Glass Industry: Breakthroughs And Challenges Coexist

The photovoltaic industry is facing intense cost challenges, and the question of whether module manufacturers will abandon dual-glass backsheets in favor of film coating has become a key focus. If this shift occurs, the prices of original glass from leading manufacturers may remain stable. However, small glass companies may be forced to stop using furnaces and buy raw glass for deep processing, which will increase activity in the raw glass market.

Currently, small production capacities below 800 tons account for about 15% of the market, a proportion that has remained stable due to the increase in furnace sizes over the past few years. Data shows that since 2020, furnaces under 800 tons have had a relatively small share of total capacity, primarily due to rapid expansions by companies like New Flat Glass, resulting in significant increases in furnaces over 800 tons. This indicates that, as the industry grows, the space for small furnaces below 800 tons is shrinking, and some furnaces may expand after repairs.

In terms of energy costs, 1,000-ton and 1,200-ton furnaces use 200 and 190 cubic meters of natural gas per ton, respectively, with heating values generally between 8,000 and 8,500 kcal. Notably, pipeline natural gas has higher heating values and lower costs, which provides a key opportunity for companies to reduce production costs.

Regarding cost structure, the labor and equipment depreciation costs for 3.2mm front sheets, 2.0mm front sheets, and backsheets combined account for about 10% of the total cost. There are significant cost differences in the production of different thicknesses of front sheets, with 3.2mm front sheets having higher costs due to thickness affecting the yield per square meter. The full cost includes three main expenses, assumed to be 100 yuan per ton, but deep processing costs are calculated separately.

For future market demand, glass demand in 2023 and 2024 is expected to be flat, with a possible increase in 2025, followed by a decline in the years after. This is mainly based on market share estimates for dual-glass versus single-glass modules and the expected conversion efficiency. In recent years, the share of dual-glass modules has remained stable at 60%-70%, and it is expected to rise to around 90% in the future.

Regarding current glass prices, the price of front glass is 13.5 to 14 yuan, and backsheets are priced at 11.5 yuan. Overall, the glass industry is experiencing severe profitability challenges. Leading companies are struggling to break even, while second- and third-tier companies are facing widespread losses. If prices continue to decline, even