Is the survival of the fittest, transformation and upgrading the only way forward for China's fiberglass industry?
1. Clearing out backward production capacity under the sword of policy
According to the "Guidelines for Industrial Structure Adjustment (2019)" of the National Development and Reform Commission, the medium-alkali glass fiber pool kiln wire drawing production line and the alkali-free fiberglass roving pool kiln wire drawing production line with a single kiln scale of less than 80,000 tons/year are listed as restricted projects. These technical indicators are like the sword of Damocles, directly determining the life and death of small and medium-sized crucible wire drawing enterprises. Data show that in 2024, the output of medium-alkali balls will decrease by 26.9% year-on-year, the output of alkali-free balls will decrease by 33.9%, and the output of traditional crucible yarns will generally decrease by more than 30%, and the policy effect has been fully demonstrated.
Taking Linzhou Minghua Fiberglass as an example, its main medium-alkali glass ball production happens to be on the list of restricted projects. Such enterprises generally have hard flaws such as outdated equipment, high energy consumption, and low product added value. Against the background of stricter environmental protection standards and tightening energy consumption dual control policies, enterprises are unable to carry out environmental protection facility renovation and cannot afford the cost of technology upgrades, and eventually fall into the desperate situation of "no renovation or elimination". This policy-driven mechanism is essentially to promote the intensive development of the industry by raising the industry entry threshold.
2. The market winter accelerates industry differentiation
The continued downturn in the real estate industry has become the last straw that broke the camel's back for small and medium-sized crucible drawing fiberglass manufacturers. While the market demand for fiberglass mesh cloth for construction has shrunk, the price war caused by the overcapacity of fiberglass has continuously compressed the industry's average profit margin. The bankruptcy and liquidation of Shandong Xinyangguang Fiberglass is a typical victim of this "quantity and price decline" market environment.
But the other side of the coin is the explosive growth of emerging fields. The demand for high-end products such as high modulus yarn for wind turbine blades, lightweight composites for new energy vehicles, and low dielectric yarn for 5G base stations continues to grow. This structural differentiation has led to a "two-sided" situation in the industry: low-end fiberglass companies are struggling, while companies with electronic-grade fiberglass and high-performance composites are full of orders. The profits of leading companies such as China Jushi and Taishan Fiberglass will grow against the trend in 2024, confirming the strong market demand for high-end products.
3. Technological revolution reconstructs industrial ecology
The replacement of crucible process by pool kiln drawing technology is a foregone conclusion. The current single-line production capacity of advanced pool kilns can reach 150,000 tons/year, which greatly reduces energy consumption and greatly improves the yield rate compared with traditional crucible processes. This technological generation gap has sharply compressed the living space of small and medium-sized enterprises.
The integration of intelligent manufacturing and green production is rewriting industry rules. For example, China Jushi Huai'an Zero Carbon Intelligent Manufacturing Base uses green electricity for production, implements green energy plans, low-carbon production technologies, and zero-carbon recycling models, so that the factory has a comprehensive zero carbon emission performance. Under the pressure of the upcoming implementation of EU carbon tariffs, companies that do not have green production capabilities will completely lose their access to the international market. This global technological competition has essentially accelerated the survival of the fittest in China's fiberglass industry.
4. Industry rebirth between destruction and establishment
The current industry pain is essentially a necessary process for the transformation of new and old kinetic energy. It is predicted that by 2028, the CR5 (industry concentration index) of my country's fiberglass industry will increase from the current 58% to more than 75%, and production lines with an annual output of less than 80,000 tons will basically withdraw from the market. This trend of concentration is conducive to the optimal allocation of resources: leading enterprises obtain production capacity indicators through mergers and acquisitions, and small and medium-sized enterprises achieve orderly exit through equipment transfer.
Under the guidance of policies, the fiberglass industry is forming a three-tier development pattern of "high-end breakthrough, mid-end optimization, and low-end exit". These breakthroughs show that China's fiberglass industry is tearing off the label of "low-end manufacturing" and climbing to the high end of the value chain.
