Analysis Of Application Areas And Current Demand in The Fiberglass Industry

1. Strong Wind Power Installations Drive Expected to Drive Increased Demand for Fiberglass

 

In the wind power sector: Fiberglass used in wind power applications is known as wind turbine yarn. It serves as a reinforcing material, primarily used in the manufacture of wind turbine blades and nacelle housings. Because fiberglass has a lower density than metal materials, it reduces the weight of wind turbine blades, improves power generation efficiency, and lowers transportation costs, offering a significant cost-performance advantage. The cost structure of wind turbine units mainly includes towers, blades, gearboxes, and hubs, with blades accounting for approximately 22% of the cost. Raw materials account for 80% of the cost of wind turbine blades, with fiber materials making up over 60%, including reinforcing glass fiber (28%) and matrix resin (36%). According to data from China Jushi's annual report, the fiberglass demand for 1GW of wind turbine blades is approximately 10,000 tons.

 

Driven by the development of new energy systems, my country's wind power installed capacity has grown rapidly. From 2012 to 2024, my country's cumulative installed wind power capacity increased from 60.62GW to 520.68GW (yoy+17.98%), with a CAGR of 19.63%. Except for 2017, my country's cumulative installed wind power capacity growth rate has consistently exceeded the global average. In terms of newly installed wind power capacity each year, the national newly installed wind power capacity reached 75.90GW in 2023, more than doubling year-on-year. In 2024, maintaining this growth momentum on a high base, the newly installed wind power capacity reached 79.82GW. In terms of bidding volume, from January to September 2024, new wind power bidding reached 119.1 GW (YoY +93.0%), of which onshore wind added 111.5 GW and offshore wind added 7.6 GW. Typically, the cycle from bidding to installation for wind power projects is about one year. Large-scale bidding projects in 2024 are expected to gradually be implemented and installed in 2025, and the continued high prosperity of the wind power industry will bring increased demand for fiberglass.

 

In 2020 and 2021, the State Council successively issued the "Action Plan for Carbon Peaking before 2030" and the "Opinions on Fully and Accurately Implementing the New Development Concept and Doing a Good Job in Carbon Peaking and Carbon Neutrality," proposing to increase investment in non-fossil energy such as hydropower, nuclear power, wind power, and photovoltaic power, with the goal of increasing the proportion of non-fossil energy consumption to around 20% by 2025, around 25% by 2030, and over 80% by 2060. Currently, my country's non-fossil energy consumption is mainly used for power generation. To achieve the goal of increasing the proportion of non-fossil energy consumption, it is necessary to increase the installed capacity and power generation of photovoltaic and wind power. In 2020, representatives from over 400 wind energy companies jointly issued the "Beijing Declaration on Wind Energy," proposing that during the 14th Five-Year Plan period, China must ensure an average annual increase of over 50GW in wind power installations, and after 2025, the average annual increase in wind power installations should be no less than 60GW. The demand growth rate for the wind power industry is expected to remain strong during the 15th Five-Year Plan period.

 

The wind power market is expected to improve by 2025, with wind turbine blades entering an era of larger sizes, and long-term demand for mid-to-high-end wind turbine yarns remaining positive.

 

In 2024, my country's newly installed wind power capacity reached 79.82 GW (YoY +5.16%). The volume of wind power tenders in my country nearly doubled in 2024. Meanwhile, 2025 is the final year of the 14th Five-Year Plan, and it is expected that newly installed wind power capacity will maintain rapid growth in 2025, with a slowdown expected in 2026. The estimated newly installed wind power capacity in my country for 2025 and 2026 is approximately 111.75 GW and 120.69 GW, respectively. Based on the calculation that approximately 1 GW of wind turbine blades requires 10,000 tons of fiberglass, the annual demand for wind power fiberglass yarn in my country for 2025 and 2026 is estimated at 1.1175 million tons and 1.2069 million tons, respectively. According to the national 3060 carbon peak and carbon neutrality target, the grid-connected wind power capacity is expected to continue to grow during the 15th Five-Year Plan period, indicating a broad long-term demand for wind power fiberglass yarn. Furthermore, the wind power industry is gradually moving towards larger scale, with wind turbine blades becoming increasingly longer. This places higher demands on the stiffness and weight of wind turbine blades, which is expected to drive demand for mid-to-high-end, high-modulus fiberglass. Leading fiberglass companies with advanced technology have a clear advantage in meeting the demand for larger wind power systems.

 

2. Photovoltaic Modules Spur Demand for Fiberglass

 

As a crucial load-bearing component of photovoltaic systems, the quality of photovoltaic modules, including their resistance to aging and corrosion, directly affects the safety and stability of the electronic equipment they support. Fiberglass-reinforced composite materials possess advantages such as lightweight, high strength, corrosion resistance, and aging resistance. Their axial tensile strength is far higher than that of traditional aluminum alloys, and they also exhibit strong resistance to salt spray and chemical corrosion. As a non-metallic material solution, fiberglass polyurethane composite frames offer advantages that metal frames lack, significantly reducing the possibility of leakage circuits and helping to reduce PID potential-induced degradation, thereby further improving the power generation efficiency of solar panels and bringing significant cost reduction and efficiency gains to photovoltaic module manufacturers.

