The wire and cable industry in the foreseeable future

21 Mar 2022

Industry Challenges

The wire and cable industry has vast potential in growth in coming years but it has some challenges also, the increasing price rise and competition from Chinese imports. The wire and cable industry is experiencing volatility in raw material prices, as the price of copper continues to increase, profit margins are squeezed and they become uncompetitive in the international market. County is experiencing an all time high price of fuel it’s direct impact on domestic transportation, in result wire and cable transportation has increased. Also, a large section of the industry is still unorganised; there is a lack of quality product offerings from these players due to non-compliance with the product guidelines.

Cable, in electrical and electronic systems, a conductor or group of conductors for transmitting electric power or telecommunication signals from one place to another. Electric communication cables transmit voice messages, computer data, and visual images via electrical signals to telephones, wired radios, computers, tele-printers, facsimile machines and televisions. There is no clear distinction between an electric wire and an electric cable. Usually the former refers to a single, solid metallic conductor with or without insulation, while the latter refers to a stranded conductor or to an assembly of insulated conductors. With fibre-optic cables, made of flexible fibres of glass and plastic, electrical signals are converted to light pulses for the transmission of audio, video, and computer data.

Electric Power Cables

The most common type of electric power cable is that which is suspended overhead between poles or steel towers. These aerial cables consist of a number of wires, usually of copper or aluminum, twisted (stranded) together in concentric layers. Copper or aluminum is chosen for high electrical conductivity, while stranding gives the cable flexibility. Because aerial cables are frequently subjected to severe environmental stresses, alloys of copper or aluminum are sometimes used to increase the mechanical strength of the cable, although at some detriment to its electrical conductivity. A more common design is to include in the stranded cable assembly a number of high-strength, noncorrosive steel wires. Many aerial cables, especially those operating at high voltages, are bare (uninsulated). Cables operating at lower voltages frequently have coverings of asphalt-saturated cotton braid, polyethylene, or other dielectric (no conducting) material. These coverings offer some protection against short-circuiting and accidental electric shock.

Another type of electric power cable is installed in underground ducts and is extensively used in cities where lack of space or considerations of safety preclude the use of overhead lines. Unlike an aerial cable, a buried cable invariably uses commercially pure copper or aluminum (mechanical strength is not a problem underground), and the stranded conductor is frequently rolled to maximize its compactness and electrical conductance.

Aerial and underground power cables compose a major portion of the electrical circuit from the generator to the point of utilization of the electric power. The balance of the circuit (and sometimes the entire circuit) may, however, require specialized cables. Illustrative of these usages and of the special conditions to be met are cables for use in steel mills and boiler rooms (high temperature), on mobile equipment (vibration and excessive flexing), in chemical plants (corrosion), for submarines and mines (mechanical abuse), near nuclear reactors (high radiation), and on artificial satellites (pressure extremes).

Electric Telecommunication Cables

Electric cables used to transmit information are quite different from power cables, both in function and in design. Power cables are designed for high voltages and high current loads, whereas both voltage and current in a communication cable are small. Power cables operate on direct current or low-frequency alternating current, while communication cables operate at higher frequencies. A power cable usually has not more than three conductors, each of which may be 1 inch (2.5 cm) or more in diameter; a telephone cable may have several thousand conductors, the diameter of each being less than 0.05 inch (0.125 cm).

Protective coverings for electric communication cables are similar to those for electric power cables. They usually consist of an aluminum or lead-alloy tube or of a combination of metallic strips and thermoplastic materials. The insulation of a telephone cable is composed of dry cellulose (in the form of paper tape wrapped around the conductor or paper pulp applied to the conductor) or of polyethylene. The insulation thickness is a few hundredths of an inch or less. A coaxial cable, which first gained widespread use during World War II, is a two-conductor cable in which one of the conductors takes the form of a tube while the other (smaller but also circular in cross section) is supported, with a minimum of solid insulation, at the centre of the tube. Several of these coaxial units may be assembled within a common jacket, or sheath.

The construction of long submarine cables for either telephone or telegraph service is somewhat different from that discussed previously. A transatlantic cable fo r telegraphs was first completed in 1858 and for telephones in 1956; a fibre-optic cable first spanned the Atlantic Ocean in 1988. See also undersea cable.

