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In-depth analysis of glass fiber industry

 The drawing process of the tank kiln is the main production process of glass fiber. From the point of view of cost, the control of upstream raw materials and energy can reduce the cost of raw materials, the degree of automation of production lines can improve efficiency, reduce labor costs, and the scale of production capacity can reduce the cost of unit depreciation. The products and composite materials industry in the middle and lower reaches belongs to the light assets industry, with a wide variety of products and new uses, enterprises need to increase R & D investment and maintain high profit margins through the continuous introduction of new products.


Industry barriers to entry, new capacity growth slowed


Glass fiber industry entry threshold high, High industry concentration, The world's top five companies account for 64% of capacity, China's top six enterprises account for 80% of capacity. The year 2018 is a year of concentrated production of glass fiber, Domestic glass fiber production growth rate 15%/13% in 2018/2019, resulting in an oversupply. Glass fiber capacity growth will decline in the future, Production capacity is expected to grow by 7.5%-3.3% in 2020/2021. High exports, Waiting for the recovery of overseas epidemic demand recovery glass fiber applications are extensive, Focused on construction and transportation, Influenced by macroeconomics, Global glass fiber demand growth is about 1.6 times GDP growth. Affected by the overseas epidemic in 2020, Domestic glass fiber exports blocked, Global glass fiber demand is expected to grow at -8.3 per 6.7 per cent by 2020/2021, China's glass fiber demand growth rate of 1.6%/11%, Glass fiber demand is expected to improve in 2021.


Supply elasticity is weak, prices fall near cost


After the production line of glass fiber is opened, it needs 8-10 years of continuous production, and it is difficult to reduce the load regulating output halfway, so the supply elasticity of glass fiber is weak. When the demand improves, because of the rigid supply, the price upward elasticity is large; when the demand falls, the kiln can not stop production, resulting in an increase in inventory, when the inventory increases to a certain extent, there will be a reduction in prices to go to inventory. At present, the price of coarse sand has fallen near the cost line of some enterprises, and the further decline of the price will lead some enterprises to shut down their production capacity and reach the supply contraction.


The price is at the bottom of the cycle and the elastic release after the layout demand improves


Because the overseas epidemic is not over, some new production lines will be put into production in the 3-4 quarter of 2020, the supply and demand situation of the industry is difficult to change significantly, and the roving price will still hover at the bottom. Domestic glass fiber supply growth is expected to be 3.3% in 2021, demand growth rate of 11%, industry fundamentals are expected to improve, glass fiber prices are likely to rise. Because the industry entry threshold is high, and the industry concentration degree is high, the leading enterprise cooperation expectation in the demand rise is strong, the glass fiber price elasticity increases, optimistic after the epidemic situation improves the glass fiber price trend.




Aug 19, 2020