China supply and demand in the fiberglass industry continue to improve with price increasing implemented in May

Supply and demand in the fiberglass industry continue to improve, with price increases implemented in May

China fiberglass
Midstream and downstream stocks are concentrated, and fiberglass roving quotations continue to increase in May.
On May 6, the quotations of alkali-free rovings and products of fiberglass companies continued to increase, with various products increasing by about 200-500 yuan/ton, an increase of about 5%-10%. Mainly due to centralized stocking in the mid- and downstream sectors, while terminal demand such as exports is still being gradually released. Considering that the price of electronic yarn has temporarily stabilized after the first round of price resumption in the early stage, and the short-term supply side continues to shrink and the demand for downstream PCBs improves, it is expected that the price of electronic yarn/electronic cloth will also continue to rise in the future. The supply and demand in the fiberglass industry is expected to be relatively optimistic in the second and third quarters of this year, and continued price increases are expected to significantly improve the profitability of fiberglass companies.

Wind power/automobile/export demand continues to grow at a good rate, and electronics demand is expected to gradually recover

The downstream demand for glass fiber is relatively diversified. According to the National Energy Administration, the country's newly installed wind power capacity in the first quarter of this year was 16GW, a year-on-year increase of 49%. The continued high growth in installed capacity is expected to drive demand in the wind power field. According to the China Association of Automobile Manufacturers, China's passenger car production increased by 7% year-on-year in the first quarter. The growth in automobile production and the continued increase in the use of fiberglass bicycles are expected to drive steady growth in demand for products such as thermoplastic yarns. At the same time, driven by policies such as large-scale equipment updates, demand in areas such as home appliances is expected to improve. It is understood that in the first quarter of this year, my country exported 530,000 tons of fiberglass and products, a year-on-year increase of 12%, and exports continued the upward trend since the second half of 2023. In terms of electronics, according to research, the operating rate of copper foil for electronic circuits in March this year was 70.3%, a month-on-month increase of 19.9pct. The slow recovery in the downstream is expected to drive improvement in demand in the fiberglass electronics field.

The association speaks out to guide the high-quality development of the industry, and the release of new supply continues to slow down
On May 6, the China Glass Fiber Industry Association issued the "Proposal for the High-Quality Development of the Glass Fiber and Products Industry", which mentioned "enhance industry collaboration and self-discipline awareness, make scientific and calm decisions on production capacity expansion projects" and "industry-wide efforts to reduce ineffective production capacity" Supply", the association's active guidance and voice are expected to promote healthier development of the industry. It is understood that there has been no new production capacity in the fiberglass industry since April this year. In early April, the Xingtai Jinniu 40,000-ton production line and the Sichuan fiberglass 30,000-ton electronic yarn production line were under cold repair. It is estimated that the fiberglass output in April decreased by 4% month-on-month. Above, supply-side pressure is expected to continue to ease.

As supply and demand improve, inventories are expected to continue to decline, and rising prices are expected to drive the recovery of corporate profitability.

According to Zhuochuang Information, as of the end of March 2024, domestic fiberglass yarn sample inventory was 794,000 tons, a month-on-month decrease of 112,000 tons. Driven by month-on-month supply and demand improvements and price increases, inventories continued to decline significantly in April. According to Zhuochuang Information, the average price of 2400tex alkali-free winding direct yarn, the mainstream product in the fiberglass industry, in April was 3,325 yuan/ton, an increase of 245 yuan/ton from the average price in March. With the implementation of the price increase in May, the average price in May is expected to increase again. At the same time, with the end of the heating season in April, natural gas prices are expected to fall. It is expected that the net profit per ton of fiberglass companies in the second quarter of this year is expected to increase by more than 500 yuan/ton, and profitability is expected to significantly improve.