Glass fiber supply chain struggles amid pandemic, economic recovery

Transportation issues, rising demands and other factors have led to higher costs or delays for gun rovings and more. Suppliers and Gardner Intelligence share their perspectives.

Fig. 1. Overall business activity of glass fiber manufacturers from 2015 to early 2021, based on data from Gardner Intelligence.

As the coronavirus pandemic enters its second year, and as the global economy slowly re-opens, the worldwide glass fiber supply chain is facing shortage of some products, caused by shipping delays and a fast-evolving demand environment. As a result, some glass fiber formats are in short supply, affecting the fabrication of composite parts and structures for the marine, recreational vehicles and some consumer markets.

To learn more about reported shortages in the glass fiber supply chain in particular, CW editors checked in with Guckes and spoke to several sources along the glass fiber supply chain, including representatives of several glass fiber suppliers.

Reasons for the shortage reportedly include rising demand in many markets and a supply chain that can’t keep up due to issues related to the pandemic, transportation delays and rising costs, and decreased Chinese exports.

Fig. 2. Composite industry activity related to supplier deliveries and production for the glass fiber market. According to Chief Economist Michael Guckes, the height of the supplier deliveries line for early 2021 (shown in green) illustrates the growing proportion of fabricators who are experiencing slow order-to-fulfillment times from upstream suppliers.

Rising demand

In North America, thanks to the pandemic restricting travel and group recreational activities, consumer demand has seen a sharp increase for products such as boats and recreational vehicles, as well as home products like pools and spas. Many of these products are manufactured with gun rovings.

This growth in glass fiber demand is also strong in China but, reportedly, no substantial capacity has been added to fiberglass production over the past year, meaning that plants are at capacity with no short-term ability to increase production, though demand continues to increase.

Supply chain issues

One factor, reported by suppliers, is their ability to come back online quickly. Karin Demez, product management lead for global fibers at Johns Manville, says, “We had to adapt to the collapsing demand in Q2 2020 and decreased production of glass fibers on our end. Then we had to make a 180-degree turn and ramp up production again.” According to Marino, much production capacity at NEG and other suppliers had to be idled for much of the second quarter of 2020. “Last summer began a restart period when automotive plants, followed by other markets, began to start up again,” he explains. “It’s been a slow, deliberate process to bring capacity back up.”

In addition, for more than two years, Chinese manufacturers of fiberglass products have reportedly been paying and absorbing most, if not all, of the 25% tariff to export to the U.S. However, as the Chinese economy recovers, domestic demand within China for fiberglass products has increased significantly. This has made the domestic market more valuable to Chinese producers than exporting product to the U.S. In addition, the Chinese yuan has significantly strengthened against the U.S. dollar since May 2020, while at the same time fiberglass manufacturers are experiencing inflation in prices of raw materials, energy, precious metals and transportation. The result, reportedly, is a 20% increase in the U.S. in the price of some glass fiber products from Chinese suppliers.

On top of this, there is a severe imbalance of shipping containers globally, caused by pandemic-induced labor shortages at major sea ports (see Fig. 3). As a result, containers are not emptied in a timely manner, which means empty containers are not available to the shipping supply chain. In some cases, the cost of container freight is reported to have more than doubled since June 2020. Within the U.S., domestic truck shipping has also reportedly risen in price due to lack of capacity and pandemic issues.

Fig. 3. This chart tracks six of the business activity measures as provided by glass fiber fabricators. According to Guckes, the February 2021 numbers indicate backlogs are expanding as fast as nearly ever, employment is expanding, supplier deliveries are very slow and exports, production and new orders are outpacing most other manufacturing disciplines.

Fig. 4. This chart tracks six of the business activity measures as provided by glass fiber fabricators. According to Guckes, the February 2021 numbers indicate backlogs are expanding as fast as nearly ever, employment is expanding, supplier deliveries are very slow and exports, production and new orders are outpacing most other manufacturing disciplines

Fig. 5. According to Guckes, prices seen by fabricators are rising, but are much lower than actual glass fiber material costs. In many cases, he says, this is caused by small manufacturers preferring to absorb rising material costs rather than pass them along to their customers.