Flat glass expansion to continue unabated

By Davide Ghilotti
Published: Tuesday, 27 September 2016

Electronics and energy drive growth; Supply insufficient to meet demand; Concerns over price hike

Global demand for flat glass is forecast to grow by 5% pa to of $94bn by 2020, on the back of strong demand from manufacturing hubs in south-east Asia and end markets including manufacturing, electronics and energy.

According to the latest World Flat Glass report produced by US-based market research agency The Freedonia Group, by the end of the 2015-2020 period, flat glass demand will be moving 9.6bn square metres of product pa.

This may lead to issues of availability of supply, analyst Allison Blackburn, author of the report, told IM.

"Currently, there isn’t enough capacity to meet our expected total demand in 2020.  It is costly to repair and expand current plants, and even more expensive to open new float lines, so producers want to be sure of growing demand before making such commitments," Blackburn said. 

This could bring about an uptick in product prices for end users, as supply gets tight.

"It will likely lead to higher prices at least temporarily until additional capacity can be opened," she added.

Market drivers

The flat glass sector is expected to keep expanding in size, albeit the growth rate would be slower than in the 2010-2015 period. The trend is due to a slowdown in demand from China – the largest single consuming market – on the back of a deceleration in construction spending in the country in the mid term.

Currently, flat glass is used in traditional industries such as architecture and automotive, as well as in newer and fast-growing sectors including electronics, technology and energy.

Any such developments in this end market would support higher demand for raw materials from producers. A number of industrial minerals are used as feedstock in the production of flat glass, including silica sand, graphite, feldspar, fluorspar, kaolin clay and soda ash.

Solar energy applications absorbed 200m square metres of flat glass last year. This figure is expected to triple by 2020.

Staple end markets such as industrial manufacturing and automotive will drive the demand, Freedonia forecast.

In terms of geographical footprint, Asia Pacific was, and is expected to remain, the largest destination hub for the sector. In 2015, the region accounted for over half of global demand in value terms.

Asia Pacific is expected to see the fastest growth rates in the coming years, as the area includes the five fastest-growing national markets for flat glass – India, Indonesia, China, Thailand and Vietnam.
According to Blackburn, China accounted for 64% of the total regional value last year. Growth in the region will be driven by rapidly-expanding consumer demand for electronic screens and solar applications, although "solid gains" are expected also in construction.

Demand in main western markets, Europe and North America, is meanwhile expected to be hindered by shifting dynamics in manufacturing, as producers increase outsourcing towards emerging markets.

China maintains downstream graphite focus
  • Slow trade in traditional markets
  • Spherical graphite exports surge
  • Downstream focus pays off

Shruti Salwan

China’s focus on downstream value-added expansion has resulted in a surge in the country’s spherical graphite exports, which registered a rise of 23.5% year-over-year (y-o-y) against a 2.1% drop seen in natural flake graphite exports for the seven months ending July 2016.

Uncoated spherical graphite exports for January to July totalled 19,371 tonnes, registering an upward spike against 15,680 tonnes reported in 2015, according to China Customs.

Natural flake graphite export levels remained depressed at 60,113 tonnes; although marginally down from 61,396 tonnes reported in 2015, volumes dropped by 19% against January to July 2014.

Excessive overcapacity alongside decreasing consumption rates in traditional buying markets of refractories and steel has seen trades slowing entering into H2 2016.

China’s flake vs. spherical graphite exports (Jan 2015 - July 2016) 
Source: China Customs, Industrial Minerals 

Nevertheless, growing demand for high-purity graphite grades in emerging technologies and a greater domestic focus on value-added production has seen the consumption of highly processed grades become a major source of revenue for Chinese exporters.  

Revenues from the exports of spherical graphite were up 16.6% y-o-y, while values from natural flake graphite exports were down by 7.9% during the same period.

Sales from the spherical graphite market made up nearly 58% of the total turnover from China’s graphite exports for the first seven months of 2016 – a proportion which has grown as a result of increases in both the volume and value of production.

The graph below highlights this persistent growth in Chinese exports, showing the growing importance of this area of the market in driving future flake graphite demand.