Friday, January 24, 2020
In the second edition of this annual Insight, CRU take a step back and review the key changes and developments in the optical fibre and cable industry in 2019, highlighting the lows and highs, alongside key moments and advances in technology.
Furthermore, we shine a spotlight on the key market moving topics and upcoming research areas CRU's Wire and Cable Team will be focusing on in 2020.
Global growth dragged down by China in 2019
Whilst there were a few highlights in 2019, namely the launch of commercial 5G services in nearly 30 countries, it was perhaps a year to forget for many industry participants. CRU estimate global optical cable consumption on a fibre-km basis contracted by almost 7% y/y in 2019, marking the second weakest year in CRU's records. In terms of market value, we estimate this fell more in the region of 24% y/y.
Whilst the level of the contraction last year pales in comparison to the -36% y/y posted in 2002, it proved to be a very tough year for producers across virtually all key markets. It was a year dominated by weak demand, excess capacity and rising inventory. It is however, the collapse in global bare fibre prices which has perhaps hurt producers the most. Let's take a look at some of the driving forces behind this weakness and other key moments in the industry last year.
Selected highlights and lowlights from the 2019 optical fibre and cable industry
The amount of optical cable installed worldwide decreased from the previous year for the first time since 2002. The quantity installed in 2018 exceeded 500 million fibre-km for the first time but then decreased below 480 million in 2019.
Demand for optical cable in China decreased by double-digits from 2018 to 2019, marking a significant reversal to a ten-year trend (China's demand had increased 556% from 2008 to 2018, representing a CAGR of 21%).
China Mobile's tender for standard telecom fibre and cable was 105 million fibre-km, the same amount as in its tender for H1 2018 (China Mobile never issued a second half tender in 2018). Counting the drop and specialty cables, China Mobile's 2019 demand was down 16% from 2018.
Telecom operators in India, which is the world's third largest optical cable market, scaled back their optical cable consumption in 2019 mainly due to financial problems. Optical cable demand dropped off sharply after H1 2019, and some cable manufacturers have subsequently had to adjust production schedules and instead turn to exports.
Preform equipment activated in 2018 and early 2019 raised global capacity to more than 20,000 tonnes. This capacity, along with the lower demand caused the shortage to end and prices to plummet.
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