Market Overview:

Over the past two decades, Indian wires and cables industry has grown considerably in size while transforming itself into an organized one from being an unorganized sector. Though the unorganized sector still constitutes a notable one-third of the industry, however, the market is dominated by few major players. To be precise, the market is led by major players specializing in designing, manufacturing viz. Polycab wires, Finolex cables, CMI, RR Kabel, Sterlite Technologies, KEI Industries and Havells India. Other significant players include Cable Corporation of India, Cords Cable Industries, Diamond Power Investment, Gupta Power Investment Ltd., KEC International Ltd., LS Cable India, Shilpi Cable Technologies, Universal Cables, V-Guard Industries, etc.

The overall size of the cables industry in India is estimated to be around INR 412.50 billion in 2016-17 as per IEEMA, recording a moderate growth of around 5.1 percent over the previous FY 2015-16. As for the current financial year, the industry has registered a growth of 9.6 percent during the first half of FY 2017-18 (April to September). On the other hand, due to the delays in order finalizations by major buyers – the conductors market saw a decline of 10.76 percent falling in overall size from INR 81.25 billion in 2015-16 to INR 72.50 billion in 2016-17. Unfortunately, the segment is still facing the heat and negative growth of 17.40 percent during the first half of current FY 2017-18 (April to September). During 2016-17, the exports stood at INR 19.55 billion (registering a growth of 14.5 percent) and the imports stood at INR 5.76 billion (with a decline of 1.1 percent). Thus, the exports have supported the growth in the cable segment.

If we look at the exports/imports comparison during the first half of the current FY 2017-18, the total value of cable exports stood at INR 11.96 billion, whereas the cable imports during the same period stood at INR 4.59 billion. While the exports recorded an increase of 2 percent over the corresponding period in the previous year, the imports witnessed a sharp decline of 50 percent over the corresponding period of the previous year. On the other hand, during the first half of the current financial year 2017-18, the import of conductors stood at Rs 3.11 billion, recording a significant decline of 41 percent over the same period in the previous year. Fortunately, the exports of conductors registered a growth of 5 percent in this period and stood at Rs 8.29 billion.

Trends: Market & Technology

Overall, the cables and conductors industry has grown significantly in the past few years with investments infused in the power and investment sectors by the government. While the cable segment witnessed a positive growth, the conductor segment experienced sluggish demand last year. Across cable sub-categories, the power cables segment registered a growth of 5.2 percent in 2016-17, while the control cables segment saw a decline of 3.4 percent. However, the first half of 2017-18 saw a reversal of trends wherein the high voltage power cable growth tumbled by 7 percent and the control cable segment grew by 2.9 percent.

The cable segment is the shift towards high voltage transmission lines. This demand is essentially driven by the creation of high capacity long distance corridors to deliver electricity to high demand regions and the development of green energy corridors for integrating the increasing share of renewable energy into the grid. Further, underground cabling is gaining increased acceptance among state and central transmission utilities as it provides greater safety (against electrocution) as compared to overhead cables.

On the technology front, the industry is witnessing a number of new technologies being introduced to enable utilities to augment their capacities without encountering the issues of right-of-way (RoW) clearances. Further, due to the risks associated with bare overhead cables, covered cables have been gaining importance in the market. Cross-linked polyethylene (XLPE), high-density polyethylene, aerial bunched cables and spacer cable systems are some of the most commonly used covered cables.

In addition, an emerging technology trend of high-temperature low sag (HTLS) conductors is witnessing a greater adoption by the utilities. These conductors not only enhanced the operational efficiency but can also be used for the purpose of reconductoring the existing lines that enable utilities to transmit a higher quantum of power through existing corridors and can significantly scale down losses as well as instances of power outages. Further, to increase the current carrying capacity and scale down the transmission losses, utilities are turning to high-temperature superconductors (HTS) that have 5 to 10 times the current carrying capacity as compared to conventional conductors.

Gas-insulated lines (GILs) that can be installed under the ground as well as in tunnels and trenches are today a well-accepted technology trend in the overseas market. Due resistive losses of GILs being lower than overhead lines and other types of underground cables, they offer greater reliability with no risk of fire. This technology can serve as a viable alternative to overhead lines where RoW is not available for the transmission of electricity. However, it is still waiting to see a widespread adoption in the domestic market.

Way Forward:

There is utmost need to look into corrective measures to deal with the issue faced by the industry. There is lack of standardisation of the end product posing a serious challenge for the sector. It is therefore imperative to develop standard guidelines for the industry as a whole so as the quality is not compromised. Further, the government should look into creating a single window clearance mechanism for all players to deal with the issue of delays in projects. This will help in faster project clearances leading to spur in the demands for the industry.

