With the novel Coronavirus epidemic under rapid control in China and the policy requirement to speed up the construction of new infrastructure such as 5G and big data center, the three domestic operators have also substantially increased the capital expenditure related to 5G. All these have provided further room for the growth of demand for optical fiber and cable.
Economic recovery CRU raised China’s optical fiber and cable market demand forecast
Michael Finch, director of CRU cables, said that given the latest statistics, worldwide demand for cable is expected to contract by 12-13 per cent year-on-year in the first quarter, falling below 100 million core kilometres, the lowest level since the fourth quarter of 2015.
Looking at the Chinese market, Michael Finch points out that demand for fiber optic cable in China has collapsed in Q1, down 18.6% year on year. Meanwhile, In Q1 of 2020, China will account for only 44 percent of the global demand for optical cable, compared with 53 percent in the same period of 2018.
Michael Finch said, “While fTTX-related demand continues to weaken, increased capital spending and a greater focus on 5G will support growth in China’s fiber demand. So we think the market will be brighter for the rest of 2020.”
It is clear that the signs of China’s economic recovery are becoming more and more obvious, and all eyes are now on the bidding of China’s three major operators. Against this backdrop, CRU raised its forecast for the Chinese market in 2020, with a projected demand decline of 5.7%. Michael Finch noted that CRU had forecast a 9% decline in February.
According to Michael Finch, China’s naked fiber market will be dominated by destocking in 2020, and the country’s naked fiber production is expected to fall 14 percent for the full year, while fiber optic cable production will fall 5 percent. Meanwhile, Michael Finch notes that despite the difficulties, many Chinese manufacturers will seek opportunities to expand exports this year.
In asia-pacific, excluding China, overall demand will remain weak in 2020, especially in India. In addition, in The North American market, higher demand growth was supported by regional protection and increased capital spending by U.S. carriers such as Verizon. However, in the European market, due to the impact of Q1 and Q2 epidemic, the demand showed a significant decline. “The delay in 5G deployment across Europe and the Asia-Pacific region has also affected the demand for fiber optic cables in the region to some extent.” Michael Finch says.
According to Michael Finch, operators are experiencing certain performance and financial pressures as a result of the outbreak, which will affect their investment and deployment plans. According to the latest estimates, global demand for optical fiber and cable is expected to drop by 3.6% in 2020, compared with a 1.9% decline in the absence of the epidemic. However, CRU also raised its market forecast for 2021 to 10.5% from 9.3%.