 

According to data from the China Fiberglass Industry Association and company announcements, approximately 10GW of photovoltaic (PV) installations in my country used fiberglass-reinforced auxiliary materials in the first half of 2024, with each GW of installations corresponding to approximately 4,000 tons of fiberglass consumption. Currently, the penetration rate of fiberglass in PV brackets remains low. However, with downstream composite material manufacturers improving efficiency, increasing industry promotion efforts, and module manufacturers becoming more accepting of PV frame composite materials, the demand for fiberglass in the PV industry is expected to maintain a relatively high growth rate from a small base. It is projected that 20GW, 30GW, and 40GW of PV frames in my country will use fiberglass in 2024, 2025, and 2026, respectively, corresponding to a demand of approximately 80,000 tons, 120,000 tons, and 160,000 tons of fiberglass, respectively.

 

In summary, the demand for fiberglass in the new energy sector is projected to reach 1.3903 million tons and 1.5197 million tons in 2025 and 2026, respectively, representing growth rates of 34.85% and 9.31%.

 

3. Transportation: New energy vehicles drive demand for fiberglass reinforced yarn; fiberglass has broad application scenarios in rail transit construction.

 

Fiberglass reinforced plastics, due to their combination of strong mechanical properties and lightweight characteristics, can replace traditional metals and achieve weight reduction in the automotive field. Automotive lightweighting aims to reduce vehicle weight as much as possible while ensuring strength and safety performance, thereby improving vehicle power, reducing fuel consumption, and reducing exhaust pollution. This is of great significance for carbon emission reduction. For gasoline vehicles, a 10% reduction in body weight generally reduces fuel consumption by 6%-8% and emissions by 4%. In 2020, the China Society of Automotive Engineers released the "Energy-Saving and New Energy Vehicle Technology Roadmap (Version 2.0)," which set standards for fuel consumption of various types of vehicles. By 2025, 2030, and 2035, the fuel consumption of new passenger vehicles (including new energy vehicles) will reach 4.6L/100km, 3.2L/100km, and 2.0L/100km respectively, while the average fuel consumption of new traditional energy passenger vehicles will reach 5.6L/100km, 4.8L/100km, and 4L/100km respectively. These increasingly stringent fuel consumption standards are driving the automotive industry towards lightweighting. Furthermore, the rise of new energy vehicles is further promoting the development of vehicle lightweighting, extending driving range through weight reduction.

 

In recent years, my country's annual automobile sales have steadily increased, and the penetration rate of new energy vehicles has rapidly improved. From 2016 to 2022, China's national automobile sales remained stable at over 25 million units annually, exceeding 30 million units in 2023, and continued steady growth in 2024. Driven by strong policy support, sales of new energy vehicles rapidly increased from 8,159 units in 2011 to 12.866 million units in 2024 (YoY +35.50%), with a compound annual growth rate of 76.19%. Against the backdrop of carbon peaking and carbon neutrality, the future trends of lightweighting in automobiles and the increasing proportion of new energy vehicles are clear. New energy vehicles and traditional fuel vehicles will continue to contribute to the increased demand for fiberglass reinforced yarn products (thermosetting, thermoplastic, etc.).

 

In the road, bridge, and rail transit sectors, fiberglass has significant advantages over traditional materials in terms of toughness, corrosion resistance, wear resistance, and temperature resistance, meeting the requirements of lightweight and high-strength transportation vehicles. Therefore, it has wide applications in the transportation sector, including highway geogrids, rail transit seats, vehicle bodies, structures, and ship hull structures. From 2017 to 2023, my country's annual fixed asset investment in transportation exceeded 3 trillion yuan, maintaining a year-on-year growth trend. With a more proactive fiscal policy in 2025, both demand and funding will contribute to steady growth in infrastructure investment. Meanwhile, international political developments are expected to drive domestic demand expansion. Maintaining stable growth will remain the main theme of domestic construction. Transportation construction, including highways, waterways, urban rail transit, and railways, is a crucial component of "new infrastructure, new urbanization, and major projects." It is projected that fixed asset investment in transportation will maintain steady growth throughout 2025.

