Composites Growth and Investment: The Timing is Just Right!

Hello readers,

We are into the last quarter of 2010. As we look back at Q1, it is obvious that there has been a perceptible positive shift both on the global economic front, and for the composites industry as a whole. Things are looking pretty good for those of us in the composites world! Here are a couple of reasons:

RESIN, GLASS  FIBER & PLATINUM

While resin producers announced yet another price increase last week, one of the leading North American glass fiber producers also simultaneously announced a price hike in the region. The glass fiber industry is inextricably linked with platinum price trend, which this month witnessed prices moving north, south and sidewards. No doubt, various factors influenced the price, such as the strike in South Africa, the ever-strengthening gold price and the automobile market. Price increases by glass fiber and resin producers alike bode well for the industry, as platinum and rhodium trading tend to be in acceptable range that enables planned investments by glass fiber producers both in furnace rebuilds and greenfield plants.

WIND ENERGY GROWTH

The wind energy sector which has been enjoying strong double digit growth in the 20%+ range for several years since 2005 (barring 2008 and 2009) has already shown good results thus far this year. The World Wind Energy Association (WWEA), which released stats for H1, 2010 last week showed strong growth with around 16 GW of new capacity (China accounting for almost 50% of this), well in line with achieving 35-40 GW by the year end and almost matching the 38 GW installed in 2009. The launch of new grades of resins by DSM and DOW in recent weeks for the wind energy segment and constant innovations in reinforcement fabrics (glass & carbon) further underscore the importance of technological advances to meet challenging demands of performance of this environmentally friendly source of renewable energy.

This is also in line with the Global Wind Energy Council‘s (GWEC) view that wind energy could account for 12% of the global power demand by 2020 and mounting to 22% by 2030.

EUROPE

There still appear to be some  rumblings, though subdued, from Europe after the clamping of anti-dumping duty on Chinese glass fiber imports last month. The industry is bullish though and claims a significant double digit increase in sales this year compared to 2009, if one were to go by the inaugural session at the September European Composites conference in Essen. The IMF sees tepid growth in the European economy in 2011 with emerging economies (Eastern Europe) growing at a faster 3.8% compared to a slower growth of 1.6% by advanced European nations.

AND NOW, FOR SOME GENERAL ECONOMY COMMENTARY

Economic research analysts have predicted that the world can withstand a cold from the U.S. provided it does not turn to flu… backed up by forecast of 1.8% expansion of the U.S. economy in 2011 compared to 2.2% in Europe, 4.8% in the Middle East and 3.9 % globally. China and India are in a league of their own in the >8% range.

Crude oil is currently in the $80 sweet spot and OPEC has forecast $85 for 2011, which should serve as an effective launch pad for  the projected 2012 highs and return to normalcy on par with 2007 levels. The world can ill afford higher energy costs at this juncture especially when the economy is on the recovery mode.

China is on track for a staggering 10.5% overall growth in 2010 and it could well be the last year that there will be double digit growth in the country. All data point to a soft landing for the Chinese economy. Beijing triggered a fall in global markets last week with a surprise interest rate hike that analysts feel was aimed at curbing bank lending and encouraging consumer spending by paying more on savings. In the U.S. on the other hand,there is a clamour to restore its past glory with a renewed focus on education and implementation of new initiatives on a fast track mode. The bumper sticker pasted to the tailgate of the modern American dream reads (loud and clear) “It’s Education.”

As stated in my earlier posts, material substitution is the key to composites growth worldwide alongside a systematic life cycle cost benefit analysis to justify selection of composites in lieu of traditional materials such as steel and aluminum. This is one of  ESSJAY’s fortes, and we have several successful case histories internationally on this aspect.

The recently concluded JEC Asia Show at Singapore reinforced Asia Pacific’s towering presence as a force to reckon in the coming years, in line with industry predictions of the region accounting for nearly 50% of global composites usage by 2015. Currently, I am in the process of preparing an update on composites in the Asia-Pacific region.

LINK TO ONE OF MY 2008 ARTICLES

In the interim, here is my 2008 feature on the subject titled “Polymeric Composites in Asia – Past, Present and Future.” It can be downloaded via the following link ASIA PDF [Page 10-14].

Till the next post,

Cheers,

S Sundaram

Email: SS@essjaycomposites.com
Twitter: @essjaycomposite
More on Essjay Composites

 

Images from Keyser.com.sg, EUInfrastructure.com, Europeword.com.

Composites and Geopolitical Economics: A Heady Cocktail!

