As the coronavirus outbreak enters its second year and the global economy begins to stabilize, the global glass fiber supply chain is experiencing product shortages due to shipping delays and a rapidly changing demand environment. Consequently, certain glass fiber forms are in limited supply, impacting composite component and structure production in the maritime, recreational vehicle, and consumer sectors.
Even as output and new orders improve, supply chain difficulties remain throughout the whole composites (and manufacturing in general) industry into the new year, according to Gardner Intelligence Chief Economist Michael Guckes in CompositesWorld’s monthly Composites Fabrication Index reports.
What are the challenges businesses are facing due to the shortage of glass?
A survey was checked up with Guckes and talked with various sources throughout the glass fiber supply chain, including representatives from multiple glass bottle manufacturers, to discover more about reported supply chain constraints in the glass fiber industry.
Delay in supply
Many distributors and fabricators have experienced delays in obtaining fiberglass goods from suppliers, notably multi-end rovings (gun rovings, SMC rovings), chopped strand mat, and weaved rovings, particularly in North America. Furthermore, the bottled and jarred packaged goods they are getting are most likely at a higher cost.
Increased demand in automobile and infrastructure
According to Stefan Mohr, business director of global fibers for Johns Manville (Denver, Colo., United States), this is due to a shortfall in the glass fiber supply chain. However, all companies are resuming worldwide, he adds, and we feel that Asia’s growth, particularly in automotive and infrastructure projects, is extremely robust.”
Shortage of supply
Right now, very few manufacturers in any sector are receiving precisely what they want from suppliers, says Gerry Marino, general manager of sales and marketing at Electric Glass Fiber America (part of NEG Group, Shelby, N.C., U.S.).
What are the reasons behind the shortage of glass, and how is it impacting businesses?
Increasing demand in various countries, a supply chain that can’t keep up owing to pandemic-related problems, transportation delays, and rising prices, and reduced Chinese exports are all said to be contributing to the shortfall.
Due to the pandemic’s restrictions on travel and group leisure activities in North America, customer demand for goods like boats and recreational vehicles, as well as residential products like pools and spas, has skyrocketed. Gun rovings are used in the production of several of these items.
According to Mohr, there has also been an upsurge in the automobile industry’s demand for glass fiber goods, as automakers returned to the market rapidly after the first pandemic lockdowns in spring 2020 and wanted to replenish their inventories. According to Guckes’ statistics, days of inventory on vehicle lots for specific models fell into the single digits, indicating a recovery.
According to Marino, a considerably more significant spike in demand than we anticipated occurred in Q3 and Q4 2020, especially for chopped glass fiber strands used by automotive clients and single-end rovings used in the wind sector.
All markets are recovering, but some are recovering faster than others. For example, our industrial clients have recovered quicker and to a more significant extent than commercial aircraft customers, but everything is better, says Scott Northrup, AGY’s vice president of sales and marketing (Aiken, S.C., U.S.).
This rise in glass fiber demand is also high in China. Still, no significant capacity has been added to fiberglass production in the last year, indicating that facilities are at capacity and have little short-term ability to expand output, despite rising demand.
The increasing demand for recreational vehicles and home renovation goods comes on top of significant development in the wind sector, according to Marcio Sandri, president, composites at Owens Corning (Toledo, Ohio, United States). In addition, all of this extra demand came when industry inventory was already low due to planned inventory reductions or supply chain problems.
Supply chain issues
Supplier delivery and fabricator production statistics for the glass fiber industry from Gardner Intelligence – We’ve never seen the kind of activity dispersion that exists now between production and supplier delivery activity measurements, Guckes adds. Conditions worsened in the fourth quarter after recovering to some extent from COVID-19’s first shock in early 2020. Given the minor improvement in production and new order activity over the last six months, this suggests that significant difficulties remain; deliveries should not be this delayed.
One aspect that providers have mentioned is their ability to re-enter the market swiftly. We had to react to the falling demand in Q2 2020 and reduced production of glass fibers on our end,” Karin Demez, product management lead for global fibers at Johns Manville, explains. Then we had to do a complete 180-degree turn and restart manufacturing. According to Marino, much of NEG’s and other suppliers’ manufacturing capacity had to be idled for much of the second quarter of 2020. Last summer started a restart phase when automotive factories, followed by other sectors, began to resume. Bringing capacity back up has been a long, careful process.
Furthermore, Chinese fiberglass product producers have allegedly been paying and absorbing the majority, if not all, of the 25% tax to export to the United States for more than two years. However, as China’s economy improves, local demand for fiberglass goods has risen dramatically. As a result, Chinese manufacturers value their local market more than selling to the United States.
Furthermore, since May 2020, the Chinese yuan has appreciated substantially against the US dollar, while fiberglass producers have risen raw material, energy, precious metals, and transportation costs. The consequence, according to reports, is a 20% rise in the price of certain glass fiber goods from Chinese vendors in the United States.
Shortage of containers
Furthermore, there is a severe worldwide imbalance of shipping containers because of pandemic-related labor shortages at critical seaports. Consequently, containers are not emptied quickly, leaving the shipping supply chain with empty containers. As a result, container freight costs have reportedly more than quadrupled in certain instances since June 2020. In addition, domestic truck transport has also allegedly increased in price owing to a shortage of capacity and pandemic concerns in the United States.
Many variables, including worldwide vaccine distribution, must be considered to restore a more regular supply chain. No one knows when stable operations will return, but predictions from suppliers vary from the second half of 2021 to the second half of 2022.