In its annual Blue Chip Financial Indicators survey, Wolters Kluwer asks roughly 50 financial forecasters to supply projections for the yr forward. The consensus for 2025 predicts actual gross home product to extend 2.1%, the patron worth index inflation fee to chill to 2.4% and the unemployment fee to common 4.3%.
In fact, the financial outlook hinges on so many components. There’s a brand new administration within the U.S. and demanding elections worldwide, notably in Germany, Canada and Australia. There’s a possible commerce warfare on the horizon between U.S. and international locations akin to China, continued turmoil within the Center East, a increase in synthetic intelligence – the listing goes on and on.
In our annual State of the Trade report, we requested 4 consultants to slim the main focus and supply perception on three key market segments and two supplies which can be pivotal to the composites business. Right here’s what they needed to say.
The Automotive Market
By Marc Benevento, President
Industrial Market Perception
Demand for composites in mild automobiles remained regular in 2024, regardless of their persevering with to realize a bigger share of auto weight. These supplies have expanded their presence in inside combustion engine (ICE) automobiles and, extra notably, in battery electrical automobiles (BEVs). Nonetheless, a slight decline in international automobile manufacturing offset the rise in composite utilization per automobile, leading to flat year-over-year quantity. The rising market share of BEVs globally will drive above-market development for composites, as their weight-saving properties assist lengthen BEV vary equally to how they enhance the gas effectivity of ICE automobiles.
The worldwide marketplace for mild automobile composite supplies reached 4.9 billion kilos in 2024, lastly eclipsing the pre-pandemic worth although automobile manufacturing quantity has not but returned to the high-water mark. Composite supplies have constantly exceeded business development resulting from their capacity to cut back weight, complexity and price from automotive elements and programs. The expansion fee is accelerating because the market shifts towards battery electrical automobiles, which have a tendency to make use of extra composite materials per automobile than these powered by inside combustion engines.
Final yr, mild automobile manufacturing development in most areas flattened considerably in comparison with the previous few years of restoration following the pandemic. Europe was the outlier, the place automobile manufacturing fell by mid-single digits in comparison with 2023 resulting from weak demand and rising stock ranges. With international provide and demand now balanced, automobile manufacturing development is anticipated to be between 1% and a couple of% per yr.
The auto business continues to shift towards electrification, with electrical automobiles (EVs), together with hybrids, gaining one other 5% of worldwide market share in 2024. Nonetheless, ICEs nonetheless account for 75% of auto gross sales. China is main the BEV cost, accounting for nearly 60% of worldwide BEV gross sales, whereas Europe provides one other 20%. The U.S., lagging with EVs at 15% of auto gross sales, faces an unsure future since modifications in authorities laws, incentives or funding in charging infrastructure will affect the adoption fee by mainstream customers. As a result of the U.S. accounts for greater than 80% of annual new automobile gross sales for the continent, North America will proceed to lag within the international adoption of BEVs.
Regardless of the uncertainty surrounding regional and international adoption of BEVs, composites proceed to win purposes in mild automobiles resulting from their capacity to cut back weight, enhance utility, lower prices and simplify parts, all with out compromising security. The necessity for weight discount to enhance the effectivity of each ICE and BEVs has resulted in above-market development for each thermoplastic and thermoset composites.
The design flexibility afforded by composites has allowed OEMs to supply BEV variations of ICE or hybrid automobiles utilizing the identical automobile structure, providing customers a wider vary selections whereas avoiding exorbitant prices related to a devoted platform. Artistic design and manufacturing innovation have allowed composites for use to extend inside storage in pickup vans and produce single shot “frunk” liners for BEVs.
As well as, composite supplies are more and more discovering use within the parts of EV batteries, which assist enhance the protection and hearth resistance of the battery pack. Though the trail to automobile electrification is winding and unclear, composites proceed to indicate constant development as a result of the utility they supply is powertrain agnostic.
With international mild automobile manufacturing tempering after the restoration from the pandemic and its provide chain points, development is troublesome to seek out. (See Determine 1.) Nonetheless, suppliers of composite supplies can count on to outperform manufacturing development, as composites proceed to win new purposes by delivering substantial worth within the type of weight financial savings, design flexibility, value and efficiency. These advantages lengthen to each ICEs and BEVs, so suppliers can relaxation assured the marketplace for composite supplies will proceed to develop whatever the powertrain sort.
