Sinolink Securities Co., Ltd. has released a research report stating that in the building materials sector, soaring natural gas prices in Europe are increasing the production costs of local fiberglass, which is expected to lead to a rise in European fiberglass imports. As China is the world's primary exporter of fiberglass, European demand is anticipated to become a key variable for China's exports this year. On the supply side, the firm predicts that 2026 will be a "low-supply year" for the industry, creating potential for fiberglass roving prices to exceed expectations. The main viewpoints of Sinolink Securities are as follows:

Recent events: A sharp increase in European natural gas prices has raised production costs for local fiberglass manufacturers, which may boost fiberglass exports from China. European gas prices surged significantly, with a further 40% rise on March 3, reaching €62.5 per megawatt-hour—a cumulative increase of over 100% within two days. Looking back to the onset of the Russia-Ukraine conflict in 2022, European fiberglass supply was constrained by high energy prices, leading to partial shutdowns. For example, in September 2022, the European Glass Fibre Producers Association issued a report titled "Impact of the Energy Crisis on the European Glass Fibre Industry," noting that "energy costs for current fiberglass production facilities are more than 10 times higher than last year, and rising energy prices pose a direct threat to the continuity of operations in the European fiberglass industry and its value chain." Additionally, in April 2025, the UK's largest fiberglass plant (NEG) decided to close, primarily due to increased energy expenses and competition from imported fiberglass.

The previous surge in European natural gas prices led to a clear increase in fiberglass exports from China. According to SCI data, China's exports of fiberglass and related products reached 545,500 metric tons in the first quarter of 2022, a year-on-year increase of 49.7%, with an export value of $952 million, up 49.6% year-on-year.

In 2023, European demand for fiberglass composites was 2.5 million metric tons, while local production capacity was only about 1 million metric tons. The shortfall was primarily filled by Chinese fiberglass manufacturers. Based on AVK data, European demand for fiberglass composites grew steadily from 2011 to 2021, rising from 2.37 million metric tons in 2011 to 2.91 million metric tons in 2021, with a compound annual growth rate (CAGR) of 2.1%. Over the same period, the CAGR for Europe's nominal GDP was 0.9%, with the main growth driven by the automotive industry. Since 2022, factors including the energy crisis have led to a decline in European demand for fiberglass composites. In 2022, demand fell to 2.72 million metric tons, down 6% year-on-year, and further decreased to 2.5 million metric tons in 2023, down 8% year-on-year, returning to levels seen in 2013-2014, with demand declining across all sectors.

Analysis of European fiberglass supply: ① Local production capacity in Europe involves 12 plants across nine countries, with a total daily melting capacity of approximately 1 million metric tons. This includes facilities operated by global fiberglass leaders such as OC, NEG, and JM, as well as local companies like 3B and Envalior. Considering that overseas furnaces are generally smaller in scale and labor costs are higher, the firm estimates that actual output is below 1 million metric tons. ② The remaining demand, representing the gap between local supply and demand, is mainly met by regions outside Europe. This includes direct exports from Chinese fiberglass producers and supplies from overseas bases of Chinese companies. For instance, Jushi Group's base in Egypt currently has a capacity of 360,000 metric tons, primarily serving European demand.

Fiberglass is globally priced, similar to resource commodities. According to data from the China Fiberglass Association, direct exports of fiberglass and related products reached 1.95 million metric tons in 2025, accounting for 12% of China's total production of 8.43 million metric tons (though total production is measured in fiberglass yarn, and the portion exported via end products like home appliances and automobiles is difficult to quantify). Based on rough estimates of domestic production at 8.43 million metric tons and global production at 12 million metric tons, domestic end-demand accounts for 55% of the total (calculated as [domestic production - exports + exports] / global production), while external demand exposure exceeds 45%. The fiberglass industry has already undergone domestic substitution and established China as the global leading supplier, making external demand as important as domestic demand.

The surge in European natural gas prices is expected to drive elasticity in fiberglass exports, becoming a key influencing factor for fiberglass exports in 2026. This year is projected to be a "low-supply year" for fiberglass, with significant price divergence expected for roving. On one hand, the price center for 7628 electronic cloth has noticeably shifted upward since the fourth quarter of 2025. According to SCI data, as of the end of February 2026, the price of 7628 electronic cloth reached 5.3 yuan per meter, an increase of 1.15 yuan per meter, or 27%, compared to the end of September 2025. On the other hand, the firm believes that fiberglass roving also has potential for price increases beyond expectations, mainly due to insufficient roving supply. Sinolink Securities judges that 2026 will be an industry supply "low year" primarily because: ① Many industry players are focusing major capital expenditures on AI electronic cloth. For example, Sinoma Science & Technology Co., Ltd. plans to raise 4.48 billion yuan through a private placement, with 3.14 billion yuan allocated to AI electronic cloth, while International Composites Co., Ltd. intends to invest 1.69 billion yuan in a project to produce 36 million meters of high-frequency, high-speed electronic fiber cloth. ② Rising platinum prices have increased investment costs (fiberglass bushings are mainly made of platinum-rhodium alloy). As of March 3, the spot price of platinum reached 571 yuan per gram, a year-on-year increase of 147%.

Risk warnings: European fiberglass demand may fall short of expectations; domestic macroeconomic fluctuations; industry capacity expansion may proceed slower than anticipated; significant volatility in fuel prices.