Mt. conducts of cable per year, with the expected low investment levels in 2020 weighing heavily on power cable demand.
2. Coronavirus outbreak will impact Chinese demand
With China currently under lockdown due to the virus outbreak, a further slowdown is expected in Chinese cable demand, which will in turn drag down key sectors such as construction and automotive, that make heavy use of cables.
3. Global automotive industry will face another turbulent year
2019 was a year to forget for the global automotive industry, and it looks like the situation won’t change much in 2020. According to the CRU’s outlooks the European automotive industry is supposed to improve slightly, while the Asian and North American counterpart will fall short.
4. Trade tensions will keep impacting the global value chain
The US-China “Phase One” trade deal will not reverse the current low levels of US imports from China, with the latter continuing to divert its production to other countries. The signing of USMCA is also expected to facilitate further North American intra-trade.
5. Switch to renewable energy will support power cable demand
Power cable demand was the fastest growing segment last year and this trend will continue in 2020 as well (excluding China), marking the second year in a row. The outlook partially reflects a strong global renewable project pipeline, particularly in the cable-intensive offshore wind sector.
6. India’s cable demand will improve from the 2019 low
India will have a strong 2020 as last October's five year investment plan (US$1,427 bn) will start to pay off. US$47 bn will be invested this year in the cable end-use sector, particularly power related. This, combined with lack of general elections and other fiscal and monetary stimuli, will result in a considerable growth for the Indian market.
7. Brexit uncertainty will remain a key risk to the Western European market
As London and Bruxelles negotiate future business relationships, the situation between the UK and Europe remains unclear. What is certain is that a disconnect between the two markets will have a strong direct and indirect impact on the European market, especially considering the risks tied to the weak automotive sector.
8. Russia’s residential financing policy change will limit demand
A contraction is expected for the Russian LVE cable consumption this year, due to the last year’s housing financing policy change weighing negatively on the building sector. Many small and mid-size construction companies are in fact still facing the policy’s aftermath and having to deal with severe financing difficulties.
9. ASEAN market will be the world’s fastest growing region
While a weak Asian automotive market will negatively impact the ASEAN region’s cable harness sector, on the upside, the region’s urbanization and industrialization will continue, with huge benefits for the domestic cable demand.
10. Commodity price will remain volatile in the near term
The coronavirus outbreak has caused many enduring geopolitical tensions, which will keep commodity prices volatile throughout 2020, especially for copper and Brent crude.
Read the CRU article here >>
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