What is the biggest drawback of China's cable industry?

What is the biggest drawback of China's cable industry? Some people may say that the market competition is unfair, some may say that there is a lack of emphasis on quality and technological innovation, some may say that there is a shortage of professional talents, and more people may say that the downside is that raw material prices remain high, resulting in extremely low profits.

The high prices of raw materials result in extremely low profits. Among all these answers, the most convincing bottleneck for the rapid development of China's cable industry is this one; Some people say there are professional talents, while others say there are too many fake and inferior products, etc. If the price of raw materials decreases and the profit of cables increases, these are not problems. If the price of raw materials decreases, who still needs to manufacture fake and inferior products to win profits; Similarly, if the prices of raw materials decrease and the profits of cable companies skyrocket, cultivating professional talents is naturally not a problem. If the profit of this industry is very low, who would be willing to work in this industry? So, ultimately, we still need to lower the prices of raw materials and increase the profits of the enterprise, in order to talk about quality and talent.

Copper is the most important raw material for wires and cables, accounting for 70% -80% of the total production cost. Therefore, reducing the cost of wire and cable raw materials is actually reducing the price of copper. China's cable industry has always used copper as the raw material for cable cores, but China's copper resources are not abundant, and the recent rise in copper prices has led some cable companies to compress raw materials for cable production, making already low-quality cables even more unqualified and unable to compete with some big brands and foreign cables. So if the price of copper is not lowered, the development of China's wire and cable industry will be difficult to achieve. From this, it can be seen that reducing raw material costs is not only the key to increasing profit margins for cable production enterprises, but also the key to improving product quality.

However, from the reality, it is also impossible to lower the price of copper. China has scarce copper resources, and copper is the second largest strategic material after oil, with an import dependence of up to 60%. China is already the world's largest producer and consumer of wires and cables. In 2012, the total copper consumption in China's wire and cable industry was 5.1 million tons, accounting for 68% of the country's total copper consumption that year. The industry's copper consumption that year was 2.83 times that of 2000, and in 2012, China's total copper consumption accounted for about one-third of the world's total. Therefore, China has had to import a large amount of copper for a long time, including refined copper and copper ore. In the face of huge demand, China is severely lacking in copper resources.

The top ten mining giants in the world control nearly 75% of the world's mining production, and China's copper reserves are about 26 million tons, with an actual annual copper consumption of nearly 5 million tons. Goldman Sachs Group predicts that China's copper demand will soar by 8% in 2013, reaching an unprecedented 8.833 million tons, which will increase global demand and create a supply-demand gap of 6000 tons, compared to 216000 tons of oversupply in 2012.

It is estimated that China's copper resources can support up to 5 years. Due to the relative scarcity of copper resources, 70% of copper concentrates in China rely on imports, which puts great pressure on smelting enterprises and causes a sharp increase in costs. According to relevant companies, for every ton of copper imported from abroad, the company will lose 1000-2000 yuan. At the same time, as more and more companies enter the cable production field, the cable industry's dependence on copper imports is constantly increasing, leading to an increase in manufacturing and construction costs.

As the most important raw material in wire and cable, copper prices have risen too quickly in recent years, making the wire and cable industry unable to bear the burden. Since copper prices cannot be reduced, a material must be found to replace copper. As a type of metal wire, aluminum has abundant resource reserves in China, with about 2.7 billion tons. In this situation, exploring the use of aluminum instead of copper and producing aluminum alloy cables has become a necessary choice for China's cable industry. This is also the only way to break the bottleneck of the cable industry caused by high copper prices and the scarcity of copper resources in China.

In fact, aluminum alloy cables have been used for many years in European and American countries. They were developed and used by American scientists in 1968 and have been in use for more than 40 years. They have a market share of up to 80% in North American countries, and have withstood the test of time and history. Aluminum alloy cables have also passed the testing and certification of international authoritative institutions such as the United States, Canada, Australia, and the China National Cable and Wire Testing Center. Moreover, aluminum alloy cables have unparalleled economic and environmental advantages over traditional copper core cables, from raw material production, processing, manufacturing to transportation, installation, operation, and recycling, making them the best alternative to copper cables.

In developed countries in Europe and America, the proportion of aluminum conductors used for insulated wires and cables is much higher than in Asian and African countries, and some countries use aluminum conductors for all medium voltage cables. In developed regions such as Europe and America, many churches, hospitals, and government agencies use aluminum instead of copper as the best substitute for copper cables when purchasing cables. As a trend, the proportion of aluminum conductors used in insulated cables is continuously increasing worldwide, including China.

There are many advantages to using aluminum core cables instead of copper core cables. In terms of investment costs, compared to copper core cables with the same current carrying capacity, 35 kV aluminum core cables can save costs by 40% -60%, and 10 kV aluminum core cables can save costs by 50% -70%. Moreover, the larger the cable cross-section, the more significant the effect. At the same time, in terms of transportation, laying overhead and other construction, due to the small outer diameter and light weight of aluminum core cables, they are more labor-saving and labor-saving than copper core cables, and the matching of cable accessories is also easier to solve. In distribution network construction projects, the use of aluminum core cables can not only meet the requirements of power grid development, but also reduce construction costs.

As a new type of energy-saving material, aluminum alloy cables conform to the new concept of low-carbon and environmental protection, so it can be imagined that they will be increasingly widely used in future development. From a government perspective, this application is also highly welcomed. The Ministry of Housing and Construction, State Grid, State Fire Protection Administration and other departments have widely recognized the use of this new technology in China. The safety performance, electrical performance, and mechanical performance of aluminum alloy power cables have been tested by relevant departments and meet the requirements of relevant standards. They are gradually being promoted and used in power engineering in China.

The aluminum consumption in the domestic wire and cable industry has increased from about 600000 tons in 2000 to about 2.3 million tons in 2012, with an average annual growth rate of about 23.6%, far exceeding the growth of GDP. In 2012, the amount of aluminum used for overhead lines was about 1.8 million tons, accounting for 78.2% of the total aluminum used in the domestic cable industry In the future, the research and development of aluminum alloy cables will be a major trend.