Cracking under pressure? Glass markets in Europe

By IM Staff
Published: Thursday, 27 April 2017

The global economic downturn and the subsequent lull in construction has taken its toll on the global float glass market. Now however, as Sarah Gibbons and Liz Newmark discover, the industry is looking to a brighter future - despite there still being challenges for producers and the raw material markets which supply them.

As the international glass market continues to recover from the global recession, experts predict emerging markets might be tempted to invest in plant development to manufacture their own flat glass rather than paying expensive import fees buying from one of the handful of major suppliers.

Nick Limb, managing principal at Ducker Worldwide, a US-based international industrial market research and consulting company, said: "The big picture is that we’re going to see new activity in float [flat glass] in places which are difficult [to operate in] economically, such as Africa and parts of Asia. Companies are exploring float capacity there. Like the oil industry where you find future supplies in hard to reach areas, float faces the same challenge."

He said many emerging market governments want to establish national float plants, but find the economic justification tough to demonstrate, especially given such factories need a significant amount of capacity to be viable: "They have to create the level of demand (…) so while countries aspire to it, they can’t justify the investment."   

Rather, globally, there has been excess capacity, he stressed, with North America or Europe mothballing plants during the recession, which have yet to be reopened.

In the US, imports now account for 10% of American glass sales, he said, as it was cheaper to import rather than restart
local plants.

China is now "the big player" in flat glass production, he said. It has the greatest number of glass-producing enterprises and the largest number of float-glass production lines in the world.

A statistical report Flat Glass Market from US-based Global Market Insights (GMI) released in March 2017 predicts the China annual flat glass production volume will exceed $55bn by 2023 out of a projected worldwide total production of $134bn.

It says continued buoyancy in the global construction and automotive sectors, the biggest users of flat glass, will drive the market up during that forecast period.

Demand is especially likely to grow in emerging markets, for instance in China, where the Civil Aviation Administration of China (CAAC), in the country’s twelfth Five Year Plan (2011-2015) forecash investments of around $65bn for building new and restructuring existing airports – spending that is still working its way through project budgets.

Demand for flat glass in the Middle East and Africa (MEA), led by Saudi Arabia and Qatar, is expected to grow over 7% by 2023 thanks to increasing construction spending in the region. Also, the Indian flat glass market is expected to witness "handsome growth" fuelled by the expansion of manufacturing industries coupled with increasing foreign investment, said the GMI report.

Limb also predicted more low iron glass production for solar power applications as the clearer glass produced by the finer sand allows in more sunlight than its mass-produced equivalent.

The GMI report said there was international production of 72.9m tonnes of flat glass during 2015, compared to 61.2m tonnes during 2012. That equated to 9.1bn square metres in 2015 (up from 7.65bn in 2012) with a market value of $76.8bn up from $63.2bn in 2012. Tempered glass accounted for 29.8% of these totals, with China being dominant here too.

But mature markets for tempered glass may also expand: "Growing tempered glass importance for automobile applications in the US, Germany and UK owing to being lightweight compared to its counterparts, should drive flat glass market size," the report said. International automotive production in 2015 was approximately 90 million units, with China being the dominant national producer, making more than 20 million units that year.

"Passenger safety is a growing concern for automotive manufacturers and the industry stands to benefit immensely from it" said the report. It estimates the global tempered glass market passing $40bn in 2023.

A report from strategic analysts Lucintel published this January, 'Growths Opportunities in the Global Flat Glass Industry 2016-2021: Trends, Forecast, and Market Analysis’, reported similar findings. It said: "Low interest rates and favourable taxation schemes are expected to drive vehicle sales, which would spur growth for this segment."

Glass1  
As construction and automobile production picks up so too does the
demand for glass. Last year European demand for automobile glass
was up 7% on the previous year, according to Glass Alliance Europe. 

Glass minerals

In terms of demand for glass manufacturing minerals, this report states: "The supply-demand deficit with price fluctuation of soda ash may affect flat glass market trend."

In 2016 the total value of domestic natural soda ash produced in the US was estimated to be about $1.8bn, according to the US Geological Survey (USGS). Production of 11.7m tonnes was about equal to that of the previous two years but about 600,000 tonnes higher than production in 2012. The US soda ash industry comprises four companies in Wyoming operating five plants and one company in California with one plant. The USGS’ latest figures show that 50% of this total was used in glass production, although soda ash consumption is declining as glass container producers are increasingly using recycled cullet in the manufacturing process.

That said, relatively low production costs and lower environmental impacts provide natural soda ash producers some advantage over producers of synthetic soda ash. The production of synthetic soda ash normally consumes more energy and releases more carbon dioxide than that of natural soda ash.

The USGS report, released in January, said world production is dominated by the American National Soda Ash Corp (ANSAC), which markets the products of three of the five US producers; Solvay SA, of Belgium; and multiple producers in China. 

