Starting from March, Chinese fiberglass enterprises collectively issued price increase letters, and the first round of price increases has been implemented. Entering the second round in April. Fiberglass enterprises have followed suit one after another, and for a while, the letters of reply prices have been flying everywhere. Coupled with the steady growth of demand, the fiberglass industry has ushered in a long-awaited situation of both quantity and price rising. So, does this mark that the fiberglass industry has emerged from the bottom of the cycle?
Firstly, marginal improvement in supply and demand is a necessary condition for the re pricing of fiberglass, and synergy can only change the pace.
The core reason for this glass fiber re pricing is the recovery of demand for exports, thermoplastics, wind power, etc., as well as the withdrawal of outdated production capacity and an increase in cold repair capacity. In March, the inventory of production enterprises in the industry significantly decreased (the number of days of inventory for manufacturers at the end of March was about 40 days, with a month on month decrease of about 6 days), and it is expected to continue to reduce inventory in the future; Secondly, there have been changes in the strategies of leading enterprises, no longer actively engaging in price wars, and adapting to the market for restorative price increases.
This round of fiberglass supply has slowed down, reflected in the withdrawal of outdated production capacity and an increase in cold repair capacity.
Since the second half of 2022, the supply and demand of fiberglass have weakened, and prices have continued to decline, causing the profitability of fiberglass to return to its lowest level in recent years, with small businesses reaching the point of losing cash flow costs. Due to the long duration and high profitability of the previous round of business in the industry, as well as the increase in the number of companies going public and cash on hand, the supply contraction at the bottom of this cycle is slower, and the profitability level has reached a new low. But the direction of the slowdown in new supply is very clear: after glass fiber enterprises suffered extensive losses in the second half of 2023, on the one hand, backward production capacity withdrew. In 2023, domestic glass fiber production was about 7.23 million tons, an increase of 360000 tons year-on-year, of which pool kiln yarn production was about 6.87 million tons, an increase of 430000 tons year-on-year, due to a decrease of 70000 tons in backward production capacity year-on-year; On the other hand, the capacity of cold repair will increase. The capacity of cold repair will be about 230000 tons in the second half of 2023, and about 170000 tons since 2024 (about 50000 tons of Mount Taishan fiberglass electronic yarn, 50000 tons of international composites in Brazil, 40000 tons of Xingtai Jinniu, and 30000 tons of Sichuan fiberglass electronic yarn, and there are still other cold repair plans). With the slowdown of new fiberglass supply, it is expected that the industry's new production capacity will be basically controllable in 2024.
Has the demand for fiberglass improved in this round? The demand increment in 2024 will continue, with a focus on emerging demands such as photovoltaic frames.
In 2023, it is expected that the global glass fiber scale will be about 10 million tons, while the domestic production will be about 7.23 million tons. It is estimated that the domestic apparent demand (domestic production net exports ending inventory changes) will be about 5.4 million tons, of which exports will account for about 25%. The export volume in 2023 will slightly decrease compared to the previous year, with export demand accounting for more than 30%; In 2023, the domestic production structure of fiberglass is 40% for ordinary thermosetting yarn, 16% for wind power high modulus yarn, 23% for thermoplastic yarn, and 21% for electronic appliances (corresponding to fine yarn). The increase in domestic demand mainly comes from wind power, thermoplastic, etc., while exports, electronics, construction and other fields are under pressure. It is expected that the increase in demand in 2024 will mainly come from exports, thermoplastic, wind power, etc. In addition, emerging demands such as photovoltaic frames will begin to increase on a small scale, so the demand increase will continue this year.
