Flat glass price continues its bounce

The entire glass industry underwent the hardest time in 2008. In the first 11 months of 2008, the EXW price of flat glass kept in about 70 yuan/weight case, while in December, it dropped to the lowest at 65 yuan/weight case; the EXW price of float glass was 88 yuan/weight case, dropped by 3.2 yuan over November.

Judging from the profit of flat glass companies, the ROS (return on sales) of flat glass industry is only 0.3% in the first 11 months of 2008, which approaches to deficit. So, it is predicted that the price may not drop greatly.

There are two reasons for the decrease of price: the over growth of flat glass capacity and the decrease of raw materials prices. However, as about 41 float glass lines halted production up to the end of 2008, the capacity shrinks in 2009. Shrinking capacity and weak demand may rebalance the supply and demand of glass industry. After the glass stock is sold out, glass price is expected to rebound dramatically (actually it rebounds now). Since it needs at least 2-3 months to recover the production of halted lines, glass bounce may last to the end of the second quarter of 2009.