According to Sina Finance, the current supply-demand dynamics in the glass sector indicate that the prolonged bottoming-out cycle in real estate will further constrain demand for glass from existing unfinished projects. Future completions also face a year-on-year decline in volume, suggesting that glass demand remains far from optimistic.

Moving forward, the float glass industry must reduce its single-point reliance on the real estate sector, accelerate industry consolidation, and pursue transformation and upgrading. It is projected that the industry will enter an accelerated phase of capacity rationalization between 2025 and 2026.

Since 1998, China has primarily relied on demand-side management to drive economic growth, such as implementing large-scale stimulus policies during the Asian Financial Crisis and the Global Financial Crisis to stabilize the economy. However, over time, this approach has led to side effects including overcapacity, debt accumulation, and rising costs. The primary contradiction in economic operations has shifted from insufficient aggregate demand to supply structures failing to adapt to changes in demand structures. Internationally, the global economic recovery remains sluggish, with international demand potentially facing further volatility and contraction. The global industrial division of labor and regional layouts are undergoing adjustments. Domestically, China's economy faces triple pressures: demand contraction, supply shocks, and weakening expectations. Challenges include oversupply of low-to-mid-tier products, insufficient high-end offerings, excess capacity in traditional industries, severe real estate inventory, and accumulating local government debt risks. Consequently, many industries must strive to build new competitive advantages by addressing both supply and demand sides.

First proposed in November 2015, supply-side reform primarily focuses on five areas: resolving overcapacity, enhancing total factor productivity, reducing corporate costs, absorbing real estate inventory, and preventing financial risks.

For the building materials sector—characterized by low technological barriers and severe overcapacity—supply-side reform aligns with industry development needs. In the glass industry, numerous private and small enterprises have effectively initiated their own “supply-side reform” over the past two years through production cuts and transformation.

During this period, the glass industry underwent significant transformation. In 2014, 38 float glass production lines nationwide underwent cold repairs or shutdowns, involving 131.7 million metric tons of capacity, accounting for 11.1% of total capacity. In 2015, the number of lines undergoing cold repairs reached 42, involving 135.24 million metric tons of capacity, representing 11.04% of total capacity. The industry's furnace shutdown rate rose from 16.3% in early 2014 to 30.5% in early 2016, indicating an operating rate below 70%.

In December 2015, float glass production reached 45.72 million metric tons, a decrease of 5.54 million metric tons compared to December 2014. Cumulative float glass production from January to December 2015 totaled 567.11 million metric tons, down 10.77% year-on-year. With production capacity effectively controlled, glass enterprise inventories remained balanced by year-end. According to data from Zhuochuang, inventories in key provinces nationwide stood at 23.72 million metric tons by the end of December 2015, down 2.09 million metric tons or 8.09% year-on-year. Capacity reduction simultaneously improved the production-to-sales ratio for float glass. Cumulative sales reached 562.15 million weight boxes from January to December, achieving a production-to-sales ratio of 99.13%, approaching supply-demand equilibrium.

China's GDP growth is projected to remain between 5.0% and 5.2% by 2025. As a key representative of the building materials sector, the float glass industry remains heavily reliant on construction demand, accounting for over 80% of its consumption. The ongoing downturn in the real estate market has led to persistently weak demand, while emerging sectors like photovoltaics and automobiles cannot absorb the excess capacity. Consequently, industry inventories have lingered at historically high levels, and prolonged price weakness has squeezed profits, leaving most companies in a state of chronic loss.

Since 2021, as urbanization nears completion, the corresponding demand for float glass has faced severe challenges. Following deep adjustments in the real estate market and temporary policy stimulus to ensure project delivery, demand has once again weakened. The industry has grappled with worsening supply-demand imbalances, high inventory levels, and sustained price pressure.

Float glass production lines are characterized by “high cold repair costs and lengthy restart cycles,” causing supply adjustments to lag behind demand changes. Although the float glass industry initiated cold repairs to reduce capacity in 2024, lowering daily melting capacity from 176,500 tons to the current 157,500 tons—a 10.7% decrease—the current daily melting level still far exceeds the approximately 150,000 tons needed to achieve supply-demand balance. Inventory backlogs are equally severe. Total inventory across national float glass sample enterprises now stands at 63.136 million metric tons, a year-on-year increase of 29.05%. This translates to 27.1 days of inventory. In recent years, as demand weakened, inventory shifted from the production end to the midstream. Therefore, analyzing only visible inventory underestimates the actual severity of demand weakness.

As of now, the weekly average profit for float glass using natural gas as fuel stands at -187.70 yuan per ton; for coal-based gas, it is 51.26 yuan per ton; and for petroleum coke, it is 32.52 yuan per ton. With the collapse of raw material costs for soda ash and coal, low-cost coal gasification and petroleum coke production lines still maintain some profitability, which also hinders further capacity reduction in the float glass industry.

In summary, considering the current supply-demand dynamics in the glass industry, the real estate market's bottoming-out cycle persists. Future demand for glass from existing projects awaiting completion will further narrow. The completion side also faces a year-on-year contraction in the coming period, indicating that glass demand remains far from optimistic.

Moving forward, the float glass industry must break free from its sole reliance on the real estate sector, accelerate industry consolidation and transformation, and upgrade its operations. It is projected that by 2026, the industry will enter an accelerated phase of capacity clearance.

As an integrated internet platform providing benchmark prices, on November 19, the benchmark price of glass on SunSirs was 13.73 RMB/square meter, a decrease of 0.87% compared with the beginning of the month (13.85 RMB /square meter).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.