 

Urban rail transit investment is growing rapidly, with metropolitan area construction boosting demand. With the continuous increase in my country's urbanization rate and the advancement of urban agglomeration and metropolitan area construction, urban rail transit construction, as a new type of infrastructure, has seen rapid growth in investment, becoming an important growth point for municipal transportation investment. According to data from the Ministry of Transport, from 2011 to 2023, investment in urban rail transit increased from 162.8 billion yuan to 521.403 billion yuan, with a CAGR of 10.19%. Investments during the 12th and 13th Five-Year Plan periods reached 1.2 trillion yuan and 2.6 trillion yuan respectively. In 2023, my country's urbanization rate reached 66.16%. The "Urban Blue Book: China Urban Development Report No. 8" released by the Chinese Academy of Social Sciences predicts that my country's urbanization rate will reach around 70% by 2030. In the coming years, my country's urbanization rate has significant room for improvement, which will lead to an expansion in public transportation demand. Furthermore, the establishment of metropolitan areas and urban clusters will help rapidly advance the national urban rail transit network. Urban rail construction projects are expected to continue to increase across the country, and the market potential for rail transit construction is promising. According to data released by the China Urban Rail Transit Association, as of the end of 2023, 46 cities had urban rail transit network construction plans in effect, with a total planned line length of 6,118.62 kilometers. The total approved investment for feasibility studies of these projects was 4,084.007 billion yuan. In 2023 alone, five cities received approval for new rounds of urban rail transit construction plans or adjustments to their plans. These approved projects involved approximately 550 kilometers of new lines and a planned investment of approximately 450 billion yuan. Based on the urban rail construction cycle, the approved plans are expected to be implemented and generate tangible investment within the next 5-7 years. Urban rail transit investment is projected to maintain a double-digit compound annual growth rate in the final year of the 14th Five-Year Plan and during the 15th Five-Year Plan period.

 

In the railway construction sector, from 2016 to 2023, the national annual fixed asset investment in railways generally remained around 700-800 billion yuan. From 2020 to 2022, investment declined year-on-year, possibly due to the impact of the pandemic. It rebounded to 7.54% in 2023, and the growth rate of railway fixed asset investment increased to 11.26% in 2024. According to the goals of the "14th Five-Year Plan for the Development of a Modern Comprehensive Transportation System," by 2025, the national railway operating mileage will reach 165,000 kilometers, of which high-speed rail operating mileage will reach 50,000 kilometers. The "Outline of the Plan for Railway Priority in Building a Strong Transportation Nation in the New Era" clearly states that by 2035, the national railway network operating mileage will reach approximately 200,000 kilometers, of which high-speed rail will reach approximately 70,000 kilometers. According to the 2025 National Railway Supervision and Management Work Conference, by the end of 2024, the total operating mileage of railways nationwide was projected to reach 162,000 kilometers, including approximately 47,000 kilometers of high-speed rail. This means that 3,000 kilometers of high-speed rail will be added in 2025, a significant acceleration compared to the 2,000 kilometers added in 2024. Currently, high-speed rail construction is accelerating across the board. Compared to traditional railways, fiberglass has a wider range of applications in high-speed rail construction, including lightweighting of track components and carriages. The future growth in high-speed rail construction mileage is expected to create stable demand for fiberglass-reinforced materials.

 

Fiberglass accounts for approximately 16% of applications in the transportation sector. It is estimated that the demand in 2023 was approximately 1.0421 million tons. Based on the future growth of the automotive, urban rail, and high-speed rail industries, as well as the increasing penetration rate of lightweight fiberglass, the growth rate of fiberglass demand in the transportation industry is projected to be 8% and 7% in 2025 and 2026, respectively, corresponding to a demand space of 1.1817 million tons and 1.2645 million tons.

 

4. Fiberglass Demand in the Building Materials Sector

 

Fiberglass is widely used in the building materials sector, serving as a reinforcing material, insulation material, and waterproofing material. Since 2022, my country's real estate construction demand has continued to contract, with real estate development investment declining year-on-year, down 10.0%, 9.1%, and 10.6% in 2022, 2023, and 2024 respectively. Currently, real estate policies maintain a loose demand stance, and sales data has improved somewhat. However, considering previous land acquisition data and the current overall cash flow situation of real estate companies, new real estate starts and construction still face downward pressure in the short term. Besides the real estate industry, fiberglass applications in the construction industry also cover non-real estate sectors such as public buildings and residential buildings. Looking at the output value of the construction industry, my country's total construction output value has maintained positive year-on-year growth each year, increasing by 6.5% and 5.8% year-on-year in 2022 and 2023 respectively. Non-real estate construction provides some support for the demand for fiberglass in the building materials sector.

 

Fiberglass accounts for approximately 34% of the building materials sector. It is estimated that the demand in 2023 will be approximately 2.2145 million tons. In 2025, there will be significant financial support for infrastructure projects. Debt reduction and expansion of domestic demand will help the steady growth of infrastructure and public construction demand. However, the start of construction in the real estate sector will still be under significant pressure. It is estimated that the growth rate of fiberglass demand in the construction industry will be 1.40% and 2.17% in 2025 and 2026, respectively, corresponding to a demand space of 2.2233 million tons and 2.2715 million tons.