"Asia and South America remain the most likely areas for increased soda ash consumption in the near future," said the USGS, which predicted US producers would see continuing "modest growth in production and exports through 2020".

Consumption of sand and gravel in the US last year was 89.4m tonnes, a 10% reduction on 2015. Approximately 7% of industrial sand and gravel production is used for glass-making sand.

Minerals and recycling

Adeline Farrelly, secretary general of the European Container Glass Federation (FEVE) stressed the recyclability of glass, with recycled glass or cullet the European industry’s most important raw material, reducing demand for raw materials such as sand, soda ash and limestone.

"In the EU28, some 74% of glass bottles and jars are collected for recycling," she said. "Some 90% of them are actually put back into the production of new container glass. For each tonne of recycled glass, 1.2 tons of sand are saved."

As for European mineral input data, it is not as abundant as glass output figures, with GAE co-ordinator Véronique Favry telling IM that companies are reluctant to release data on use of minerals such as silica sand and borates: "Glass formulas are very diverse and strictly confidential between glass companies," she said. "The biggest use is however crystalline silica and soda ash."

FEVE’s environment, health and safety director Fabrice Rivet said that for container glass, "generally, the raw materials are locally sourced, to about 300 kilometres. The exception is natural soda ash coming from the US or Turkey." 

The main material in tonnes of raw materials per year in the EU plus Switzerland and Turkey is silica sand at 7.3m tonnes, followed by soda ash (2.05m tonnes), limestone (1.57m tonnes), dolomite (0.732m tonnes) and other materials (0.715m tonnes).

The European industrial minerals association IMA-Europe’s estimated EU’s annual consumption of silica at around 66m tonnes in 2013 – with glass the leading application for high-grade silica sand. 

"Based on our current market analysis and estimated recycling rates, we can consider that about 73% of all silica used is recycled," said an IMA-Europe note, cautioning, "this figure is an EU-wide average and regional disparities exist."

Glass2  
Letting off steam: Tronox Alkali’s Green River facility in Wyoming, US.
Tronox Alkili 

Markets

As for sustainability issues, a 2015 International Labour Organisation (ILO) working paper predicted improvements in production energy efficiency in coming years, through thermal isolation of furnaces, heat recuperation from combustible gas and improvements to the combustion chambers. "Increasing use of recycled glass will also reduce the need for high temperature fusion," said author Nora Wintour.

According to Wintour, the global market for container glass packaging is of critical importance, being valued at $47.43bn in 2012 and projected by ILO to reach $59.94bn by 2019, growing at 3.4% per year from 2013 to 2019. In terms of volume, global demand was 45.71m tonnes in 2012 and is expected to grow at 3.1% per year from 2013 to 2019, said ILO.

A strategy briefing from London-based market researchers Euromonitor International predicted that the glass industry would in coming years find "valuable opportunities" in the beauty market – especially as the cosmetics industry has pledged to reduce oceanic plastic waste.

EU Production

In Europe, the glass sector has been thriving, European industry associations have told IM, with the European Union (EU) being the largest glass producer in the world, covering about 33% of the total world market. According to the Statistical Report 2015-2016  of industry organisation Glass Alliance Europe (GAE), that represents the container glass, flat glass, special glass, domestic glass and continuous filament glass sectors.

In 2015, EU glass production exceeded 35m tonnes. This was up 3.8% on 2014 (34.5m tonnes) and reflecting a steady recovery from the recession – production was 32.2m tonnes in 2009: glass sectors have been stabilising "since 2013 thanks to slightly better market conditions and consumer confidence, particularly noticeable during the second semester 2014 and 2015," the report states. 

For 2016, the alliance said there has been "a continued improvement of market conditions" - for the first time in many years, all glass sectors increased production, due to a revived construction sector, car industry, engineering and food services sectors. For example, the flat glass segment benefited from a 7% volume increase in automotive glass, boosted partly by a design trend to increase glazed areas in vehicles, notably panoramic sunroofs.

Container glass made up most EU glass production tonnage in 2015, followed by flat glass (29%), domestic and other glass (3%) and reinforcement fibres (2%). Germany remains the EU’s biggest glass producer with about one fifth of the volume, closely followed by France, Spain, Italy and the UK.

Stéphane Noël, Environment adviser for flat glass manufacturers’ trade association Glass for Europe (building, automotive and solar-energy glass), said that for his segment "the return of the market seems to be confirmed for the second year in a row, with a growth rate of about 2% [in 2016]."

The latest results of major industry player Saint-Gobain of France, one of Glass for Europe’s five members, along with AGC Glass Europe, Guardian, the NSG Group and Sisecam-Trakya Cam, bear this out. Saint-Gobain 2016 results released on February 23 showed a 2.6% sales increase and 10.8% rise in operating income, including a 6.5% sales increase for flat glass. "Saint-Gobain showed strong progress in its 2016 results," noted its chair and CEO Pierre-André de Chalendar. He said a similar increase would be targeted for 2017, adding: "The group also benefited from its focus on pricing against a backdrop of lower energy and raw material costs."