The Glass Fiber Market
By Dr. Sanjay Mazumdar, CEO
Lucintel
Total, the glass fiber market is evolving quickly, pushed by developments in expertise, innovation and a rising emphasis on sustainability. As demand grows – significantly from rising markets – and because the materials finds elevated use in industries akin to transportation and building, Lucintel expects the market to bear continued enlargement.
The worldwide glass fiber market elevated by roughly 3% in 2024, with demand rising to 16.8 billion kilos in comparison with 16.3 billion kilos in 2023. There was softer demand within the U.S. for glass fiber in numerous industries, akin to building, marine and others. Lucintel forecasts that international demand will improve by roughly 4% at a compound annual development fee (CAGR) when it comes to quantity from 2024 to 2031. (See Determine 2.)
Nonetheless, the worldwide glass fiber market faces important hurdles. Key amongst them is intense competitors, significantly from Chinese language producers. China had virtually no presence within the glass fiber section in 1990, whereas right now it dominates the market with 65% of worldwide capability.
On one hand, China’s market infiltration has helped develop the general section due to its low-cost fiber. Nonetheless, that poses substantial challenges to North American, European and Japanese glass fiber suppliers making an attempt to keep up profitability as a result of they’re unable to compete with Chinese language suppliers on value.
Many gamers are shedding their market share to Chinese language suppliers. A number of outstanding firms, together with PPG, 3B and Owens Corning, have both exited the market or introduced plans to take action resulting from declining profitability. North American, European and Japanese glass fiber suppliers might proceed to battle with profitability sooner or later and may very well be pressured to chop 1000’s of jobs except they’ll determine methods to compete with Chinese language gamers on value or improved efficiency.
The Trump administration has pledged to impose a 25% tariff on all imports from Mexico and Canada and a further 10% responsibility on items from China. This coverage would elevate the price of imported glass fiber, shifting the market in favor of U.S.-based glass fiber suppliers.
One other development within the glass fiber worth chain is prioritizing sustainability and round economic system ideas. Because the business strives to cut back its environmental footprint, producers are specializing in closed-loop recycling programs to recuperate and reuse composite supplies, minimizing waste and conserving sources. Firms akin to Johns Manville and Jushi are investing in revolutionary recycling applied sciences and sustainable practices to fulfill international environmental requirements. By 2030, these efforts are anticipated to considerably cut back the business’s environmental influence and contribute to a extra sustainable future.
OEMs and half fabricators are innovating recycling applied sciences and setting lofty targets. As an example, Vestas is striving for zero-waste generators by 2040. (On this case, ‘zero waste’ means stopping all waste and creating a round economic system for all supplies, together with the carbon cycle.)
In conclusion, the glass fiber market panorama is dynamic. By leveraging developments in expertise and adeptly addressing present challenges, companies can unlock the complete potential of glass fiber and safe a aggressive edge available in the market.
The Aerospace Market
By Richard Aboulafia, Managing Director
AeroDynamic Advisory
The plane and protection business continues to be a story of the most effective and worst of occasions. Demand in all segments – jetliners, navy programs, enterprise plane, rotorcraft, and so on. – continues to be extraordinarily sturdy, with backlogs at or close to file highs. International tensions are fueling demand for protection gear, whereas a robust journey restoration and undersupplied markets are driving demand for civil transport plane.
Nonetheless, provide chain delays and different manufacturing issues are suppressing output. Manufacturing in 2024 was stagnant, regardless of the continued power in markets. For a market screaming for gear, deliveries had been flat, as proven in Determine 3.
In equity, not all of this manufacturing disappointment was the results of provide chain issues and manufacturing ramp sluggishness. Two of the 5 largest packages noticed flat or declining output resulting from distinctive circumstances – a 53-day strike crippled Boeing 737MAX output, whereas delays in a mission programs improve halted Lockheed Martin F-35 Joint Strike Fighter output. Then once more, if these occasions hadn’t occurred, it’s doubtless that these packages would have solely achieved marginally higher, and final yr’s topline totals would solely improve barely.
There are hopes for enchancment within the coming yr, however given previous disappointments many within the business are skeptical of greater than single proportion year-over-year output will increase. Sadly, decrease inflation doesn’t appear to be an indicator of an bettering provide image for aviation and different sectors of the economic system.
That is additionally the primary aerospace restoration the place the primary yr of the restoration – 2021 – was worse than the place to begin. That yr’s disappointing output, after all, was attributable to pandemic-related provide chain disruptions, even when demand was greater than in 2020.
