Summary of Industrial Study

Introduction
The purpose of this report is to give an overview brief about the Copper and Aluminum are the preferred conductors for power
power cables industry in the Kingdom where it explains the cables. Copper has a higher conductivity than Aluminum. It is
product and its manufacturing process, talks generally about more ductile and has relatively high tensile strength It can also
the market, provide supply and demand analysis in the be easily soldered. However, copper is typically three times
Kingdom, competition, and pricing of cables.
more expensive and is heavier than Aluminum. Although
Aluminum has only about 60 percent of the conductivity of
Product Description
copper, its lightness makes long spans possible and therefore it
Power cable is used in the transmission and distribution
is preferred for high voltage overhead lines.
networks that transport electric power from the generation
facilities to the consumer. In the network there are four types of Manufacturing Process
cable which are segmented according to the maximum voltage Power Cables are made of solid or stranded copper /aluminum
(in kilovolts KV they can support): High Voltage (HV), wires surrounded by applying a layer of insulating material i.e.
Medium Voltage (MV), Low Voltage (LV) and Building Wire PVC (polyvinyl chloride) or XLPE (cross linked polyethylene)
(BW). around the cable. XLPE is mainly used in high voltage cables
due to its excellent thermal and mechanical aging
Applications for power cables in the KSA are divided into
characteristics & very low dielectric loss. Armored cables are
transmission and distribution. Transmission applies to the
surrounded by steel strands wrapped round the cable and may
transfer of high voltage electricity from generating stations to
be deployed in underground or overhead configurations. Power
sub-stations which is achieved by a mix of bare overhead lines
cables are subject to strict international specification standards.
and underground cables. Distribution refers to the transfer of
medium and low voltage electricity from sub-stations to end Since the main cost component of a power cable is the copper
users and is mainly underground. Distribution is achieved using or aluminum content, production volumes are usually
a mix of medium voltage, low voltage cable and building wire. measured in terms of metal tons, i.e. the content of metal in the
finished cable.
Type Item Voltage range Power Transmission Application
High Voltage 40KV to
HV From generating plant to substation Market Overview
Cables 150KV
Medium Voltage From substation to distribution The power cable industry in the KSA is divided into two main
MV 6 KV to 36 KV
cables transformers
market segments: the HV/MV segment and the LV/BW
Transmission of power from
LV Low Voltage cable Less than 1 KV
Transformers to buildings segment. This reflects the role of the SEC as the dominant
Internal wiring in houses, offices, customer in the HV/MV segments and a major customer in the
BW Building wires Less than 1 KV
factories etc.
LV segment. SEC customers grew from 3.6 million in 2000 to 8
million in 2015, a 5 % CAGR. Major transmission projects have

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now been completed and the focus for the coming years is in Supply/Demand
distribution projects. There are approximately 8 local producers and the following
table represents the local production, imports, exports and local
Local manufacturers tender for SEC projects and tenders are
demand for the period 2013-2015:
awarded based on an SEC supplier ranking system. Competition
in the KSA power cable sector is intense due to the structure of Product Segment 2013 2014 2015 CAGR
Local
the industry. Demand
29,167 31,699 31,389 9.5%
High Voltage
Growth% %8.7 1% -
The main customers in the LV and BW segments are
Local
independent construction contractors who connect buildings 103,076 104,100 109,450 3%
Medium Demand
Voltage Growth%
and factories to the substations and provide the internal wiring %1.0 5.1% -

within such buildings. Therefore demand in these segments is Local

175,963 187,930 190,442 4%
Demand
Low Voltage
driven by construction and industrial demand generally. Growth% %6.8 1.3%
Local
The major trend in the KSA power cable market is the transition 72,863 94,677 97,547 15.7%
Building Demand
wires Growth%
from copper to aluminum in the MV and LV segments. This %29.9 3% -
follows a strategic 2013 SEC decision to reduce costs and Local
308,144 320,641 337,780 %4.9
Production
leverage local production of Aluminum whereas all copper is Total Power Imports 112,433 133,588 127,050 %6.3
Cables Exports 39,508 35,823 36,002 %-4.5
currently imported into the Kingdom. Underground high Demand 381,069 418,406 428,828 %5.6
voltage cable and building wire will remain copper-based. Growth - %8.9 %2.5 -

