As of September 2024, China's total glass fiber exports were 1.618 million tons, of which 0.1918 million tons were exported to the US, accounting for 11.85%; the total export volume was 2.26 billion US dollars, of which 0.301 billion US dollars were exported, accounting for 13.34%.
The Zhitong Finance App learned that China Galaxy Securities released a research report saying that if the US increases trade restrictions with China, China's export-related industries will be impacted. It is expected that China's commodity exports will be reduced, directly affecting the profits of related enterprises. Currently, the United States is one of China's main exporters of glass fiber, and it is expected that China's glass fiber export volume will be significantly affected. In this context, the competitive advantage of glass fiber companies with many overseas production capacity layouts, especially in the US, is showing. At the same time, in this context, it is expected that China will further increase its domestic demand policy stimulus, which will facilitate the rapid recovery of domestic glass fiber market demand.
Incident: In the early morning of November 6, US Eastern Time, US Republican presidential candidate Trump announced his victory in the 2024 presidential election.
The main views of China Galaxy Securities are as follows:
The US increases trade restrictions with China, and our export-related industries will be impacted.
Tariffs are one of the core elements of Trump's trade policy. Trump's tariff policy mainly includes:
1) Impose a 10% base tariff on most foreign goods, and a 60% or higher tariff on all Chinese goods;
2) Revoke China's most-favoured-nation trade status, gradually stop importing all Chinese necessities, prevent US companies from investing in China, and prohibit any company that outsources its business to China from signing federal contracts, etc.
The increase in US trade restrictions on China will impact China's export-related industries and enterprises. It is expected that China's commodity exports will shrink, directly affecting the profits of related enterprises.
China's glass fiber exports will shrink, and we are optimistic about companies with a large overseas production capacity layout.
The US imposes 60% tariffs on Chinese goods, which will greatly increase the cost of China's glass fiber entering the US market and directly reduce the export profits of Chinese glass fiber companies. Furthermore, even if cost pressure is transmitted to downstream consumers through price increases, China's glass fiber products will lose their price advantage in the US market, and eventually lose US market share.
The United States is one of China's main exporters of glass fiber. According to Zhuochuang information data, as of September 2024, China's total glass fiber exports were 1.618 million tons, of which 0.1918 million tons were exported to the US, accounting for 11.85%; the total export volume was 2.26 billion US dollars, of which 0.301 billion US dollars were exported to the US, accounting for 13.34%. It is expected that China's glass fiber export volume will be significantly affected. In this context, the competitive advantage of glass fiber companies with many overseas production capacity layouts, especially in the US, is showing.
Domestic demand stimulus policies are expected to be strengthened, and domestic demand for glass fiber is expected to recover at an accelerated pace.
Against the backdrop of the intensification of US trade restrictions on China, it is expected that China will further increase its domestic demand policy stimulus, which will facilitate the rapid recovery of domestic glass fiber market demand. Recently, domestic demand for thick glass fiber yarn has slowly recovered, and the market has improved compared to the previous period. With the rapid development of China's wind power, new energy vehicle and other industries, the wind power yarn and thermoplastic yarn markets have broad prospects. Furthermore, the application of thick yarn in new photovoltaic frame scenarios is expected to expand rapidly, and I am optimistic about the demand prospects of the domestic thick yarn market.
The world's leading glass fiber company has shown advantages in production capacity layout in the US.
China Jushi is a leading glass fiber company in China. Currently, the company has the largest production capacity in the world. It has two major overseas production bases in South Carolina in the US and Suez in Egypt. The total overseas production capacity of the company is 0.416 million tons/year, of which the US production capacity is 0.096 million tons/year. Compared with other domestic glass fiber companies, it is expected that China Jushi's overseas sales situation will be less affected by US trade restrictions. The company can take advantage of its US production base and increase its US market share.
Investment suggestions: Increased trade restrictions by the US with China will directly affect China's glass fiber exports. We recommend China Jushi (600176.SH), a leading glass fiber company that already has a production capacity layout in the US, and it is recommended to focus on international composites (301526.SZ), which has an overseas production capacity layout.
Risk warning: Risk of raw material price fluctuations exceeding expectations; risk of downstream demand falling short of expectations; risk of policy progress falling short of expectations.