Though increasing industrialization and growing population agriculture for reliable and efficient power supply have kept demand high for cables and conductors.  Going forward, looking the investments infused in the power and investment sectors by the government and various initiatives undertaken, this demand trend is expected to continue for the industry in the future as well.

According to the IEEFA, India’s T/R grids will requirement adding modernization investments totaling between $60 bn & $ 80 bn.  Additionally, GoI has established a target to add100 GW of solar power capacity by 2022 which requirements between $6 bn & $8 bn of grid investment to move this power from its sources to its users. After this India’s grid will be much more accessible, reliable, cleaner & efficient than it currently is.  Much of this investment seems to be made using world-class equip’, materials & techniques to ensure that every penny invested gets put to good use. Cables & conductors are crucial elements of a T&D network. Cable & conductor market in India seen strong growth over the past few years on the back of expansions in the power sector as well as other investment sectors. This market in India comprises nearly half of the electrical industry & has grown at a CAGR of over 12%. Governments continued focus on 24×7 reliable power supply, reduction in T&D losses & universal household electrification has helped drive demand in the market & this rising trend is expected to continue in the near term. Development & strengthening of the country’s T&D network has always been a key focus area. For this, a no’ of government initiatives & programs have been undertaken such as the DDUGJY, IPDS & the recently launched Saubhagya scheme. All these schemes have created a market for this sector in the country. Indian wire & cable industry gone through different phases of expansion & contraction.  JFTC is now being used no more for the telephone lines& is an e.g. of boom & bust cycle.  Fiber optic cable too will have its boom & bust period; it had one 17 years ago & it will have one again. India will have consolidation of certain plants & closure of certain others but there will be an ongoing market for fiber optic cables.  This industry has had a cyclical demand profile where demand is based upon the economy& technology, both of which run at different speeds & so some­ times these peaks & troughs in the 2 different demand cycles coincide & either get a boom/ get a bust & at other times a steady trickle of business.  Some players in India have survived through all of that & the people who are still here are the ones who know how to manage & survive it. In the next 2-3, some good growth can be seen in the cable industry, especially the fiber optics.  India cannot produce enough fiber at the moment to satisfy the demand that will come over the next 2-3 years.  And is a reason why major fiber makers in India are investing a lot to expand production to produce fiber that will be needed. India stands to be in a good position globally in terms of being a producer of these products.  Once saturated own market with cable there will still be a market for replace­ment.  Some additions will be there but there will also be other markets which need it & those become the export market. African countries are the next big & growing markets.  China is covering its domestic market.  Middle East will grow but small population may impact the scope for business there.

Market size & growth

Size of the cable industry in India has increased at a CAGR of 14.6% between 2013-14&2017-18. As per IEEMA, total size of the domestic cable market in 2017-18 was est’ at Rs 500 bn, a remarkable growth of 20% over 2016-17. In the first 6 months of 2018-19 (Apr-Sep), market registered a 30% growth. Meanwhile, Domestic conductor industry has witnessed sluggish growth over the past 5 years, recording a CAGR of about 2%. Size of market increased marginally from Rs 72.5 bn in 2016-17 to Rs 81 bn in 2017-18, after recording -ve growth for 2 consecutive years. In the first half of 2017-18 (Apr-Sep), it again registered a decline of 6.3% over the previous year. Which can be attributed to delays in the finalization of orders by major buyers? In the cable industry, demand for all subcategories of wires & cables such as power cables, control cables & comm. cables has grown consistently. In 2017-18, the LV cable segment registered a growth of 27.87%, followed by the control cable segment at 12.2%, & the HV cable segment at 9.7%. In the first half of 2018-19, the LV, HV & control cable segments recorded growth rates of 33.5%, 29.3% & 22.9%, respectively. Yet, increase in import of cables & conductors have affected domestic demand. In 2017-18, import of cables stood at Rs 7.34 bn &conductors at Rs 5.25 bn, about 20&33% higher than respectively imports recorded in 2016-17. In the first 6 months of 2018-19, while the import of cables continued to grow, recording an increase of 23% over the previous year, import of conductors recorded a significantly decline of 24%. Total value of cable exports in 2017-18 stood at Rs 25.6 bn &conductor exports at Rs 18.2 bn, hence registering a growth of 18%&15%, respectively which is a +ve indicator for the domestic industry.

