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  • Published In : May 2024
  • Code : CMI6993
  • Pages :136
  • Formats :
      Excel and PDF
  • Industry : Advanced Materials
Market Challenge: Volatility in raw material prices

Volatility in raw material prices can hamper the global aluminum cable market growth. Aluminum is one of the key raw materials used in the production of aluminum cables, however, aluminum prices have been quite volatile in the recent years. Aluminum is sourced from bauxite mines and the price of bauxite is dependent on international commodities markets. Thus, any fluctuations in the price of bauxite is directly reflected in aluminum prices. In 2020-2021, prices of aluminum witnessed fluctuation ranging between 15-30% due to uncertain economic environment caused due to COVID-19 pandemic. The fluctuating prices made effective forecasting and planning quite challenging for aluminum cable manufacturers.  The volatility had significant ramifications on the operations and profitability of aluminum cable manufacturers. With raw material costs constituting over 60% of the total production costs, unstable aluminum prices meant frequent changes had to be made to product pricing, and this renders marketing and sales strategies ineffective in the short term. Manufacturers were forced to decide between absorbing higher costs and losing margins or regularly increasing product prices to pass on the rising costs. Both options impacted consumer demand and purchasing decisions in the short run.

 Market Opportunity: Development of smart cities

The rapid urbanization across the world is driving many governments to focus on developing smart and sustainable cities. These smart cities aim to improve quality of life for citizens by leveraging the latest technologies to boost efficiency and connectivity. One of the major focus areas for smart cities is building out underground and overhead infrastructure for power transmission and telecommunications networks. As more smart cities projects take shape, there will be a massive demand for laying down cables to enable the high-speed data transmission and smart grid capabilities envisioned by these developments.  Aluminum is increasingly becoming the material of choice for power and telecom cables due to its lightweight and corrosion resistant properties. Aluminum cables allow for longer transmission distances without additional voltage drops as compared to copper. Thse also have significantly less oxygen permeability, thus, reducing maintenance and repair requirements over the cable lifespan.

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