China float glass price trend analysis 2021&2022

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China float glass price trend analysis-2021&2022
Since 2021, affected by multiple factors, the price of China float glass has increased significantly compared
with 2020, which has caused a greater reaction from downstream enterprises(glass processors,facade
contractors,real estate developers) . Especially after May,2021, frequent tight supply of float glass has been,
and the price has been running at a high level and continuously rising. In August, float glass industry listed
companies have successively released performance reports for the first half of 2021. Benefiting from the high
prosperity, the performance of these flat glass companies is very gratifying.
The price of flat glass has risen rapidly, but the price transmission from upstream to downstream is
not smooth. Glass deep processing companies that do not have their own flat glass production lines, have to
purchase raw materials at high prices and then selling the products at a loss. On May 29 this 2021, seven
glass deep-processing industry associations(Henan,Shanxi,Hunan,Ningxia,Luoyang,Wuhan,Hefei) gathered
in Huangshan City, and issued an appeal to relevant state ministries and commissions to investigate the
abnormal float glass price increase.
The Politburo meeting held on July 30 also pointed out that the current global epidemic is still evolving, the
external environment has become more complex and severe, and the domestic economic recovery is still
unstable and uneven; it is necessary to "do a good job in ensuring the supply of bulk commodities and
stabilizing prices." On August 3, the China government also held a flat glass price symposium. Lv Guixin, the
first-level inspector of the Raw Materials Department, said bluntly: At present, the continuous price increase
under the background of excessive production capacity,the situation is out of the fundamentals of the
industry, and the policy does not allow it. It is necessary to fully realize the harm caused by the
excessive and rapid rise of the original price.

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What are the consequences of fast and continuous price increase of flat glass prices?
What causes its price misalignment to be so serious?
Will prices fall before 2021?
How can we avoid recurring waves in the industry?
Float glass price keep increasing
The rate of increase of float glass in 2021 is the highest since the abolition of the national glass distribution
price in 1993.Said Mr Sun Xingshou, deputy secretary general of China Building Materials Federation.
After the outbreak of the Covid-19 in early 2020, the production and sales of the float glass industry have
shrunk sharply, and prices falled sharply. In April 2020, the price of flat glass fell to a low record to USD210/MT.
With the joint efforts of the industry to promote the resumption of work and production, the price of float glass
will gradually recover after May 2020. In 2020 August, it recovered to normal price level USD295/MT, and
climbed to USD350/MT at the end of the year. Since 2021, the price of flat glass has declined first and then
increased, and has accelerated after May, reaching a peak of USD500/MT in August,2021,it’s already much
higher than global average price.

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The excessively high and rapid increase has caused great response from downstream enterprises and some
users in the industry chain. Glass deep processing enterprises are in the middle a of the industrial chain, and
are dominated by small, medium sized enterprises, with weak bargaining power and weak transmission and
digestion of cost pressures.
"We’ll customers if no delivery, but huge loss if deliver glass”. Many companies want to delay the delivery date,
thinking that a little bit less loss." According to a description by deep processing company boss, in May
2021,When the rise was the most intense,daily rise is very common. However, due to poor downstream price
transmission and upstream raw material prices increase, it is very difficult for them to "live" under the attack of
both ends.
The upstream and downstream industries are inseparable from each other. From a deeper point of view, the
price of flat glass is too high and too fast to rise, which may also endanger the effectiveness of the flat glass
industry in resolving overcapacity and supply-side structural reforms in recent years.
According to Sun Xingshou's recollection, the problem of overcapacity of float glass began in 2009. Under the
loose macro policies at the time, high domestic infrastructure demand drove a large number of float glass
production capacity. In 2008, the production capacity of flat glass was 33.5 million tons, which surged to 38
million tons in 2009, and there are more than 5 million tons under construction. At that time, there was a
serious overcapacity problem in the entire industry, and the utilization rate of capacity gradually declined, and
the price of flat glass was also declining.
In the next few years, government departments successively issued de-capacity documents, prohibiting new
and expanding float glass production capacity projects, strictly implement the new capacity replacement policy
in order to contain and resolve the problem of overcapacity. Float glass also achieved rapid growth in
production and sales without increasing production capacity.
In 2021,Sep,the industry has 299 effective production lines with a production capacity of 197,600 tons/day; 265
production lines with a production capacity of 175,500 tons/day.
From January to September,2021, the industry statistic is as below:

