For years, composites manufacturers have benefitted from China's bullish government policies on wind energy, with windmill-blade construction often making up the largest part of their business in China.
After a few years of unbridled growth, however, China's government is putting on the brakes and composites manufacturers are feeling the effects.
“Last year, China installed 17 gigawatts of new wind energy,” said Beth Rettig, spokeswoman for Toledo, Ohio-based Owens Corning. “This year they will maybe make it to 10.” At 7,500 tons of composite materials per gigawatt, Rettig said, the slowdown is going to impact the whole supply chain.
The reduction in China is not limited to the wind market. At the recent China International Composites Industrial Technical Expo, held Sept. 7-9 in Shanghai, companies said they have seen slowing in the automotive market, in construction and in the manufacture of trains.
“We are doing well overall — business is up — but there has definitely been a slowdown,” said Dale Silvernell, director of IDI Composites International's Asia-Pacific supply chain. “The only market that's been unhampered by the slowdown is the metro system,” he said.
IDI International's U.S. headquarters is in Noblesville, Ind.
While different markets have cooled for different reasons, the dampened pace of growth can be traced back to government policies. In the real estate market, for instance, China's central government has put policies in place to help curb rising housing prices, limiting the number of home purchases that can be made by one buyer. Tightened lending policies and higher mortgage rates have put pressure on developers and slowed the typical lightning pace of construction.
In the rail industry, investment dropped following a deadly high-speed crash in the Chinese city of Wenzhou. Following the crash in July, rail construction investment dropped 25 percent.
Of all the markets for composites, however, wind has been the most acutely affected. Despite the slowdown, “We are [still] seeing a lot of growth in wind in China,” said Christian Koppenberg, sales director at SGL Group, a Wiesbaden, Germany, manufacturer of carbon composites. “The European market is saturated; in China there is growth and there are new technologies being adopted — that's where you want to be.”
The slowdown in the wind industry has come after China encountered difficulties with its already-installed wind power.
Windmills on land are designed to turn only a percentage of the time, explained Sam Chi, commercial director of global wind energy at Owens Corning. The electricity grid wasn't prepared for situations when all the turbines would turn at once; when that happened, it created a power surge.
“I think they noticed this happening and realized that they need to improve the standards,” said Chi.
Now, new turbines can no longer be approved locally, but have to go through the central government. They are also required to include technology to protect against power surges.
“From 2005-2009, the wind-energy market grew incredibly fast,” Chi said. “Now we're back to 2009 levels.”
Chi predicts the slowdown will continue at least for another 12 months. In the meantime, companies are competing for a smaller market and looking to other applications to fill the gaps.
“We're not backing off even in light of the slowdown,” said Marcel Loyson, industrial composites business leader at Dow Formulated Composites in Midland, Mich. “We're still very committed to making more-efficient blades for the China market.
“This is temporary,” Loyson said. “Globally, the wind market is only going to get larger.”