Cables – Procurement Best Practices & Sourcing Strategies

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Global Cables Market Size and procurement market research report

The global cables market is valued at a splendid worth of $168 billion, indicating its sustained positioning in the rapidly growing global economy. ELINT Market Research’s projection shows a steady CAGR of 2% to 3% by 2025, highlighting a promising growth outlook. Demand across diverse industries, especially in construction, energy, and telecommunications, drives industry growth.

Sustainable growth is closely related to the vital role of cables in streamlining power infrastructure and connectivity with supporting technological innovations. As the global telecommunication industry continues to transform and expand, the requirement for high-quality cable for secure data transmission witnesses is rising. In addition, the energy industry depends on cables for the proper transfer and distribution of power, propelling the cables market growth as several countries revamp and expand energy grids.

Market Definition

The global cables market covers a range of products developed for signals, power, and data transmissions. The range of products includes communication cables, power cables, optical fiber cables, and tailor-made cables for dedicated applications. These cables are essential for the seamless transmission of electrical energy, while cables for communication allow data transfer through numerous mediums. In addition, optical fiber cables, a foundation of modern telecommunication networks, use light signals to achieve high-speed data broadcast.

Market Drivers:

• Rapid Urbanization and Infrastructure Development: A high rate of population and growing urbanization drive an increasing need for infrastructure development, covering smart cities, power grids, and telecommunication networks. The growing trend significantly contributes to the rising demand for cables.

• Technological Breakthroughs: Recent technological innovations, especially in the telecommunications industry, create demand for high-speed and high-capacity data transmission cables. In addition, breakthroughs in materials and manufacturing processes further drive the development of reliable and durable cables.

• Sustainable Energy Deployment: Several global initiatives and campaigns for renewable energy sources, such as wind and solar, propel demand for power cables. Such cables act as a crucial element during the transmission of electricity generated from green energy sources to the grid and end-users.

Market Challenges:

• Volatile Material Costs: As per the research, the global cables market is sensitive to volatilities in raw material prices, such as aluminum and copper. Fluctuations in prices can influence the final cost of cable development and impact the profit ratio for manufacturers.

• Environmental Concerns: The scrapping of old cables leads to environmental challenges owing to the existence of non-biodegradable materials. As the world emphasizes sustainability, it becomes complex for companies to manufacture eco-friendly cables and fund recycling processes.

• Fierce Competition: The global industry is witnessing stiff competition among international and domestic players. Continuous price wars and trends of constant innovation to stay unique pose hurdles for businesses to sustain in the market.

Market Opportunities:

• 5G Technology Rollout: The launch of 5G technology revolutionizes the telecommunication industry, which needs infrastructure turnover. It presents a lucrative opportunity for cable manufacturers, particularly those manufacturing high-capacity cables managing rising data transmission demands.

• Electric vehicle Integration: The global push from several countries to adopt electric vehicles and boost the electrification of transportation systems creates new growth avenues for the global cables market. The demand factors include charging infrastructure and tailored wires for electric vehicle powertrains.

• Emphasis on Renewable Energy Projects: The growing focus on renewable energy projects, such as wind and solar farms, creates scope for tailored cables capable of managing power transmission over long distances with reduced energy loss.

Market Trends and Influencing Factors

• Cutting-Edge Connectivity: The rapid expansion of 5G networks creates demand for reliable and high-capacity cables to manage the increased data traffic. In addition, projected advancements in 6G technology present new challenges and opportunities for players operating in the cables market.

• Electrified Transportation: A rise in electric vehicle adoption across the globe is boosting demand for tailored power cables and robust charging infrastructure. Moreover, innovations in cable technology are vital for dealing with the emerging unique requirements of electric charging systems.

Market Segmentation:

The ELINT’s research segments the global cables market based on product types, end-user industries, and geographical regions.

• Product Types: The research classifies the market based on product types into power cables, telecommunication cables, specialty cables, etc.

• End-User Industries: The research study divides the global market according to end-user industries into automotive, energy and power, construction, telecommunications, etc.

• Geographic Regions: As per the research, the market is segmented based on geographic region into North America, Latin America, Asia Pacific, Europe, and the Middle East and Africa.

Regional Analysis

High Market Maturity Regions

• Asia-Pacific (APAC): As a high market maturity region, APAC holds a significant share, driven by rapid industrialization and infrastructural development. The demand for cables in emerging economies such as China and India is a prominent contributor to market growth.

• Europe: Europe stands as another high-maturity regional market, with a well-established industrial base and a robust demand for cables across various applications.

Medium Market Maturity Regions

• North America: The North American market exhibits medium maturity, driven by technological advancements, especially in the telecommunications and energy sectors.

• South America: With its developing economies, South America showcases a medium-maturity market fueled by ongoing infrastructure projects.

• Middle East and Africa: The region represents moderate market maturity, witnessing substantial growth in the construction and energy sectors.

Impactful Cost Components

Several cost components significantly influence the cables market, and a keen understanding of these factors is imperative for market players.

• Raw Material: Raw materials play a pivotal role. It constitutes 65% of costs. Fluctuations in commodity prices can directly impact profitability.

• Design and Labor: Accounting for around 16 percent, the design and labor segment reflects the importance of a skilled workforce and innovative design.

• Fixed Components: Approximately 14 percent of costs are attributed to this component type, emphasizing the need for stability in operational aspects.

Contract Periods:

1. Fixed Price Contracts:

• Duration: 24–26 weeks on average
• Conventional in short-term projects with well-defined specifications and deliverables.

1. Variable Price Contracts:

• Duration: 2–5 years on average
• Applicable to long-term projects with evolving requirements, often seen in large-scale infrastructure and construction projects.

Market Pricing Strategies

Contractual Purchase and One-time Orders

The market primarily operates on contractual purchases, reflecting long-term commitments and partnerships between buyers and suppliers. However, one-time orders provide flexibility that caters to short-term demands and dynamic market conditions.

Leading Players in the Cables Market

The global cable industry is in the transformative phase with the support of continuous technological advancements, global sustainability initiatives, and strategic collaborations. Some of the leading players are Sumitomo Electric, Axon Cable S.A.S, Prysmian Group, USA Wire and Cable, SAB Cables, Furukawa Electric, Nexans S.A, Southwire LLC., Leoni AG, Fujikura Ltd, Noramco, and Synergy Cable.