The composites industry bounces back at different speeds

In 2020, the Covid-19 pandemic caused a heavy downswing, negatively impacting the underlying industries of composite materials (aeronautics, auto­motive, construction…).  Following this, the composites industry has been recovering in 2021 and 2022. According to the JEC Observer 2022-2027 recent­ly published and established by Estin & Co for JEC Group, at the end of 2022, the mar­ket is estimated at 12,7Mt worldwide (composite ma­terials that are consumed to produce composite parts). It represents in value a market of $41 billion of composite materials and corresponds to a market of assemblies that are made of composite parts worth $105 billion.    

Asia still in pole position but showing signs of slowdown
Over the coming years, Asia should keep on leading the race with a compound annual growth rate (CAGR) of 4% followed by North America (3% to 4%) and Europe (1% to 2%). The region represents the largest market in volume, at 47% of the global market and it is also likely to grow at a faster rate than other continents, at around 4% p.a. In Asia, the global composites market should climb to 7.3 Mt by 2027, of which Elec­trical & Electronic (E&E) is expected to represent the bulk part (1.8 Mt).

“Despite a slowdown of its economic growth rate, China should continue to be a strong driver of the global composites industry. As an example, the demand for Electronics  (digitalisation, remote work­ing/studying…) from China and other Asian countries is expected to continue to grow,” notes Julien Deleuze, VP of Estin & Co.

China is already the largest wind energy market globally, representing 48% of the global market. Still, wind energy accounted for less than 8% of China’s energy output in 2021.

 About 30 GW of capacity will be added annually in China, accounting for about half of newly installed capacity. By 2050, installed capacity could reach 1 TW, about 26% of total power capacity. [1] As a rule, the construction sec­tor should slacken off in Asia, due to economic slowdown in China and its impacts on the financial and property sectors. The default of the Chinese property giant Evergrande in 2021 did not help either. The group that has shaken up Chi­nese finance has been engaged in a painful asset sale process since mid-2021. After a strong upswing of the CAGR (11%) from 2010 to 2019, the aerospace industry has not fully recovered after the pandemic. It should nevertheless remain dynamic at 8% CAGR over the next four years. End of last year, the first-ever C919, China’s  first domestically developed narrow-body passenger jet, was delivered to China East­ern Airlines in Shanghai and is expected to be put into com­mercial operation this spring. The dosage of composite materials reaches 11.5% of the body structure weight.

Transportation and construction: the growth drivers of the North American composite materials market
According to the Inter­national Monetary Fund (IMF), North American economy is set to expand at 2% p.a in the years to come, while the future growth of composites materials should be at around 3% to 4% p.a.

“North America, along with China, should be a strong driver of the global compos­ites industry. There is still potential in the construction area for further penetration (infrastructure major mainte­nance and development such as bridges, renovation…), with, however, a potential risk regarding the segment of new buildings/equipment given the macro-economic context,” says the vice-president of Estin & Co.

According to the JEC Observer, the global composites market (marine, aerospace, consumer goods, E&E, energy, construc­tion and transportation) in this region should climb to 4.0 Mt by 2027, construction and transportation accounting respectively for 1.3 Mt and 1.1 Mt. In the United States, rap­idly rising mortgage rates has put pressure on house prices across the country. Yet, North America construction (see box) is set to remain a large contributor to the composites industry, holding around 20% of the market, driven by large investments programs in infrastructure building and renovation (bridges, water networks).

Aerospace companies in North America were badly bit by the pandemic (-10% CAGR during the period 2019-2022) but seem bound to recover faster than their Eu­ropean counterparts, although disruption in the aerospace sector started prior to 2020 with a significant decline in 2019 regarding annual aircraft deliveries due to the Boeing 737-MAX difficulties.

Transportation leads the way for the European composites industry
For Europe, financial institutions forecast a lower growth rate, as observed over the past years, at 0-1% p.a. Yet, the EMEA region and Americas represent all together 63% of the composites global market in value, which is still very encouraging.  

