The glass industry is highly probable to exhibit characteristics of both weak supply and demand in 2026, with its business cycle continuing to decline. A swing trading approach is recommended: capitalize on expectations of cold repairs amid low valuations, then trade on weak demand logic after price rebounds.
Weak demand has driven domestic float glass prices sharply lower since the second half of 2021. The glass industry is likely to exhibit dual weakness in both supply and demand in 2026, with business conditions continuing to deteriorate.
End-user demand remains sluggish
Domestic float glass demand is directly linked to the real estate sector, with float glass prices highly correlated to the growth rate of completed floor space. Data from the National Bureau of Statistics shows that from January to December 2025, new housing starts in China totaled 587.7 million square meters, down 20.4% year-on-year, while completed housing area reached 603.48 million square meters, down 18.1% year-on-year. Based on new starts, under the baseline scenario, China's completed housing area in 2026 may decline by 7% to 10%, impacting float glass demand by nearly 1.8 million tons. Factoring in demand from deep processing exports and second-hand home renovations, glass demand is projected to decline by approximately 1.31 million tons in 2026, reaching around 48.54 million tons—a decrease of about 2.6%.
With weak expectations for the real estate sector, glass demand is highly likely to decline in 2026. Attention should be paid to the impact of demand-related policies. As 2026 marks the beginning of the 15th Five-Year Plan period, historical experience suggests China may intensify fiscal and monetary policy support for the economy. Combined with deepening efforts to “counter internal competition” in key sectors, market expectations may see phased improvements. Regarding real estate, in January 2026, Qiushi Journal published an article titled “Improving and Stabilizing Real Estate Market Expectations,” stating that “real estate remains a foundational industry supporting the national economy, and China's real estate sector still possesses vast room for transformation and development.” As the opening year of the 15th Five-Year Plan, real estate policy intensity may exceed market expectations, exerting phased impacts on market sentiment.
Undervalued with Declining Supply Expectations
Weak terminal demand has become a market consensus. Short-to-medium term glass price dynamics are primarily driven by supply-side factors. In a market economy, supply is fundamentally profit-driven: operating rates respond to short-term profits, while capacity adjustments reflect medium-term profit expectations. Amid high profitability, enterprises maximize operating rates to capture gains. Once operating rates and capacity utilization reach limits, firms and external capital invest in new capacity. Under loss conditions, companies reduce capacity utilization to minimize losses. If losses persist beyond a company's tolerance threshold, it will be forced out of the market after exhausting cash reserves. Unlike most products, float glass involves high cold repair costs, making companies reluctant to undertake such repairs. After cold repair, production lines require over six months to re-enter the market. Cold repair decisions by glass companies are typically triggered by prolonged weak demand expectations and sustained losses.
As of January 16, 2026, the production cost of domestic float glass using coal as fuel was ¥1,042/ton, petroleum coke as fuel was ¥1,046/ton, and natural gas as fuel was ¥1,342/ton. The profit margin for coal-to-gas-fueled glass was -69 RMB/ton, petroleum coke-fueled glass was 4 RMB/ton, and natural gas-fueled glass was -164 RMB/ton, with an industry average profit margin of -76 RMB/ton. From a valuation perspective, the glass industry averaged losses of nearly 100 RMB/ton, with valuations at near-decade lows and limited room for further downward compression. Recently, expectations of limited production line restarts have sparked market anxiety. However, against a backdrop of weak demand, the industry's low valuation may drive further supply contraction. Float glass daily melting capacity is projected to range between 148,000 and 158,000 tons by 2026, representing a roughly 2.5% decrease from 2025 levels.
Industry Must Accelerate “Anti-Involution” Efforts
Amid weak terminal demand, the float glass industry's performance may continue to decline. To reach an inflection point, the sector must further optimize its capacity structure and accelerate the elimination of outdated production facilities. Since the 2015 supply-side reform, the “Implementation Measures for Capacity Replacement in the Cement and Glass Industries” has strictly restricted new float glass capacity additions. Over the past decade, China's total float glass capacity has remained stable around 200,000 tons per day, with operational capacity peaking at 177,000 tons per day and idle/shutdown capacity bottoming at 23,000 tons per day. Due to substantial idle capacity, merely restricting new additions has failed to achieve effective capacity reduction.
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