APP下载

The Wire and Cable Industry will Usher in a Consolidation Period

2012-08-15

China Nonferrous Metals Monthly 2012年1期

According to spot check data released recently by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ),the percent of pass of widely used PVC, crosslinked polyethylene and PVC soft cable is merely 88.4%, far below that of other major industrial products; in many provinces and municipalities, the pass rate in spot check is even below 60%.

To improve that, the AQSIQ teamed up with the Ministry of Industry and Information Technology, China Machinery Industry Federation,China Electricity Council, State Grid Corporation of China and China Southern Power Grid Co., Ltd. to release the Instructions on Promoting the Improvement of Wire and Cable Products (hereafter referred to as “Instructions”).

The Instructions point out that the overall quality of wire and cable products remains low in China, scamp work and stint material and fake products could be seen almost everywhere, and the quality problems pose significant safety,environmental and health hazards.

At the same time, the Instructions point out China’s wire and cable industry face many problems, including serious overcapacity, low industry concentration, homogeneous low and middle-end products, disorderly excessive expansion of industry, and irregular market competition.

To address the above issues, the six ministries and commissions pointed out that exit mechanism will be introduced into the wire and cable industry: Enterprises that do not comply with the industry policy, or enterprises with prominent product quality issues or quality accidents will be ordered to withdraw from the industry.Industry insiders say China has worked out a framework for curbing the production capacity of the wire and cable industry. Once the rules and date for implementation are announced, the wire and cable industry may usher in a consolidation period.

It is learned that the wire and cable industry is downstream business for copper, and demand for copper in the industry takes up 60%-86% in the total demand for copper in China.

Since the second half of this year, due to sharp rise and fall in the copper market, demand for copper has become sluggish. The primary field supporting copper consumption in China is the wire and cable industry. Analysts say once exit mechanism is introduced into the wire and cable industry, it will have direct impact on the demand for copper.

In addition, according to industry insiders, as weather gets cold, in December operating rate will hit bottom in the wire and cable industry,and demand for copper in power grids will subside in Q4. Therefore, downstream consumption will hardly be optimistic in Q4’11 and even Q1’12.