The three major factors in the growth of Zhujiang cable demand for Guangzhou cable

According to a research report on the submarine power cable market released by Technavio, from 2016 to 2020, the annual compound growth rate of the global submarine power cable market demand is about 5.89%. Among them, raw material price fluctuations, increased demand for high-voltage DC cables, and increased R&D investment are the three emerging trends that promote the steady increase in global submarine power cable demand.

By 2020, the offshore wind power industry will be the most important terminal application market for submarine power cables. Energy companies increase investment and construction of submarine power cables in order to further improve the efficiency of power transmission and ultimately ensure land power supply.

At the same time, global investment in renewable energy power, including tidal energy, wave energy, and offshore wind power, will continue to promote the growth of demand in this market.

Raw material price fluctuations

The main raw materials used to produce power cables are aluminum and copper. The cable itself is a heavy industry and light industry, so raw material price fluctuations have a direct impact on cable manufacturers. As of December 2015, the cost of raw material prices accounted for nearly 85% of the production cost of submarine power cables.

Among them, the cost of copper and aluminum accounts for about 50% of the total production cost. Therefore, the price fluctuations of copper, aluminum and other necessary raw materials, coupled with the price fluctuations of fuel and energy costs, have had a very large impact on the cost of sales and income of cable manufacturers. For this reason, cable manufacturers try to reduce the impact of metal price fluctuations by negotiating price changes for finished products.

The report believes that the goal of increasing gross profit margin can be achieved by increasing the price of finished products, so as to reduce the risk of fluctuations in the price of raw materials, but the premise is that the market for finished products is in short supply.

Increase in sales of HVDC cables

HVDC underground cables are a viable option for long-distance high-voltage power transmission. The European Commission has selected 43 major energy projects to build cross-border infrastructure to achieve a single energy market and improve regional energy security. In these projects, a large amount of electricity is required to be transmitted from one country in Europe to another country. Therefore, by 2020, the European market will become the main demand market for HVDC cables.

In addition, the characteristics of light weight and low loss make HVDC cables a more advantageous choice than AC cables, especially in the submarine power transmission market.

Increased R&D investment

The report believes that the increase in R&D investment is one of the main reasons for promoting the steady growth of future submarine power cable market demand. The rapid growth of the offshore wind power market has created more opportunities for research and development. Different alternative energy resources require different types of power cables to achieve stable power transmission.

Therefore, cable manufacturers will continue to increase their investment in new cable technology to achieve long-distance, lower-loss high-voltage power transmission.

Not only that, because of the serious competition of product homogeneity, cable manufacturers continue to increase the research and development of new products in order to keep enterprises competitive.

The report also pointed out that the future development trend of submarine power cables (including high-voltage/UHV cables):

The transition from wet design to dry insulation is conducive to the surrounding environmental conditions of the cable;

The transition from low electrical stress to high stress;

Transformation from large diameter to small diameter;

The cable quality is lighter;

Short-distance delivery to long-distance destinations.