Growth drivers

Cable & conductor industry have grown significantly in the past few years with investments being made in the power & investment sectors by the government. Size of the industry is expected to double over the next 5 years, growing at a CAGR of 20%. Continuing focus on 24×7 power supply, development & strengthening of the T&D network & electrification of all villages & households are some of the key growth drivers of the cable & conductor market. Various government programs including the IPDS, Sahaj Bijli Har Ghar Yojana & the UDAY have led to new investments in the distribution segment. Government has planned an investment of about Rs 2.6 tn in the T/R sector during the XIIIth plan period, which is 1.4 times higher than the proposed capex in the XIIth plan period. Of the planned investment, Rs 300 bn is likely to be spent on T/R systems of 220 kV & below. One of the major drivers for this industry is the integration of renewables to the system. Government has set a target to install 225 GW of renewable capacity by 2022. A large share of which will come from solar installations, creating a significantly opportunity for solar cables. Also, to evacuate power from the large-scale RE plants being developed under the plan, a no’ of T/R lines are being constructed, hence driving demand for conductors. Also, ongoing smart city projects are expected to lead to large-scale developments in the power, telecom, housing & other investment sectors, creating more demand. Underground cabling is an essential part of smart city projects. It has become almost mandatory in densely populated areas owing to increasing RoW issues. It is also being preferred owing to its benefits such as low susceptibility to damage from severe weather conditions, greater safety, protection against illegal connections, theft & pilferage & better aesthetics. Government also plans to undertake 100% electrification of its broad-gauge network by 2021-22 which involves electrification of almost 40,000 route km of railway lines, which is a huge opportunity for this market. Metro rail projects worth Rs 1.75 tn are at various stages of approval & are likely to come up for bidding in the next 5 years, creating a Rs 175 bn opportunity. Also, the oil & gas industry is set to invest Rs 6 tn over the next 7 years, largely focusing on increasing the refining capacity & developing new fields. And, this is expected to boost the cable industry as 3% of the capex in the oil & gas industry is spent on cables. Reconductoring also increases the demand as it enables utilities to transmit a higher quantum of power through existing corridors & can significantly scale down losses & instances of power outages.

While the cable segment witnessed a positive growth, the conductor segment experienced sluggish demand. With the development of large-scale RE plants & solar parks, there is a need to lay down lines in order to connect them to existing grid. Meanwhile, investment in the coming years will continue to be driven by the central government through schemes such as DDUGJY, IPDS & Saubhagya. Even though the DDUGJY scheme is nearing its target, the focus on household electrification through Saubhagya will continue to sustain the demand in the cables & conductors’ segment. Also, with most of the states adopting UDAY, the state discoms are expected to improve their T&D investment through renewed capital expenditure. Apart from the impetus provided by the government, other key driver for the growth of the cable segment is the shift towards HVT/R lines.  This demand is essentially driven by the creation of high capacity long distance corridors to deliver electricity to high demand regions & the development of green energy corridors for integrating the increasing share of RE into the grid. Future growth in the cable segment is likely to be driven by 132 kV&400 kV lines. Underground cabling too is gaining increased acceptance among state & central T/R utilities as it provides greater safety as compared to overhead cables. Lastly, the increase in government infra spending, particularly under the Smart Cities Mission, is expected to propel demand &present new opportunities in the cables & conductors’ segment.

Wires and Cables Market Share Insights

Key players such as Prysmian S.p.A; Furukawa Electric Co. Ltd.; Nexans; Fujikura Ltd.; Sumitomo Corporation; Southwire Company; Leoni AG; NKT A/S; Belden Inc.; LS Cable & System Ltd.; and KEI Industries Ltd. held the leading position in the market. These companies are adopting various organic and inorganic growth strategies. Extensive investments in smart grid transmission have led players to aggressively receive contracts and agreements. For instance, in 2017, LS Cable & System Ltd. received a contract from Power Grid Company of Bangladesh (PGCB), an overhead cable project worth $60 Billion. LS Cable & System Ltd. will manufacture and supply all the products and construct the transmission towers for the project.

Mergers and acquisitions and partnerships have positively impacted the growth and are significantly driving the overall market share of key players. For instance, in August 2016, Nexans and American Superconductor Corporation (AMSC) entered into a partnership to market and sold AMSC’s Resilient Electric Grid (REG) system. The partnership involves AMSC and Nexans to collaborate and deliver products and solution to electric utility customers in U.S. and Canada. Also, in June 2016, Nexans signed a framework agreement with Energinet.dk, a Danish Transmission System Operator (TSO). The agreement was to deliver 500 km of high voltage (HV) cables, and the contract is worth more than 20 billion euros.