Supply Side: Limited Increment in Q1-2, Concentrated Capacity Release in Q3-4, Estimated New Addition of About 18,000 Tons for the Year
The glass capacity in 2021, 2022, and 2023 was 46,000, 81,000, and 105,000 tons, with a year-on-year increase of 35+%, 70+%, and 30+%. As of now, the domestic glass capacity is about 99,000 tons, plus 5,850 tons overseas. In Q1 2024, the industry added 3,100 tons of new capacity and 650 tons of resumption. Considering about 3,500 tons of repair, the actual increase in Q1 is limited. Q2 is expected to increase, with capacity expected to be concentrated in Q3-4. The annual new capacity is expected to be about 21,000 tons, but considering the old and small capacity put into operation before 2017, they will gradually enter to repair period. Estimating a 50% ratio, the expected repaired capacity is about 3,000 tons, and the actual new addition for the year is 18,000 tons (about 5-6 thousand tons in Q2, and about 6-7 thousand tons in Q3/4). The industry's capacity growth rate in 2024 is about 15-20%, with a slowdown in the supply growth rate. Coupled with an estimated 20-30% growth rate in photovoltaic demand, the industry's capacity Operating rate will further increase. In 2025, an additional 15-16 thousand tons are expected, with a year-on-year increase of 10-15%.
Demand Side: Increase in module Scheduling, Gradual Decline in Glass Inventory
In March, the module scheduling increased significantly month-on-month, about 51-52GW, with an increase of 50%+. The increase in demand drives the increase in glass demand, and inventory gradually declines, expected to drop from about 4 weeks at the end of February to around 20 days by the end of March.
Material Prices Decline, Inventory Reduction Expected to Increase Price .
The cost of soda ash accounts for about 30%, and the price has dropped from 2,900 to about 2,000 yuan/ton. Considering the limited supply increase in Q1 and the production scheduling demand, the inventory is declining. After the glass inventory drops below 20 days, the price maybe increase higherin April-May. In addition, the overseas strong demand in Q4 2024 and domestic installation rush are expected to drive a new increase in glass price. Overall, the glass industry is expected to see a reduction in costs due to the decline in soda ash prices and the expansion of the scale of individual lines. Therefore, the average price in 2024 is expected to be lower than in 2023.
Profitability Varies Greatly, Leading Companies Have Profit Advantages, and Expected to Further Improve.
The net profit of the industry in 2023 is about 2-3%. Looking at individual companies, leading companies such as Xinyi and Flat Glass have cost advantages due to scale and yield advantages, own sand mines, and natural gas, with10-15 percentage points higher than the average. Other manufacturers in the industry generally incur losses. With the stabilization of glass prices in March and the decline in material prices, industry profits have been restored. With the expectation of glass price increases in April-May, profits are expected to further improve.
Source: ZD Solar