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 14 production lines were resumed, with a production capacity of +9900 tons/day;
 6 new float glass lines, with a production capacity of +4000 tons/day;
 8 cold repair lines (2 had resumed production), with a production capacity of -5350 tons/day;
Compared with the beginning of the 2021, the production capacity is +5.12%. and the production capacity is at
a historical high.
Multi factors affect price increase
1. Raw materials increase.
Since the beginning of 2021, the prices of bulk commodities and raw materials have risen considerably, which
has brought certain cost pressures to the flat glass industry. Taking Guangdong as an example, the quartz
sand used for glass production has an increase of 50%; the quartz sand for ultra-white glass rose by more than
80%; soda ash price rose over 40%, and fuels such as natural gas have also increased by more than 10%
recently. "Overall, the production cost of float glass has risen by more than 12.5%."
2. The sharp reduction in inventory is also the direct reason.
Key flat glass companies have maintained low inventories this year. In the past, under normal circumstances,
corporate inventory was basically maintained at 20 days. In 2021 It has dropped to about 10 days, sometimes
even less than 10 days."
3. The strong pull from the demand side cannot be underestimated.
The outbreak of the Covid-19 in early 2020 has caused the real estate delayed delivery time, and the real
estate market has substantially "cleared inventory" . The data shows that from January to June this year, the

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floor space of houses completed nationwide was 364.81 million square meters, a year-on-year increase of
25.7%, of which the growth rate in June reached 66.5%. In particular, large-scale promotion of energy-saving
doors and windows in shed renovation and renovation of old communities has made the demand for glass in
the construction sector more obvious.
4. Government policy.
Due to environmental protection reasons, Xingtai, Tangshan and other regions limited production in recent
years, resulting in a tight supply of flat glass in stages and pushing up the glass market price.
5. Additional factors such as capital intervention, hoarding, and abusing pricing power, etc. The
doping of factors eventually led to the abnormal price. The act of hoarding float glass not only involves float
glass manufacturers and distributors, but also deep-processing enterprises. The emergence of these
excessive speculations not only contributed to the price increase, but also disrupted the normal production and
sales cycle.
Price will keep high in balance 2021
September and October is the traditional peak season of glass industry,but 2021 is different.
The overall market trading atmosphere is stable, the fulfillment rate of order delivery has declined, demand has
weakened slightly compared with August, and the enthusiasm for downstream purchases is weak.

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Since July, due to extreme weather, repeated epidemics, delayed demand and other factors, the industry's
inventory has continued to increase. The average inventory days this week is close to 15 days, +4.9 days from
the August, but the overall inventory of the industry is still at a low level.
The construction progress of the project was affected, and the processing plants were cautious in receiving
orders to control the capital risk. Some enterprises' orders generally even weakened slightly; the phenomenon
of reminding orders for finished goods decreased, and the pressure on finished goods inventory of processing
plants increased. On the whole, the price of glass is at a high level, terminal payment is slow, processing
companies are cautious about rising material costs, and short-term demand may continue to be flat, but
terminal demand will only be late and will not be absent.
The current price increase is due to the explosive growth of demand, which has led to fluctuations in the
relationship between supply and demand in the short term.China has always encouraged the promotion of
energy-saving insulating glass. "From one piece to two pieces,and then triple insulated glass three pieces."
the proportion of demand for flat glass will increase further in the second half of the year.
Flat glass is included in the "two high" (high energy consumption, high pollution) industries.
Under the guidance of the "dual-carbon" goal, the supply of flat glass production capacity will not increase
much, and the environmental pressure on enterprises will also increase further.
But some guys offered different opinion:
1. As the float glass line cold repair and capacity replacement are put into production, the supply is gradually
increasing;

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2. After the peak of the real estate market, the domestic market demand will decline.
3. This round of price increases is something that both the supply and demand sides are unwilling to see, and
both hope to fall back. "
4. Domestic prices are likely to fall, and by the end of 2021, they may gradually return to the state at the
beginning of 2021, and will be further adjusted after the first half of 2022."
Morn Opinion:
As glass trading company,Morn has seen that glass export,both float glass and processed glass products
decreased significantly compared with 2020.In addition to 10-20 times increased shipping fees,the glass
trading companies survive is quite difficult,China glass industry is losing its competitive in global market.
With decreased export requirement,the cooling down of China real estate industry,the float glass price will
keep relatively stable and in next few years will keep USD390-450/MT.
Nobody will benefit from the high price except float glass manufacturers,we sincerely hope below
measurements been implemented:
1. Strengthening the collection and sorting of information such as changes in flat glass production capacity
and changes in market supply and demand, and timely release to effectively prevent market fluctuations and
price fluctuations caused by information asymmetry.
2. Glass processors should develop new and creative products to increase the export competition advantage.
3. Stop and punish the behaviors that affect normal market price.

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Contact us:
Qingdao Morn Building Materials Co.,Ltd
China HQ: Room A304,Shengxifu Road,NO.209 Weihai Road,Shibei
District,Qingdao,China,266024
Sales Email: marketing@cnmorn.com
Technical support: han@cnmorn.com Mobile/Wechat: 0086-17705464660
Website:https://www.cnmorn.com/ https://www.mornglass.com/

China float glass price trend analysis 2021&2022

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China float glass price trend analysis 2021&2022