“The dynamics in Europe re­main heterogeneous across the different European countries, with an overall difficult context for growth (access to competi­tive energy, war in Ukraine and its consequences…).  A strong attention is focused on transportation, where com­posites can play a role in light­weighting light­weighting (railway industry, smaller/lighter cars, hydrogen heavy mobility…),” explains Julien Deleuze.

In transportation, it is no­ticeable that composites are particularly essential for new types of vehicles (hybrid and electric cars, for lighter struc­tures allowing to compensate for heavier batteries; hydro­gen cars, for hydrogen tanks) to enhance performance, for example within consumer sporting goods (cycling…), where composites represent around 16%.  

Construction: a resilient market
In value the composites market for construction makes up 19% of the global composites market in 2022 (26% in volume).The sector was strongly hit in 2020 by the Covid-19 pandemic, however, it quickly recovered to structural levels. The construction segment for composites is consequently expected to grow at a limited 2% per year on average in the next 5 years, provided no major crises happen in the meantime. During economic crises, infrastructure, as well as renovation or maintenance, are more resilient market drivers than new buildings.

“The price of composites projects, while it was far more expensive, has become more competitive as the price of steel, concrete, and timber has risen. In addition, being far lighter and subsequently requiring less groundwork makes composite structures better for the environment, and reduces costs associated with labour and plant (machinery) hire for an equivalent project,” says a product sales manager, working in a British group specialised in design and manufacturing services for the road, rail, marine and coastal sectors which was interviewed by Estin & Co for the JEC Observer.

Poor health of infrastructure facilities is anticipated to attract growing investments in the United States, and thus likely to drive the market. Fibre-reinforced Polymers (FRP) bars have the potential to replace the steel rebar and thus represent a threat to steel rebar products. FRP bars are light in weight and exhibit high tensile strength. These products can be substituted with FRP bars owing to their higher lifespan and increasing metal processing costs over the coming years.

There is a lot of work with pre-recommendations at the European level on the use of these reinforcements for rein­forced concrete (Feb, 2007; CNR-DT, 2007) and at the international level (ACI, 2003; CAN/CSA, 2002). The Eurocode is also working on the integration of the use of these reinforcements.

At the European level, water networks in Italy and Eastern Europe (Italy, Bulgaria, Romania) represent a significant opportunity for composite pipe manufacturers in the coming years. Leakage rates from these networks, which range in length from 70.000 km (Bulgaria) to 480.000 km (Italy), vary between 40% (Italy) and 60% (Bulgaria). Therefore, significant restoration work could be required over the coming years.

References: [1] China Wind Energy Development Roadmap 2050, International Energy Agency (IEA) and Energy Research Institute. https://iea.blob.core.windows.net/assets/8c00f1d3-8054-4e4f-b81f-2b7a23619167/TechnologyRoadmap-ChinaWindEnergyDevelopmentRoadmap2050.pdf [2] U.S. Steel Rebar Market Size, Share & Trends Analysis Report by Application (Construction, Infrastructure, Industrial), by Region (Northeast, Midwest, West), and Segment Forecasts, 2022-2030. [3] www.afgc.asso.fr/groupe/utilisation-d-armatures-composites-pour-le-beton-arme/

This article has been published in the JEC Composites Magazine N°150.

Discover the JEC Observer: Current trends in the global composites industry 2022-2027 
The JEC Observer, prepared in collaboration with Estin & Co, is established as the annual barometer of the composites industry. This edition illustrates the current state of the composites market globally and provides forecasts of growth by region and by application industry to 2027: how were some regions or sectors affected by Covid-19 ? How resilient have they been? What can we expect for the coming years? and much more… Overall, the composites industry is facing a positive future directly linked to application industries seeking sustainable solutions where composite materials can play a significant role, or even offer THE solution.

The JEC Observer is available here.