Hello again,

The tailpiece of my last post on water being the next oil left a few readers bemused. To clarify, what I meant to convey was that  drinking water could prove to be one of the defining aspects of economic prowess (much as oil today) in the future. The fact remains that we would need oil and catalytic crackers to produce basic thermoplastic building blocks such as ethylene and propylene…..unless technological advances come up with alternate routes and/or oil-based plastics are displaced by renewable bio-based resins. Who knows ?

Cocktail anyone?

The purpose of this blog is to be daringly different… as Lady Gaga’s ceremonial public outfits. But then her numbers are foot tapping and hold our rapt attention…..analogous to this blog on composites with a whiff of social stuff, touch of humour & economics and technical happenings on fibers, resins. To sum up…a heady cocktail meant to grab readers’ attention and be thought provoking !

So it is now official… as of September 17, 2010, the European Union has imposed provisional antidumping duties on Chinese glass fiber (reinforcements) imports to the same extent of ~40% as Turkey and India. The debate on the pros and cons of this decision will continue to rage for some time to come.

Focus on weight reduction (& carbon fibers)

The interesting news from a composites perspective was an October 1st column in Bloomberg’s Businessweek that carmakers in the U.S. may be required to almost double the fuel economy of their vehicles to 62 MPG by 2025 – up from the 2016 target of 35.5 MPG (based on a 5% increase from 2010 and building up to the 2016 models). This could entail a vehicle fleet that is 55% hybrids, 15% plug-in electrics and 30% advanced gasoline cars.

The same day, Reinforced Plastics featured a news write-up on the successful introduction of non-polluting electric buses featuring carbon fiber/epoxy prepregs in Seoul, Korea with a weight reduction of 25% being achieved compared to conventional buses.

The focus on weight reduction is thus an unwritten rule and carbon and glass fiber producers (especially the former) have their tasks cut out in not only making enough reinforcements available; but also teaming up with researchers, resin producers, processors and vehicle manufacturers alike in achieving the ultimate objective.

Such news would also cockle the hearts of environmentalists and renewable energy activists that the 2020 targets would be on track and carbon dioxide emissions/global warming issues are being addressed without letup.

Further composites tie-ins with the auto industry

The fact that a leading global resin producer (DSM)  received an award at the recently concluded China Expo for successful commercialization of a bio-based resin for automotive applications bears testimony to ably responding to key industry challenges in reduction of the harmful impact of fossil-based raw materials to the environment.

Dubai’s comeback?

With oil prices trying to break the psychological $80 barrier, the re-emergence of Dubai in the UAE has been the talking point last week. This follows  the recent debt restructuring settlement with creditors by the embattled state-controlled holding company Dubai World. A passionate affair that is daring to surface again succintly sums up the fact that the world appears to have forgiven Dubai – or at least accepted it for what it is in the aftermath of the default . An emotional piece that hit the headlines of the International Herald Tribune titled  “Dubai rises from the ashes of debt crisis” said it all. Such is Dubai’s charisma!

What better way to vindicate the Kubler-Ross model depicting the five stages of grief – denial, anger, bargaining, depression and then acceptance [not necessarily in the same order] ? Plotting these emotional states  as key points on a graph would aptly depict the world’s reaction towards the Emirates during its woes that commenced in Q4 2009.

Click the following link to read the feature:
GRP REBAR [GULF CONSTRUCTION- JUNE 2010]

A little more on China vs U.S.

This post would be incomplete without touching upon the continuing economic imbroglio between China and the U.S. China’s worst abuse involves its undervalued currency (probably  by 20%) and its promotion of export-led economic growth. Talks of a U.S. retaliation if China does not revalue the yuan gained ground last week, though it could trigger a trade war. The question uppermost in the minds of many is whether China is an economic juggernaut or an overinflated bubble? No one knows the exact answer… such is the complexity of the situation.

Intel’s former CEO summed up the U.S. economic quagmire  pragmatically by stating that “while the nation continues to look back (instead of finding effective ways of providing  fillip to investments, amongst a myriad of other to dos), the rest of the world are in their vehicles looking  (ahead) through the windshield .”

Is the latest upsurge in stock market indices  pointer to a quicker global resurgence? The IMF itself is not too sure, judging by frequent revisions of the global GDP growth (3.5% by the last count).

Let’s wait and watch!

Till the next post…….

Cheers,

S Sundaram

Email: SS@essjaycomposites.com
Twitter: @essjaycomposite
More on Essjay Composites