U.S. Demand for Insulated Wire and Cable to Exceed $26 Billion in the Year 2006

Demand for insulated wire and cable in the United States is forecast to rise 5.1 percent annually (including price increases) through 2006, exceeding $26 billion, according to Insulated Wire and Cable, a new study from The Freedonia Group Inc., Cleveland, Ohio.

While well below the robust gains registered throughout most of the 1990s, forecast growth represents a significant improvement over the early 2000s performance, which was characterized by weakness in technology-related capital investment.

The best growth prospects will be for high-end products such as fiber optic, coaxial and multiconductor wire and cable. Motor vehicle wire will also post improved gains, due to the brightening outlook for U.S. light vehicle production. However, gains for the industry will be dampened by a difficult pricing environment, as wire and cable is becoming increasingly viewed as a commodity item. The study points out that the principal growth-restraining factor for fiber-optic cable will be the capacity glut prevailing in the wake of the overbuilding of fiber-optic networks in 1999 and 2000. This will take some time to alleviate, although cable demand is expected to recover and begin to grow rather rapidly as demand for high-speed data services expands with greater availability, working off the capacity glut and possibly creating new shortages.

International trade will continue to be a major factor in the industry, as imports and exports each comprise over 20 percent of total shipments. Export opportunities will be best for more advanced products such as fiber-optic cable, since these products will be increasingly used in the construction of telecommunications networks in developing nations.

Communications will continue to be the largest market for wire and cable, due to the wide range of applications involved. Although gains will exceed the industry average, decelerating growth in capital investment by telecommunications suppliers will cause gains to slow from the 1990s pace. Communications and information processing are expected to provide the fastest growth of any markets, due to continuing increases in computer networking. Rising production in the motor vehicle industry will also create opportunities, as will the increasing amount of electronics content in U.S.-produced vehicles.