It’s additionally notable that in contrast with earlier civil market upturns, this time round all business segments are demanding manufacturing sources, significantly labor. Protection specifically may be very sturdy proper now, with file U.S. protection budgets and file world ranges of spending. That makes this the primary mixed civil-military uptick since earlier than the top of the Chilly Battle. Protection contracts are sometimes cost-plus, which means they’ll pay prime greenback for folks and materials.
Evaluating right now’s very sluggish restoration with the quick development seen in earlier ones factors to a doable silver lining. In most civil segments, market booms have tended to finish with market busts.
The explanation for these declines is straightforward; it’s robust to know when to cease rising manufacturing. Whether or not it’s small and mid-sized enterprise jets in 2007-2008, widebody jetliners within the center 2010s or massive civil helicopters within the first half of the 2010s, producers have tended to maintain the great occasions rolling and ignore warning indicators that they need to cut back output. The consequence tends to be overcapacity, adopted inevitably by a manufacturing drop.
With right now’s restoration, if it may be termed that, there is no such thing as a severe threat of overcapacity. Whereas producers try to extend output, and would favor to cut back their wholesome backlogs, provide chain issues will virtually definitely hamper the business for at the very least the following 18 months – and sure longer.
By then, aerospace market indicators may inform a distinct story. Consequently, the remainder of the 2020s may see continued comparatively gradual development. Nonetheless, this slower development will doubtless show extra sustainable in comparison with fast development in different shorter recoveries as a result of there’s a lot much less threat for overcapacity.
The Carbon Fiber Market
By Dr. Sanjay Mazumdar, CEO
Lucintel
In 2024, international carbon fiber market development remained steady. The business maintained a cautious outlook, reflecting ongoing international financial uncertainties pushed by components akin to elevated rates of interest, geopolitical conflicts, persistent inflation and provide chain points. There was softer demand within the U.S. for carbon fiber in aerospace, wind power and sporting items purposes. Demand inside aerospace was decrease resulting from manufacturing points with the Boeing 737 MAX and 787 Dreamliner. Nonetheless, carbon fiber demand grew globally in aerospace aided by regular plane deliveries by Airbus and China’s industrial plane, akin to COMAC.
A major shift is going on within the aggressive panorama, with China changing into the world’s largest client and producer of carbon fiber lately. Lucintel forecasts that China will account for greater than 65% of worldwide carbon fiber capability by 2030; it has already achieved the identical feat within the glass fiber market. China had little presence in 2010 within the carbon fiber market, and right now it has reached roughly 45% of worldwide capability.
A decade in the past, Japanese, European and U.S. gamers akin to Toray, Teijin, Zoltek, Hexcel, Mitsubishi and SGL dominated the carbon fiber market. At the moment, Toray is the highest provider when it comes to capability adopted by two Chinese language firms – Jilin Chemical Fibre Group Co. and Zhongfu Shenying Carbon Fiber Co. Ltd.
Total, international demand for carbon fiber reached 300 million kilos (U.S. $ 3.5 billion) in 2024, up from 216 million kilos in 2018. Lucintel forecasts that demand will improve at a compound annual development fee (CAGR) of roughly 10% from 2024 to 2030 pushed by development in strain vessels, wind generators, industrial plane, automotive and different markets. (See Determine 4.)
Rising markets akin to air taxis, hydrogen storage and gas cells will assist increase the expansion of carbon fiber sooner or later. The city air mobility market, together with electrical vertical take-off and touchdown (eVTOL) air taxis, is about to extend carbon fiber utilization in structural and inside parts. As demand for hydrogen automobiles grows, so too will the necessity for carbon fiber in hydrogen storage tanks, significantly Sort IV vessels.
Whereas there’s optimism for market development, the value of carbon fiber stays a major problem to widespread adoption, significantly in industries akin to automotive, client items and industrial purposes. These industries search carbon fiber at worth ranges of $4 to $6 per pound. Some Chinese language suppliers plan to promote carbon fiber on this vary and thus can penetrate new purposes with their low-cost carbon fiber. This poses issues for North American, European and Japanese carbon fiber suppliers striving to keep up profitability as a result of they’re unable to compete with Chinese language suppliers on value.
