China: Glass industry sparkles as prices peak

Date: 25 August 2009

With the Chinese real estate market recovering in the first half year, the glass industry – which supplies float glass for windows, doors and other household construction uses – is riding the wave.

Li Bing, owner of a small float glass enterprise in Wuhan, said his business grew at a surprisingly rapid pace during the second quarter. “The price of float glass is up almost 21 percent from the same time of last year to 65 yuan ($9.5) per square meter. “My business seems to be going well this year,” he said. Li credits its rebound to the attendant rise of the housing market. “My business has picked up quickly since June, and many clients were real estate agents,” Li told the Global Times. According to data from the Wuhan Municipal Bureau of Land Resources and Housing Management last month, the city’s new commercial and residential building area reached 2.1 million square meters in June, up 3 percent from April. Wuhan’s real estate revival was shared throughout most of China.According to the National Bureau of Statistics, the country’s new commercial and residential building area totaled 479 million square meters, almost 12 percent up from 2008.

As in Wuhan, the national glass industry rode real estate’s coat tails.

According to a research from China Jianyin Investment Securities released Tuesday, domestic glass prices increased rapidly in the second quarter. Currently the average price is 2,300 yuan ($337) per ton, only 100 yuan ($15) less than the same level of last year.

In Guangdong, where commercial residential construction is flourishing, the price for float gass reached 2,450 yuan ($359) per ton, or 75 yuan ($11) per square meter, higher than the same period of last year.

“Last year the glass industry was seriously down,” said Li Fan, an analyst from China Jianyin Investment Securities. “Fifty glass production lines suspended work last year, and the stock reached 100 million weighted boxes.” One weight box contains about 50 kilograms of glass.

“But now the stock is falling sharply. In June, the domestic output was up to 49 million containers, while the stock was down 70 percent to 30 million containers,” Li said.

“The price probably will increase again, because the peak period for glass sales is coming,” noted Li. He predicted the average price for glass would rise to 2,550 yuan ($373) per ton in the third quarter.

The latest half-year results from China South Glass Holding Co Ltd (CSG), China’s largest glass producer by market value, also appeared bright. The operating income was 2.07 billion yuan ($303 million). The average price for float glass reached 2,400 yuan in June, up by 20 percent from January. Float glass products generated an income of 1.1 billion yuan for CSG.

Han Ling, from the Bank of China, pointed out that CSG’s actual income was down due to falling investments in solar photovoltaic related production. “The half-year results also show there was a 12 million yuan ($1.76 million) loss in its solar photovoltaic division. And if it’s true, it means that investment may not be able to earn money this year,” Han said.