Analysis of China’s glass fiber industry in 2024 and forecast for 2025
First of all, let me summarize:
Glass fiber is a reinforcing and alternative material with a wide range of downstream applications. Glass fiber is an inorganic non-metallic material with excellent performance, usually used as a reinforcing and alternative material. From the production characteristics, the technology and capital threshold of the glass fiber industry are relatively high. A roving production line with an annual output of 120,000 tons requires about 1.2 billion CNY in fixed asset investment. At the same time, similar to glass, the production has the characteristics of continuity and follows an 8-10 year cold repair cycle.
Then
From the perspective of downstream demand, the application field of glass fiber is wide and continues to expand. At present, global glass fiber is used in infrastructure and building materials, transportation, electronics and electrical, industrial equipment, and energy and environmental protection, accounting for 35%, 29%, 14%, 12%, and 10% respectively. From 2012 to 2022, the global glass fiber production increased from 5.3 million tons to 10.41 million tons, with a CAGR of 7.0%. In 2022, my country’s glass fiber production accounted for 66% of the world’s total. In 2023, China’s glass fiber yarn production was 7.23 million tons, a year-on-year increase of 5.2%. Among them, the total output of glass fiber electronic yarn was 788,000 tons, a year-on-year decrease of about 2.2%, the total output of glass fiber industrial yarn was 744,000 tons, a year-on-year increase of 7.9%, and the total output of glass fiber reinforced yarn was 5.7 million tons, a year-on-year increase of 6.0%, of which the output of ordinary thermosetting roving, wind power high modulus yarn and thermoplastic yarn reached 2.92 million tons, 1.14 million tons and 1.64 million tons respectively.
Next
From the perspective of upstream costs, raw materials, labor, depreciation and energy account for a relatively high proportion. In 2023, materials, labor, depreciation, energy and transportation accounted for 45%, 12%, 10%, 26% and 3% of the cost of glass fiber and products of Changhai Co., Ltd. respectively. One of the important components of raw materials is pyrophyllite, and my country is one of the countries with the richest reserves of pyrophyllite ore, and resources are concentrated in Zhejiang/Fujian, etc., which is also the important production base of giants such as Jushi. The supply and demand pattern has improved marginally, and the bottom of glass fiber prices has rebounded.
Since 2014, the price of roving has experienced three cycles. The first two cycles lasted about 3 years. The third round of rising cycle lasted from 2020Q3 to 2022Q1, and the downward cycle lasted from 2022Q2 to 2024Q1, which is close to 4 years. After 2024M3, the leading enterprises raised prices one after another, and the price of glass fiber rebounded by about 25% from the bottom. This is mainly due to the serious losses in the industry, the active adjustment of the strategy by the leading enterprises, the marginal improvement of demand in the peak season in March and April, and the active replenishment of inventory in the middle and lower reaches driven by price increases. With the end of the replenishment of inventory in the middle and lower reaches in April and May, coupled with the weak demand in the off-season in July and August, the inventory of glass fiber manufacturers has stopped falling and rebounded since June, and the inventory pressure has gradually increased. At the same time, the capacity construction of the industry after the price recovery in the second quarter has accelerated (the production capacity in the first eight months increased by 340,000 tons), and there may still be new capacity release in 2024H2 and 2025. Therefore, whether the subsequent prices can be stable or raised again depends on the terminal demand after the peak season.
Judging from the performance in the first half of the year, the demand in the automotive/wind power/export/electronics fields is still acceptable, and new markets such as photovoltaics are still being cultivated. We will pay attention to terminal demand and inventory performance in the future. It is expected that the short-term prices will be relatively stable under the active stabilization of major manufacturers. Among them, the electronic yarn pattern is better than the coarse yarn, and the price may be more resilient. The industry has a high degree of concentration, and the leading companies have outstanding advantages in cost, technology, etc.
The production capacity of the world’s seven leading glass fiber companies accounts for 70% of the global production capacity, and the production capacity of the three leading domestic companies (Jushi, Taishan, and International Composites) accounts for more than 60% of the domestic production capacity. China Jushi has a global market share of 23% (2020) and an annual production capacity of 2.6 million tons of glass fiber yarn. In the past ten years, Jushi’s average net profit margin has been 7-13pct higher than that of other listed companies, mainly due to cost control (behind the advantages of scale, regional layout, controlling raw material suppliers, advanced equipment, etc.), and a high proportion of mid-to-high-end products (behind customer resources, technology and product strength).
In addition, the company has achieved a global layout, and overseas revenue accounts for nearly 40%. Sinoma Science & Technology and Jushi are both controlled by China National Building Materials Co., Ltd., and its subsidiary Taishan Fiberglass has an annual production capacity of 1.4 million tons; at the same time, Taishan Fiberglass products are mainly mid-to-high-end, with a high proportion in new energy, transportation, electronics and other fields, especially wind power business has advantages.
Mainly because Sinoma Science & Technology is focusing on glass fiber, blades and lithium membrane businesses at the same time, its subsidiary Sinoma Blades is the leader in the wind power blade industry, with a global market share of 26%. International Composites accounts for 10% of global production capacity, ranking among the top four in the world. The company has become one of the world’s most important suppliers of wind power yarn and fabric in the field of wind power blades, with a market share of over 25%, and is also in the leading position in the high-end electronics and thermosetting fields. After listing at the end of 2023, it will raise 1.86 billion yuan for project construction, etc. Changhai Co., Ltd. is a private enterprise with a complete industrial chain from glass fiber production, product processing to composite material manufacturing, which makes its profit margin at the forefront of the industry. Changhai plans to invest in the construction of a 600,000-ton project, which is far higher than the current production capacity of 290,000 tons, and has great potential production capacity elasticity.
Last
In the past two years, the Chinese glass fiber industry has experienced a downward trend in business sentiment, with prices falling sharply and the industry suffering from severe losses. As leading enterprises actively adjust their strategies and the supply and demand structure improves, glass fiber prices have rebounded significantly since the second quarter, which is expected to drive a gradual improvement in corporate performance in the second half of the year. Whether glass fiber prices can continue to rise depends on the relationship between supply and demand, but given the high concentration of the industry and the strong willingness of leading enterprises to stabilize prices, it is not appropriate to be pessimistic about the price of glass fiber, especially electronic yarn.