CRU: Impact of the Novel Coronavirus on the Optical Fibre Industry
LONDON, Jan. 4, 2020 /PRNewswire/ -- The novel coronavirus (2019-nCov) outbreak in Wuhan, Hubei, has led to Chinese New Year holidays being extended and transportation restrictions introduced in order to contain the spread of the virus. Demand is usually weak during this period, but production usually continues, albeit at reduced levels. With Wuhan alone accounting for over 20% of Chinese preform capacity, any significant and ongoing disruptions could make a discernible impact to domestic and indeed global supply. Furthermore, any impact on other dominant fibre and cable manufacturing provinces such as nearby Jiangsu would compound the issue, but all assessments remain highly speculative at this early stage.
Background: what is 2019-nCov and what is the latest response from provincial governments?
In only 13 days from 16 January, the number of people infected with the coronavirus in China went from 45 to almost 6,000, plus over 9,000 suspected cases. On Wednesday 28 January, the death toll reached 132, with confirmed cases reported in 12 other countries, including the US, Japan, France and Singapore.
More than 60 million people in 15 cities in China have been fully or partially locked down since the virus outbreak. On top of this, the Chinese government has extended the Chinese New Year public holidays, to delay the mass migration of people back to work. In Shanghai and nearby Suzhou in Jiangsu province, the holiday period has been extended further, until 9 February. Meanwhile, the Hubei Provincial Government have determined a further extension, suggesting the resumption of work across all industries will not take place before midnight on 13 February.
What does this mean to the fibre optic industry?
In terms of geography, Wuhan is the capital of Hubei province with 60 million people. Its central location and proximity to the Yangtze River means it's an important logistical hub for China. With regards to Wuhan and wider Hubei's importance in the domestic and indeed global fibre optic industry, it cannot be understated. Although any assessment of the likely impact of the virus on the Chinese optical fibre industry remains highly speculative currently.
Out of the 'Big 5' Chinese producers, two of them, YOFC and Fiberhome, have a significant presence within the province of Hubei. YOFC's wholly owned preform factory in Wuhan, with an annual capacity of 64M F-Km is one of the biggest preform manufacturing facilities in the world. YOFC also have two JV operations with Shin-Etsu with a combined capacity of 64M F-Km also located in Qianjiang, Hubei. Meanwhile, Fiberhome's JV with Fujikura is located in Wuhan and has an estimated capacity of 33M F-Km.
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