Rough ride for glass makers
Updated: 2015-03-03 09:26
By Felix Gao in Hong Kong(HK Edition)
The mainland's float glass industry had a tough year in 2014, with prices being dragged down by increased production capacity and weaker demand from the real estate industry.
Xinyi Glass Holdings - one of the mainland's largest glass manufacturers - reported a net profit of HK$1.36 billion for last year - a 58-percent decrease year-on-year, while gross profit dropped by 12.9 percent to HK$2.73 billion. The decline was due to a decline in float glass prices as well as rising production costs, the company said.
Xinyi Glass Chief Executive Officer Tung Ching-sai said the industry's capacity reached a record high last year, but the supply relationship would improve this year as the overall capacity is expected to drop by 2 to 5 percent due to industry consolidation and the mainland's growing housing sales.
Sunwah Kingsway Research said the company has bright prospects as the mainland is expected to continue to be the world's fastest growing market for flat glass, including float glass, sheet glass and rolled glass. Global demand for flat glass is forecast to jump by 8.6 percent per annum to 11.5 billion square meters by 2018. The Asia Pacific region accounted for 54 percent of global flat-glass demand in value terms in 2013, while the mainland accounted for 64 percent of the region's total.
Demand for flat glass in the solar energy market is expected to be particularly high as many countries increase investment in renewable energy. Solar energy applications accounted for 130 million square meters of flat-glass consumption in 2013 - a figure that's projected to more than double by 2018.
Photovoltaic glass is an important accessory in the solar-cell industry. Driven by the photovoltaic industry, the mainland's photovoltaic glass consumption has increased gradually, exceeding 200 million square meters last year.
Xinyi Solar Holdings - a unit of Xinyi Glass and the largest maker of solar cover glass in the world - said on Monday its net profit for 2014 soared by 62.3 percent on the year to HK$493 million.
"We like Xinyi Solar's leading position in the solar glass industry and its strategy of tapping into the solar farm business for additional earnings growth in the longer term," a Daiwa Capital Markets report said. JP Morgan said it expected solar installation on the mainland to accelerate again in 2015-16 following a slowdown last year, with key drivers coming from continuous policy support on distributed generation and better project return after the decline in solar component prices.
The demand for flat glass is said to remain strong due to declining costs and favorable policies on the mainland - one of the world's biggest glass consumers. Natalie Behring / Bloomberg News
(HK Edition 03/03/2015 page8)