Manufacturing equipment purchased in the last ten years is 500,000 10%

normally capable of dual copper/Aluminum processing and 400,000 8%

Growth Rate
300,000 6%
most producers are expected to cope with the transition.
Ton

200,000 4%
The demand of copper cables decreases by huge percentage, 100,000 2%
while aluminum cables demand increased. 0 0%
2013 2014 2015
While cable sheathing is predominantly PVC and XLPE, the Local Production Exports
trend to low-smoke cable is likely to affect the above material Imports Demand
choices in the medium term. Growth

Export has not been stable during the last period as it decreased
by 9% in 2014, and increased by 0.5% in 2015 which resulted
from the unstable economic situation in the middle east.
As the chart above shows, During the period of 2013-2015,
local demand has grown at a 6% CAGR, passing through
significant increase in 2014 by 9% driven by infrastructure and
construction demand, while in 2015 the demand increased by
only 2.5%. The drop in oil prices in 2015 has caused the growth

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 to slow not only for the cable industry, but also, the whole 520,000 4%
construction sector. 500,000 3%
Imports are concentrated in in LV and Building wires segments 3%

Growth Rate
480,000
due to the fact that most of its costs comes from copper which is 2%

Ton
460,000
not being produced locally. The demand of other segments are 2%
affected by the demand of SEC. 440,000
1%
The largest segment is the Low Voltage (44%), followed by 420,000 1%
Medium Voltage (25%), Building Wire (23%), and High Voltage 400,000 0%
2016 2017 2018 2019 2020
(7%) .
Future Demand CAGR (%)
The strongest growth segment has been building wires (16%
CAGR) followed by high voltage (9%), Low Voltage (4%), The expected future demand above was based on the expected
Medium Voltage (3%). effect of the drop of oil price on infrastructure and construction
projects. the future demand is estimated to grow at 3% CAGR
Future Demand
during the period 2016-2020.
The following table shows the demand forecast for power
cables in the KSA.

Metal Conductor
Tons/Year Demand Forecast- Power Cables KSA 2016-2020

2016 2017 2018 2019 2020

High Voltage 35,336 36,395 37,451 38,574 39,732

Medium Voltage 110,423 113,735 117,034 120,545 124,161
Low Voltage 194,344 200,173 205,980 212,160 218,524
Building wires 101,589 104,636 107,671 110,901 114,228
Total Power
441,692 454,939 468,136 482,180 496,645
Cables
CAGR 3%

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Competition
Competition in the KSA power cable sector is intense due to the
structure of the industry. With a dominant customer, the SEC, in
the HV/MV segments, who also plays a large role in the LV
sector, a diverse number of manufacturers are effectively
competing for the same business. Imports maintain
competitive pressure in the LV/BW segments.
in LV and BW segments. 11% of local production are exported.
Power cable prices are directly affected by LME prices of copper
and aluminum. Indeed, with the continuance growth of
infrastructure projects and construction as a whole, the cables
industry is expected to grow steadily in the next years.

Price
Pricing of power cables is based on a markup formula on the prevailing
London Metal Exchange (LME) prices for copper and aluminum respectively.
For longer term contracts include pricing formulas which reflect any changes
in LME pricing.

Conclusion
The industry of cables consists of two main market segments,
the HV/MV segment and the LV/BW. SEC is the dominant
customer in the first segment and is a major customer in the
second sector. Independent construction contractors are main
customers of the LV/BW segment; therefore, the segments is
driven by construction and industrial demand in general. Local
production of power cables reached 337 thousand tons where
imports constitute 30% of local demand and are concentrated

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