1. Glass fiber: widely used functional and structural reinforcement material glass fiber is an inorganic non-metallic material with excellent performance. It has the advantages of light weight, high strength, high temperature resistance, corrosion resistance, heat insulation, sound absorption, good electrical insulation performance, etc. it is mainly used as a functional and structural material for reinforcement in composite materials Electrical insulation, thermal insulation and so on have a certain substitution effect on traditional materials such as steel, aluminum, wood and so on.
In 2018, the global glass fiber production is about 7.3 million tons, and the market scale is about 8 billion US dollars. The terminal demand is widely distributed. According to OC data, the demand in building materials, transportation, consumption, industry, energy and other fields respectively accounts for 35%, 29%, 15%, 12% and 10%.
The glass fiber industry chain is long, from raw materials to the final application end, there are several links from glass fiber (raw yarn) to glass fiber products, glass fiber composite materials, etc.
(1) Glass fiber yarn is a "heavy asset" industry. At present, the investment of glass fiber tank kiln is about 100 million yuan / 10000 tons, and continuous production needs to be guaranteed (abnormal shutdown costs a lot), until the tank kiln is cold repaired 7-8 years later (cold repair period is generally about 6 months), and the short-term supply has strong rigidity.
(2) Most of the products and composite materials in the middle and lower reaches belong to light assets, with a wide range of categories, wide range of uses and continuous emergence of new uses. Therefore, the products and composite enterprises continue to invest in innovation and research and development to ensure their leading position, while the dominant enterprises are often able to continuously launch new products to the market, so as to continuously obtain high profits.
2. "The strong will always be strong", the leading cost advantage "positive feedback cycle", the new round of leading in structural upgrading 2.1. The glass fiber industry "heavy assets" feature is significant, and the cost is the core competitiveness
Raw materials in the upstream of fiberglass include pyrophyllite, kaolin, limestone, quartz sand and other minerals, and the energy mainly includes natural gas and power. The production of raw materials through high temperature melting, drawing, drying, winding and other links from manufacturing. At present, the main process is tank furnace drawing. This process is simple, energy-saving, stable, efficient and high-yield. It is convenient for large-scale automatic production. The glass fiber produced by this process accounts for more than 90% of the global output. Most of them adopt pure oxygen combustion system, which can save more than 40% energy compared with air combustion. With the gradual elimination of backward crucible production capacity, the current capacity of tank kiln in China has accounted for about 95%.
The cost structure of fiberglass raw yarn reflects its "heavy assets" characteristics. In addition to materials and energy, fixed costs such as depreciation account for a large proportion, so cost is one of the core competitiveness of enterprises.
(1) The core of glass fiber production cost is materials, accounting for about 30%, of which pyrophyllite is mainly used as raw material by domestic enterprises, accounting for about 10% of the production cost (kaolin is widely used by foreign enterprises).
(2) The second is energy power, accounting for about 20% - 25%, of which natural gas accounts for about 10% of the production cost.
(3) In addition, labor, depreciation and other cost items account for about 35% - 40%. The first is depreciation, which generally accounts for about 20% of the production cost (platinum rhodium alloy is not depreciated); direct labor accounts for about 10-15%; other costs mainly include platinum rhodium alloy loss cost, which accounts for about 6%.
In the cost of products, direct materials are the most important part, followed by energy and power, while the proportion of manufacturing expenses such as depreciation is obviously smaller than that of raw yarn.
2.2 the industrial structure has been clear, and the three enterprises are the first echelon
The glass fiber industry has formed a competition pattern of "three big enterprises (Jushi, Taishan glass fiber, Chongqing International) - three small enterprises (Shandong glass fiber, Sichuan Weibo, Changhai) - other enterprises" after the past business fluctuations and strict industrial policies. The domestic production capacity concentration CR3 and Cr6 are 60% and 73% respectively.
