A few days ago, the 2021 7th World Optical Fiber and Cable Conference was held in the form of an online conference. Wang Chenfei, a senior analyst at CRU, a market research firm, said that after a nearly collapsed market environment in the past two years, China Mobile’s bidding this year has set a new price level for China’s optical fiber and cable market. At the same time, the Chinese market’s demand for optical fiber and cable is expected to reach 261 million core kilometers in 2022.
Looking back at the Chinese optical fiber and cable market in the past two years, the nationwide FTTx deployment is about to be completed, and the penetration rate of FTTH/B users in some cities has even exceeded 100%. The demand for optical cables by the three major domestic operators has slowed down significantly, and the supply-demand relationship has changed. .
Wang Chenfei introduced that in fact, the balance of supply and demand in the Chinese market has been broken in 2018. With the further slowdown in demand in 2019 and 2020, the relationship between supply and demand is completely out of balance. CRU data shows that from 2018 to 2020, China accounted for almost 79% of the global preform “surplus” production capacity. In addition, in 2019, China’s inventory level exceeded the annual demand of many countries and regions.
Due to reduced demand and overcapacity, China’s optical fiber and cable market has almost collapsed in the past two years. On the demand side, the year-on-year decline was 14% in 2019 and another 1.2% in 2020. The price of optical fiber and cable has also fallen sharply despite the overall market downturn. The price of G.652D optical fiber has dropped from approximately US$9.13/core-km in 2018 to approximately US$4.52/core-km in 2019, and further drops to approximately US$2.90/core-km in 2020. Most fiber optic cable manufacturers are on the verge of loss.
Entering 2021, with the launch of China Mobile’s centralized procurement of ordinary optical cables, the increase in procurement volume, and the obvious rebound in centralized procurement prices have all released positive signals for China’s optical fiber and cable market. At the same time that China Mobile’s centralized procurement was launched, China Telecom also launched the centralized procurement of optical cables. According to the experience of the past few years, China Telecom’s centralized procurement prices will be higher than that of China Mobile. However, Wang Chenfei pointed out that despite the new price level, due to the increase in raw material prices, fiber optic cable manufacturers will still operate with low profit margins.
Based on the current market environment, CRU predicts that the demand for fiber optic cables in the Chinese market will reach 261 million core kilometers in 2022, a year-on-year increase of 6.5%. At the same time, under the 5G and gigabit optical network construction plan, from 2021 to 2026, China’s optical cable demand will maintain a compound annual growth rate (CAGR) of 2.9%.
In response to the export issue, Wang Chenfei said that with the formal ruling of the EU that will impose an anti-dumping duty of 19.7% to 44% on imports of optical fiber and cable from China, the growth of exports may not be sustainable in the future. According to reports, from January to August this year, China’s fiber optic cable exports increased by 30% year-on-year, and fiber optic exports nearly doubled year-on-year.