Glass Fiber Industry "Small And Specialized" Is Expected To Grow Flowers.

In the long run,

It is a new demand for steady growth: 1) in addition to extreme conditions (1998, 2001, 2009 and three years of negative growth), glass fiber demand has maintained a positive growth: demand increased by about 4 times from 1981 to 2015 (GAGR4.7%), and the actual GDP of the world increased by 2.6 times (GAGR2.9%), and the growth rate of glass fiber demand was about 1.6 times that of GDP. The main reason is that the downstream application of fiberglass is wide (fluctuating with GDP growth rate), and the field is expanding continuously (higher than that of GDP).

2) the variety is constantly enriched, the downstream application areas are constantly expanding, and the development potential is great. As the most cost-effective material in the composite materials, with the continuous development of technology and technology, the continuous improvement of performance, the continuous decline of cost and the improvement of cost performance will make fiberglass composite materials have wider application fields in the future.

In the medium term, fiberglass is a small and specialized industry with barriers to entry: 1) the glass fiber industry is highly centralized and remains relatively stable (except for the 2002-2008 year's impact on China's capacity output, led by the three largest fiberglass enterprises). The top 5 enterprises remain basically unchanged (ranking changes), and there are also large enterprises withdrawing or merging during the period, and 2) owing to the fact that the glass fiber industry is highly concentrated.

The advantages of structure, cost control, management and control, the profitability and efficiency of large enterprises and the obvious differentiation of small and medium-sized enterprises; 3) trade barriers, one is the industry "small and specialized", and the other is a few player games; the two is that production and R & D have many knowhow and need time to accumulate.

In the short term, the profitability of glass fiber yarn enterprises presents a certain periodicity: 1) heavy assets and rigid supply, resulting in frequent imbalance between supply and demand.

Although the demand for fiberglass is growing steadily in the medium term, the upper reaches of the glass fiber industry chain (glass fiber yarn) are highly concentrated, but the short-term profits of enterprises are still showing cyclical fluctuations. Taking the data of OCV in recent 30 years as an example, its profit margin basically fluctuates in a period of 5 years.

There are two reasons for the cyclical fluctuation of earnings. One is the rigidity of supply, the other is the attribute of assets and the fluctuation of profit. Two.

2) the high economic boom in 2016 is expected to continue, and there will be some pressure in 2017.

The industry boom in 2015 -2016 remained strong. Under the guidance of the high profit margin of leading companies (actually the median industry is not so good), the industry and the entrant of the industry have the impulse to expand, and these new capacity will bring some pressure in 2017.

Based on the analysis, the following conclusions can be drawn: in the medium term, it will benefit from the improvement of product cost performance and downstream.

Technological progress, glass fiber is still a new material, demand will continue to maintain steady growth; glass fiber industry chain structure, upstream is highly concentrated, and the entry threshold is higher, because the industry is "small and specialized", we need to do a good job of time to accumulate and master a lot of "knowhow".

In the short term, due to the characteristics of the glass fiber industry chain upstream (glass fiber yarn) heavy assets and rigid supply, the supply and demand relationship will be phased out of balance, and the high leverage will enlarge the fluctuation of the revenue side to the profit side; take the data of OCV over the past 30 years as an example, basically maintain a cycle of every 5 years; based on the current, the industry has recovered since the second half of 2014, and the boom is still expected to maintain a relatively prosperous level in 2016, and there will be some supply pressure in 2017.