Jushi, Taishan and Chongqing international enterprises are obviously ahead of the next tier enterprises in terms of capacity scale, and they have also reached the world leading level in some fields of production and R & D. Three enterprises account for 29%, 16% and 15% of the domestic production capacity of fiberglass yarn, among which Jushi and Chongqing International are also domestic enterprises that take the lead in going out to build overseas fiberglass yarn production bases. The main technical indicators of the tank kiln production line of the leading enterprises have reached or even partially surpassed the European and American levels, including the single line production capacity of 50% higher and the per capita labor productivity higher.
China's three major enterprises also account for more than 40% of the global total production capacity, and OC (Owen Corning), neg (Japan electric nitrates), JM company in the United States are listed as the world's six largest glass fiber enterprises (six are expected to account for more than 75% of the global total production capacity). Among them, Jushi has a clear leading capacity of over 1.7 million tons, followed by OC (Owen Corning), with an estimated capacity of over 1 million tons; after the acquisition of PPG glass fiber business by neg in 2017, the capacity is expected to exceed 700000 tons, which is not much different from the international capacity of Taishan glass fiber and Chongqing, with JM ranking sixth.
Shandong fiberglass, Sichuan Weibo and Changhai ranked 4-6 in terms of production capacity in China. Although they are significantly behind the top three enterprises in terms of scale, they have basically completed the industrial chain layout of the original yarn products, and the product structure also basically covers the middle and high-end fields such as wind power, electronics and thermoplastics.
2.3 "positive feedback cycle" from cost advantage to Capital Barrier
2.3.1 the steeper cost curve of the industry comes from the difference of energy consumption, labor productivity and factor cost in the production link
Looking back on the development of the industry, since 2006, the upgrading of tank kiln and formula technology has promoted the continuous reduction of glass fiber cost. The leading enterprises represented by Jushi have opened the cost gap by virtue of leading strategy, capital, R & D and management advantages, and the slope of the industry cost curve has increased significantly. In this process, the leading enterprises represented by Jushi occupy and consolidate the leading position in the cost curve.
The first round of cost reduction mainly relies on the upgrading of tank kiln, formula and other production processes, which makes the production scale and efficiency significantly improved.
(1) In terms of large-scale tank kiln, in 2007, the 120000 ton tank kiln production line of Jushi in China was ignited, becoming the largest single line production line in the world at that time. The application of large-scale tank kiln and pure oxygen combustion greatly improves the melting rate and reduces the energy consumption.
(2) In terms of formula upgrading, China Jushi successfully developed E6 formula in 2008, which significantly improved the performance compared with traditional E-glass fiber, replacing expensive ingredients such as calcium borate, saving 500-600 yuan per ton yarn cost, and Taishan glass fiber also launched TCR fluorine-free boron free formula in 2010.
The second round of cost reduction depends on the technical transformation and upgrading of kilns and equipment to further improve efficiency and reduce costs. The leading enterprises take the lead in cold repair and technical transformation based on their own stock advantages such as technology and capital, so as to realize the iteration of production capacity and cost, including the optimization and improvement of melting rate, startup rate, production efficiency and other indicators. The peak period of cold repair of Jushi in China is mainly from 2012 to 2018, and Taishan fiberglass continues to replace the old capacity with new capacity in 2013-2018, while the cold repair technology of other domestic enterprises is obviously backward.
At present, the industry cost curve is still steep. In terms of gross profit per ton, gross profit rate and net profit per ton, Jushi is in the leading position in both gross profit per ton and gross profit rate of products, followed by Taishan glass fiber, which has outstanding advantages. In the middle of the cost curve are Chongqing International and the second echelon enterprises, represented by Shandong glass fiber and Changhai Co., Ltd, Scale, cost control and other aspects may be slightly inferior to the leader, but they have certain comparative advantages in production factors or downstream products. At the end is the capacity of some small enterprises and crucibles. It is estimated that the total cost of ordinary roving is more than 4000 yuan / ton, and the gap with leading enterprises is more than 1000 yuan / ton. (during the period, there is a small gap between several enterprises in terms of expenses, mainly due to the higher R & D investment and higher capital expenditure of leading enterprises)
Specifically, the production efficiency advantage and management efficiency advantage realized by leading enterprises in production equipment and process technology are the core reasons for the steep cost curve of the current industry, and the cost of raw materials and fuels and other factors are also important factors.
