Summary of 2024 Fiberglass Annual Conference: Industry self-discipline promotes high-quality development, looking forward to increasing demand in emerging fields

On December 12th, the 2024 Annual Meeting of China Glass Fiber Industry Association was successfully held. The meeting conducted in-depth discussions on the recent industry operation, industry self-discipline, intelligent transformation, and promotion of new application areas. We conclude that the current fiberglass industry has shifted from high-speed development to high-quality development, and industry self-discipline has gradually become a consensus among enterprises. Looking ahead to the next 25 years, we are optimistic about the continued rapid growth in demand in the wind power sector, while new application areas such as ocean/photovoltaics are expected to contribute incremental growth. We look forward to the implementation of wind power yarn pricing to support the profitability improvement of fiberglass enterprises, and leading enterprises with technological strength and high-end product structure are expected to benefit.

On the supply side, the growth rate of production capacity and output slows down, and industry self-discipline promotes healthy competition

According to the China Glass Fiber Industry Association, the cumulative production growth rate of domestic glass fiber has continued to decline in the past 24 years. Since May, the year-on-year growth rate of single month production has turned from positive to negative. However, since Q3, new production capacity has gradually been released. According to Zhuochuang Information, as of 11M24, the national glass fiber production capacity is 7.818 million tons, a year-on-year increase of 14.2%. Although the industry's production capacity continues to grow, we believe that unlike previous years, in the past two years, the newly ignited production capacity has mostly been dynamically regulated by supporting cold repair of old production capacity. According to statistics from the China Glass Fiber Industry Association, in the past 23 years, the seven major domestic glass fiber enterprises have shut down a total of 15 production lines, with a total production capacity of 1.01 million tons. Guiding industry self-discipline is an important responsibility of the association. Leading enterprises take the lead in repairing outdated production capacity and delaying the pace of new production capacity, which reflects the gradual consensus of industry self-discipline and helps promote healthy competition and high-quality development in the industry.

Import and Export: Since Q3, the export growth rate has fallen, and attention is being paid to the progress and impact of tariff policies

According to Zhuochuang Information, as of 10M24, the export volume of glass fiber and products in China was 1.788 million tons, a year-on-year increase of 14.0%. However, the overall export growth rate slowed down in the third quarter, with September's export volume hitting a new low for the year, a month on month decline of nearly 18.0%. In November, the Ministry of Finance and the State Administration of Taxation issued a notice on adjusting the export tax rebate policy, in which the export tax rebate rate for glass fiber and products was reduced from 13% to 9% from December 1st. The meeting had in-depth discussions on this matter, and we concluded that a decrease in export tax rebate rates may have a certain impact on the export profits of fiberglass enterprises in the short term. Currently, fiberglass enterprises may share the impact by negotiating price increases with distributors and downstream customers; In the medium to long term, we believe that reducing the export tax rebate rate will help avoid low price competition, force companies to adjust their product structure and enhance their competitiveness, and further strengthen their international influence.

Demand side # 1: We are optimistic about the simultaneous increase in wind power yarn quantity and price, and look forward to the support of re pricing to improve profitability

According to the National Energy Administration, from January to October of 2024, the domestic wind power installed capacity increased by 45.8GW, a year-on-year increase of 23%. Since the third quarter, wind power bidding and installation have shown an accelerating trend. Referring to the new team of Huatai Electric's "Wind Power: High Domestic Installed Capacity, Smooth Overseas Progress" (241129), it is expected that the domestic onshore wind installed capacity will increase by 82/88GW and the offshore wind installed capacity will increase by 8/12GW in 24/25. The continued high growth of wind power installed capacity in 25 years is expected to drive the demand for fiberglass wind power yarn. In November, Chinese companies such as Giant Stone successively issued re pricing letters, with a re pricing of 15% -20% for products such as wind power yarn. The simultaneous increase in wind power yarn quantity and price is expected to support the improvement of profitability for glass fiber enterprises. Meanwhile, as wind power yarn is a high-end product with technological and certification barriers, only a few top companies have production capacity. Therefore, we believe that leading enterprises with technological strength and high-end product structure are expected to benefit more.

Demand side # 2: New application areas continue to expand, and demand for ocean/photovoltaic frames is expected to increase

In recent years, the fiberglass industry has continued to expand its research and development of new applications and products in areas such as photovoltaic new energy, safety protection, marine development and construction, smart logistics, and energy-saving insulation. This conference gave a special report on the promotion and application of fiberglass in new fields such as security, photovoltaics, and ocean. It was mentioned that fiberglass products have excellent lightweight, high strength, salt spray resistance, and seawater corrosion resistance, and are expected to play an important role in material empowerment in marine development and construction fields such as ocean pastures, offshore platforms, offshore new energy, fishing boats, fishing gear, and reef docks; In the field of photovoltaics, according to the research and development promotion working group for glass fiber products used in photovoltaics, the order volume of glass fiber composite materials on photovoltaic frames is expected to reach 4GW in 24 years and continue to increase in 25 years. We believe that the development of new fields and tracks is expected to open up growth space for the industry and is the key to its long-term sustainable development.