Wire and cable industry resurgent, finds study

July 19, 2006 -- A study by Integer Research reveals that the world's leading 60 wire and cable producers posted combined revenues of $47.4 billion in 2004, and more than $56.4 billion in 2005.

The wire and cable industry has seen a significant recovery in the last 18 months, according to a study of the world's leading 60 wire and cable producers published by Integer Research. The study (which encompasses all types of wire and cable, including the communications variety) reveals that these companies posted combined wire and cable revenues of $47.4 billion in 2004, and more than $56.4 billion in 2005.

"The industry also reported total revenues of $82 billion in 2004 and $97 billion in 2005," reports Philip Radbourne, director of Integer Research. "In part, the continued expansion in the Chinese cable market has driven growth globally, combined with a recovery in demand from the US cable sector, from the low point in 2002."

Radbourne continues, "The 60% increase in copper prices during 2006, which is a five-fold increase from the low of $1,400 per ton in November 2001, has also meant that the wire and cable industry will likely surpass the $120 billion level. This is if prices continue at their present level through H2 2006."

"As a result, the world's leading 60 wire and cable producers returned to profitability in 2004 and 2005," adds Integer Research analyst Craig French. "Most companies showed both operating and net profits in their 2004 annual financials. This trend continued into 2005, despite higher raw material prices. Higher global demand for a range of cable products, with significantly higher demand from the U.S. and Chinese cable market, helped improve operating margins. Net profit margins across the industry reached 1.1% in 2004, which although modest, were still better than the previous three years of net losses. However, this is still lower than the industry average of 4.5% in 2000."

According to the firm, the global wire and cable industry is still dominated by Western and Northeast Asian cable makers, with the leading global players maintaining domestic headquarters in the U.S., Western Europe, or Northeast Asia.

"Three cable producers - Nexans, Prysmian, and Sumitomo Electric - dominated the global industry in 2004 and 2005, with each company reporting wire and cable revenues of more than $4 billion in 2005," reports Radbourne. "The other leading cable producers in the top 10 include Furukawa Electric, Draka, General Cable, Southwire, Fujikura, LS Cable and Walsin Lihwa."

Radbourne concludes, "The leading top 60 producers have continued to invest in China, where 30 of these companies have at least one cable manufacturing operation. Most of the leading 20 companies had set up manufacturing plants in China, with the exception of the leading U.S. producers: Southwire, General Cable, and Belden CDT. Superior Essex and CommScope have set up new plants in the last 18 months. As yet, no major Chinese producers have emerged to threaten the dominance of these global players, but we would expect one or two leading producers from China to emerge with the next five years."


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