Many suppliers are shedding market share towards Chinese language firms in non-aerospace purposes. In 2024, SGL Carbon, a European provider, introduced their intent to promote their carbon fiber enterprise. Lucintel forecasts important worth competitors in carbon fiber within the coming years, and the value of carbon fiber will fall in quite a few purposes to guard home enterprise.
Along with pricing considerations, recycling and sustainability of carbon fiber proceed to problem suppliers, who’re striving for tactics to deal with the problem.
Regardless of these and different challenges, Lucintel predicts that improvements in hybrid composites, recycling strategies and automatic manufacturing processes will proceed to reinforce the attraction of carbon fiber. Famend for its unmatched strength-to-weight ratio and sturdiness, carbon fiber stays a important materials shaping the way forward for aerospace, transportation, renewable power, hydrogen automobiles and high-performance client items and industrial purposes.
The Building/Infrastructure Market
By Ken Simonson, Chief Economist
Related Normal Contractors of America
The election outcomes have delivered each hope and larger uncertainty to building contractors. Many contractors welcome the prospect of decrease federal taxes and fewer laws than if Democrats had gained management of Congress and the White Home. However the business may additionally expertise unfavorable modifications in spending, tariff and immigration coverage.
Even concerning taxes there’s loads of uncertainty as to which present tax provisions shall be prolonged, whether or not construction-friendly tax breaks for renewable power shall be repealed or what different offsets shall be enacted to pay for the tax minimize extensions. The Trump administration may additionally attempt to “pay” for tax cuts by impounding or canceling spending authorized underneath the Infrastructure Funding and Jobs Act (IIJA), the CHIPS and Science Act or the Inflation Discount Act. These legal guidelines collectively include unprecedented quantities of funding for a variety of building tasks.
Whereas there could also be few new federal laws, rolling again present guidelines can take as a lot time as adopting them within the first place. And contractors usually favor some federal laws as a approach of offering uniformity and readability a few regulation’s intent or to preempt a number of state and native laws.
Even larger uncertainty and concern on the a part of contractors encompass the prospect of recent and elevated tariffs and harder insurance policies towards foreign-born employees. Tariff will increase are more likely to elevate prices for any product that competes with imports or incorporates imported supplies, in addition to for immediately imported objects. Some international locations might go for quotas in lieu of tariffs, a step that would utterly choke off entry to wanted inputs. One other fear is the prospect of retaliatory motion by U.S. buying and selling companions, which might be dangerous to a variety of U.S. companies and employees.
Building can be weak to actions to limit or deport foreign-born employees. An evaluation of the Census Bureau’s American Neighborhood Survey signifies that 34% of building commerce employees in 2023 had been immigrants – one of many highest foreign-born shares of any business. Half or extra of the commerce employees had been immigrants in 4 states: California, New Jersey, Texas and Maryland. However even contractors in states with small foreign-born shares in building would really feel the influence if competitors for employees elevated from different industries or states.
Aside from these uncertainties, a number of the current spending tendencies seem more likely to proceed. Particularly, general building spending development is more likely to stay round 5% (not adjusted for inflation), as within the 12 months from October 2023 to October 2024. (See Determine 5.) Furthermore, development is more likely to be intently balanced between residential and nonresidential building.
However inside these broad segments, there shall be modifications. Spending on the 2 fastest-growing nonresidential classes – knowledge facilities and manufacturing vegetation – is headed for slower development for various causes. Demand for knowledge facilities stays torrid however house owners are having issue discovering places with sufficient energy, expert employees, supplies and little or no opposition from neighboring landowners. In distinction, building of electrical automobile (EV) vegetation and EV battery vegetation has slowed or been halted within the face of weaker-than-expected demand for EVs.
Offsetting slowdowns in these classes, many kinds of infrastructure and energy building seem poised for extra fast development. Funding for highways, airports, water, wastewater and rail building ought to lastly flip into contracts and never merely press releases from federal businesses, as had been the case for a lot of the previous three years. Demand for added and upgraded energy provides will gas additional funding in photo voltaic fields, transmission strains and utility-scale batteries and turbines.
Two different markets – workplace and warehouse building – look like caught in low gear. There isn’t a signal of a backside for brand new workplace building and solely restricted alternatives for conversions or renovations. And warehouse vacancies stay excessive, at the very least for the most important constructions. Nonetheless, there could also be development in smaller, inside-metro amenities, chilly storage and warehouses close to new manufacturing vegetation.
Briefly, contractors can have a number of potential coverage and demand shifts to deal with. Some will thrive however others might battle to outlive.
