Insight into the second half of the fiber optic cable market

Since the fourth quarter of 2022, the fiber optic cable industry is facing a lack of orders, low start rate situation, mainly due to China Mobile, China Telecom did not start the ordinary fiber optic cable, outdoor fiber optic cable collection bidding project, to the fiber optic cable manufacturers to bring the pressure of order shortages, the market demand continues to be low, looking forward to the market in 2023 can be improved.

Fiber optic cable market demand is concentrated

In recent years, China's annual fiber optic cable consumption of about 300 million core kilometers or so. Under the stimulating influence of 5G and gigabit optical network construction planning, China's demand for optical fiber cable will maintain a compound annual growth rate (CAGR) of 2.9% from 2021-2026. Influenced by the construction of 5G dual-gigabit networks, the trend of rising market demand for optical fiber cables remains unchanged in the long run. Embodied in the first half of 2023, the fiber optic cable market appeared positive signals: two major operators, China Mobile and China Telecom, have launched bidding projects for ordinary fiber optic cables, outdoor fiber optic cables and other tender projects, which has brought light to the fiber optic cable market.

China Mobile in June to start 108.2 million core kilometers (about 3,389,900,000 skin-length kilometers) of ordinary fiber optic cable procurement, the project set the highest bidding limit of 762,459,500 yuan (excluding tax total price), to the industry to once again release good news. China Mobile as the cable market "wind vane", 2023 start ordinary cable bidding project, which will give fiber optic cable manufacturers to enhance the development of confidence.

At the beginning of July, China Mobile 2023 to 2024 ordinary cable procurement project winning candidates came out, 14 vendors bidding average price of about 6.871 billion yuan, rough calculation of each core kilometer of fiber optic cable after the average price of 63.5 yuan. Compared with the results of the ordinary cable bidding project in 2021, the average price of the 14 vendors' bids was about 9.158 billion yuan, and the rough calculation of the average price per core kilometer of optical fiber after cable formation was 63.95 yuan.

In addition, China Mobile also started in May butterfly cable procurement, the estimated procurement scale of about 5 million core kilometers, compared to China Mobile's previous butterfly cable procurement volume, 2023, the same record high.

After statistics, China Mobile ordinary fiber optic cable, butterfly cable project generated a total of 113.2 million core kilometers of cable demand.

China Telecom, for its part, launched 50 million core kilometers of outdoor fiber optic cable (2023) collection, and the procurement volume of this outdoor fiber optic cable collection project exceeded that of the same period in 2020 and 2021, and was the same as that of 2018, which showed the robust demand for fiber optic cables from China Telecom.

In the first half of the year, China Mobile, China Telecom's optical cable procurement project, the two operators launched a total of about 163.2 million core kilometers of optical cable bidding projects, greatly boosting the confidence of fiber optic cable companies.

In addition, in the first half of the year, China Unicom, China Radio and Television has not yet launched a scale-level fiber optic cable bidding project. But compared to 2022, China Unicom local network cable procurement generated 43.62 million core kilometers of fiber optic demand; China Radio and Television in 2022 for the first time to start the ordinary fiber optic cable, butterfly fiber optic cable products (a total of about 9.03 million core kilometers) centralized purchasing project bidding. 2023 the second half of the year, China Unicom, China Radio and Television will also generate a certain amount of fiber optic cable purchasing demand, worthy of the industry to look forward to.

It is worth noting that, in addition to the operator market, the non-operator market will also release a certain amount of fiber optic cable demand: grid construction, the State Grid will increase investment in 2023, grid investment will be more than 520 billion yuan, creating a new record high; the South China Power Grid "fourteen-five" investment will be more than 620 billion yuan, focusing on investment in South China Power Grid will invest more than 620 billion yuan in the "14th Five-Year Plan", focusing on the "two new and one heavy", power supply, construction of new power systems, digital transformation and other areas, and plans to invest about 80 billion yuan in 2023 to accelerate the construction of projects in Guangdong. As for railroad rail transportation and other areas, the investment in railroad fixed assets is expected to reach RMB 840 billion per year in 2023-2025, and the average annual investment is expected to be lifted by 18% compared with that in 2022. According to the Outline of Railway Advance Planning for a Strong Transportation Nation in the New Era released by the National Railway Group, the modernized railroad network will be the first to be built by 2035, and the national railroad network will reach about 200,000 kilometers. Among them, about 70,000 kilometers of high-speed railways will be available, cities with a population of more than 200,000 will be covered by railroads, and cities with a population of more than 500,000 will be accessible by high-speed railways. By 2050, a more developed and complete modernized railroad network will be built. Power grid, railroad and rail transportation construction continues to promote, will undoubtedly pull the non-operator market part of the demand for fiber optic cable, the relevant cable bidding projects will be launched one after another.

Looking ahead to the second half of the year, by the operator as well as non-operator market cable procurement focused on the impact of the release of orders too concentrated, will lead to fiber optic cable manufacturers in the consumption of the original fiber optic cable inventory at the same time, but also will face a certain amount of scheduling and production pressure.