First, in terms of production consumption, the leading enterprises take the lead in implementing the technological transformation of tank kilns to achieve larger scale production and higher melting rate, and with the process improvement such as large leak plate processing to achieve higher start-up rate and wire drawing yield, the improvement of production efficiency of single furnace position reduces production consumption. For example, the energy consumption per ton of raw silk products in Taishan new area with advanced glass fiber equipment, high degree of mechanization and short production time is only 0.286 tons of standard coal, which is 41% more energy-saving than the average energy consumption of this tank kiln. In recent years, the energy consumption per ton of Jushi products has also shown a stable downward trend.
Second, in terms of labor productivity, the improvement of production line automation and intelligent level has achieved higher per capita labor productivity and reduced unit labor cost. The per capita labor productivity of the production department of Jushi has increased by more than 30% from 2013 to 2017. Therefore, although the labor wage has increased year by year, the per ton labor cost and other costs of the company have basically maintained a downward trend.
The third is reflected in the cost of factors, including raw materials, natural gas, power costs, etc. The most typical is the cost of pyrophyllite. The leading enterprises have more advantages in the upstream layout and procurement scale. At the same time, because of the distribution of pyrophyllite mines, the production capacity layout of Jushi also reduces the procurement and transportation costs.
Although the reserves of pyrophyllite resources in China are relatively rich in the world, their distribution and exploitation are relatively concentrated. As of 2016, 62% (5.85 million tons) of the national reserves of 9.51 million tons were distributed in Fujian, and 20% (1.92 million tons) in Zhejiang. Among them, there are about 110 pyrophyllite mining enterprises, only 12 large-scale mines (with an annual output of more than 100000 tons), and they are concentrated in Fujian and Zhejiang coastal areas (including Fuzhou and Ningde in Fujian, Qingtian, Taishun and Shangyu in Zhejiang). The number of mines in other provinces is small and the output is low.
On the one hand, the production capacity layout of Jushi is closer to the production area of pyrophyllite, on the other hand, expanding the upstream to improve the self-sufficiency rate of pyrophyllite powder and other raw materials (90% of the purchased pyrophyllite comes from Tongxiang Leishi, a holding subsidiary), which can obtain obvious advantages in the cost of raw materials.
2.3.2 the slope of the cost curve may be reduced, but the accumulated capital advantage supports the leading enterprises to keep ahead
If we simply look at the factors of current cost differences, with the promotion of production equipment and process technology, as well as the advancement of technological transformation of backward enterprises, when the speed of technological progress in the production link slows down, the differences in labor production efficiency are likely to narrow, except that the cost advantages of production factors (such as resource endowment and production capacity layout) are relatively stable. But we think that for the glass fiber industry, which is a heavy asset industry, the huge capital advantage accumulated by the long-term cost advantage will make the situation of "the strong will remain strong" continue and deepen, and it is more difficult for the laggards to catch up.
The steeper cost curve brings about the difference of cash flow among different echelons, which accumulates to the end of the balance sheet and becomes the capital and capital barrier, which is reflected in the huge gap of financing ability and "Matthew effect". Especially from the indicators of Jushi, Taishan fiberglass and Shandong fiberglass bank credit line, the degree of differentiation of corporate financing capacity is greater than capacity scale and profit volume.
Therefore, the advantage of capital funds of leading enterprises is also reflected in the long-term leading in the dimension of capital expenditure. Although other enterprises are also following up the implementation of cold repair and technological transformation of production capacity, leading enterprises such as Jushi