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2018-2019 China Optical Cable Industry Status And Forecast
- Oct 27, 2018 -

Since 2012, the Ministry  of Industry and Information Technology has taken the lead in advancing  the “Broadband China” program, and continues to promote the popularity  of fiber access through the construction of broadband cities. By  the end of 2017, the number of fiber access (FTTH/0) ports reached 657  million, an increase from 75.5% at the end of the previous year to  84.4%. Based on the data released by CRU,  benefiting from the joint demand of 4G+FTTH construction, the average  annual growth rate of China's fiber optic cable market in 2012-2017 is  17.4%.


The demand for fiber  optic cable is mainly driven by FTTH and wireless network construction  (positively related to the size of the base station). Based on the  operator's announced collection and bidding plan, the total demand for  optical cables of the three major operators in 2018 is expected to be  274 million core kilometers. Combined with the optical  cable collection of the three major operators in 2015-2017 and the  annual demand for optical cables in the Chinese market announced by CRU,  the optical cable demand of the three major operators accounts for more  than 80% of the total domestic demand. Assuming  that the demand of the three major operators is 80% for domestic optical cable, then 2018 the total demand is expected to be 342 million  core kilometers. The FTTH demand based on the  penetration rate will only gradually weaken, and the construction of 4G  base station has come to an end. We judge that 2018 will become the  culmination of the release of domestic FTTH construction demand. Even considering  the demand of 5G, its increased demand for fiber optic cable is  difficult to offset the decline in FTTH. It is predicted that the  probability of decline in total domestic cable demand in 2019 is very  high.


On the other  hand, the capacity expansion of the preforms at the supply end is  accelerating, and the  production capacity is  concentrated in the second half of 2018, and the competitive pressure is  increasing. Since the anti-dumping investigation  started by the Ministry of Commerce of China in August 2015, China  Mobile's aggressive FTTH construction progress has been superimposed, domestic TOP6 manufacturers have expanded their production capacity  of optical fiber preforms. The scale of each  expansion is different. The production capacity of leading enterprises  (such as YOFC and Hengtong) has doubled, and several other companies  have followed up quickly. Due to the huge input  cost of expansion, it can be reasonably assumed that all companies will do  their best to put into production on schedule. It is predicted that the  production capacity at the end of 2018 will reverse the tight supply  and demand situation, which will create competitive pressure on the 2019  fiber optic cable bidding. If the demand side slows down again, the fundamentals of the industry will accelerate to deteriorate.