That said, 2015 showed a "stagnating trend" for special glass production. And, reinforcement glass fibre production only surpassed the 2011 levels in 2015, reaching 793,000 tonnes, according to the GAE annual report. 

Glass3  
Turkey’s Sisecam became the largest producer of flat glass in Europe in terms
of capacity, after acquiring  Italy-based flat-glass manufacturer Sangalli for €84.7m
Sisecam

EU export and import

Turning to trade, the EU’s major glass product export markets are the rest of Europe (50%) including Switzerland (15%), Turkey (8%) and Russia (4.5%), followed by the United States (12.2%) and far east Asia (9.3%) including China (3%). In 2015, EU exports decreased by 5.9% year-on-year in volume and stabilised at minus 0.4% in value compared with 2014. Exports were of greatest importance to the special glass and tableware sectors, the report said.

As for imports, Asia suppliers were important, specifically China, particularly for the domestic, special glass and reinforcement glass sectors. EU imports increased by 4.35% in volume and by nearly 14% in value compared with 2014. Asia was the biggest import source at 48% of sales – including 39% from China alone, followed by the rest of Europe (38%) – including Turkey (9.7%) and Switzerland (10%) – and the
US (4.5%).

Headwinds for the glass industry

Not all EU glass manufacturers are thrilled with this rise in imports of course. EU glass fibre producers’ association GlassFibreEurope said unfair competition, notably from China, closed European factories and killed jobs. Ahlstrom closed its glass fibre business in 2012, European Owens Corning closed one facility each in Italy and Spain in 2013 and P-D FibreGlass stopped European production at the end of 2015.

The group welcomed EU member states’ decision in December 2014 to approve antidumping duties against Chinese glass fibre manufacturers, imposing total tariffs of up to 25-30%. Ministers backed European Commission claims that Chinese manufacturers had dumped continuous filament glass fibre (CFGF) at predatory prices to seize EU market share, receiving subsidies from the Chinese government in breach of global trade agreements.

The alliance argues that the glass sector is under pressure, highlighting concerns that the revised EU emissions trading scheme (ETS) might ultimately drop glass from its carbon leakage list that gives sectors special carbon trading benefits who risk losing business to competitors with weaker carbon-control legislation. If EU glass or glass fibre production was excluded from this list, its global competitiveness would be severely damaged, it said. The GAE said that it was critical for the glass tableware industry to remain on the list beyond 2020 and to receive CO2 quotas for free.

The glass industry is further concerned about how respirable crystalline silica (RCS) will be regulated at EU level. Last October (2016), the EU Council of Ministers backed amendments to a directive protecting workers from exposure to carcinogens or mutagens in the workplace (2004/37/EEC). If also supported by the European Parliament, it would set exposure limits to RCS dust as well as refractory ceramic fibres.

EU domestic glassware manufacturers’ association European Domestic Glass (EDG) is concerned, saying the reforms should not limit exposure in domestic glass production where no realistic substitutes are available.

The European Special Glass Association, also affected, "urges the EU authorities to clarify the definition of this substance and the criteria which industry and inspectors should consider…".

Other regulatory concerns for the EU glass sector are a planned revision of a directive 84/500/EEC on ceramic articles intended to come into contact with food. The changes foresee dramatically lower migration levels for lead and cadmium. This is a major issue for lead crystal and enamel decorated glassware in contact with food, the GAE report makes clear.

Despite these regulatory issues, European glass industry employee numbers are stabilising, with the EU industry currently employing 185,000 people including processors, an increase of 1.9% compared with 2014, said the GAE report. 

"We can say that the industry is doing generally well," said FEVE’s Farrelly. "Against a European and international macroeconomic context of uncertainty and modest growth, the container glass food and drink production in Europe [EU’s 28 member states plus Turkey and Switzerland) recorded positive strikes in 2015 with more than 21m tonnes of food and beverage containers produced," she said, adding: "Container glass (….) production has been steadily increasing which allows for a prudent but realistic positive outlook on the future."

ANSAC Member companies

Tronox Alkali Wyoming Corporation

Tronox Alkali is the world’s largest producer of natural soda ash. The Alkali division mines and processes trona ore and manufactures soda ash. It also produces sodium bicarbonate and other chemical compounds used in common industrial and household applications. 

Tata Chemicals (Soda Ash) Partners

Tata Chemical’s Green River operation is one of the largest soda ash facilities in North America. The Partnership is 75% owned by Tata Chemicals North America Inc, based in Rockaway, NJ and 25% owned by the world’s largest glass container producer, Owens-Illinois Inc, headquartered in Perrysburg, OH.

Ciner Resources Corporation

Headquartered in Atlanta, Georgia (USA), Ciner Resources Corporation is the North American subsidiary of The Ciner Group of Istanbul, Turkey.