Construction and infrastructure boosting North American wire and cable materials market
A report by Frost & Sullivan projects that North American market for power cables, building wires and communication cables should grow from $1.92 billion in 2012 to $2.53 billion by 2018.
A press release said that the projected demand for materials in the wire and cable industry "is tied directly to the economy." It also predicted further growth in construction and infrastructure activities, with revenue "driven by the shift of the industry toward higher-performance materials, especially in the power and communication cable segments."
"Overhead lines are generally bare conductors, where air acts as the insulation; underground cables, however, require plastic insulation, jacketing and sheathing materials," company Research Analyst Anita Pamu said in the release. "Thus, the growth of the underground T&D market will accelerate the sales of cable materials within this segment."
The release said that while there is significant demand for new cables in the power sector, there is little demand within the replacement market because cable has such a long life span. For power cable, the average life span can range from 25 to 40 years, which translates to low replacement rates, it said. This loss in revenue-generation opportunities can be offset by the market's shift toward higher-performance materials, as manufacturers are paying more attention to life cycle costs, it said, adding that there is also increasing pressure from both customers and regulators to maintain and enhance service reliability, while simultaneously controlling costs.
To stand out in a competitive, commodity market, material suppliers must focus on developing lighter compounds and reducing material costs, the release said. "Resin and compound suppliers should seek to establish their presence in high-growth markets to sustain sales volumes. Suppliers that offer a wide range of cable-grade resins and compounds are much better able to retain existing customers and gain new business." Pamu suggested that suppliers also develop specialized products to capture a niche market.