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Float-enomics: China under pressure Cosmetic glass markets Asian automotive glass India: a PET battleground
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Contents: AG 17-1 Regulars
Features
4 Welcome
28 PET vs Container glass
Currency woes for China.
6 Headline News
Openings, closures and industry moves from across Asia.
18 Global View
Our eye on the international arena.
22 People and Places Movers and shakers, ups and downs.
24 Batch Raw material news and views.
26 Comment & Analysis CSG and Kibing lock horns.
28 Your favourite magazine is now available at the App Store‌ download today to see your first sample issue! Asian Glass: now for mobiles, ipads and androids
Rohan Gunasekera digs beneath the surface of the ongoing PET v Glass debate in the sub-continent, and exposes some surprising viewpoints...
36 Chinese float glass pricing
As China gets to grips with slower economic growth and a more orderly expansion of tis glass industries, AG works with a number of respected authorities within the country to ascertain how development will keep being managed throughout the coming year.
48 Cosmetic glass markets
Yogender Malik looks at how rising awareness of cosmetic products across the Middle East and Indian sub-continent is having a major impact on packaging glass demand.
56 Automotive glazing
AG looks at how developing political tensions globally may have major effects on the supply, demand and place of manufacture for many of the world’s leading carmakers, and hence the consequent effects on the glass supply chain.
48
Anaylsis 64 In Focus
With the winds of political change sweeping through all continents, will the new US president result in pressures on the solar glass supply chain for a country currently dependent on China?
66 Window
Analysis and insight into Japan.
70 Refractory Zone
News and developments from the hot part of the factory. 2
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23-25 FEBRUARY isted Chinese firms will announce their 2016 Se e us at earnings after the Lunar New Year holiday. Since the Chinese yuan slumped 6.8 percent Inside: • Float-enomics: against the dollar last year and the majority China under pre ssure • Cosmetic gla ss markets • Asian autom of Hong Kong listed firms derive most of their otive glass • India: a PET bat tleground earnings from China, the currency movement is a PLUS! news, views, ana lysis and much, muc h more! big deal. Mainland companies already represent nearly 70 percent of the total listed companies in Hong Kong. The remaining local and international companies have considerable exposure to the mainland market. The impact, however, varies a lot, depending on the income source and the accounting currency. We can classify companies into four categories. Companies that are based in China get most of their revenue from the mainland market. Provided that they are hardly involved in trade activities or foreign borrowing, as long as they use the yuan as the reporting currency, yuan exchange rate changes have little impact on their results. Typical examples include Vanke and Li Ning. Those with considerable US dollar or Hong Kong dollar debt with earnings largely denominated in yuan would have suffered significant currency translation loss last year. China Evergrande Group and Yuexiu Property fall into this category. Companies that own lots of foreign assets will gain from a weaker yuan as their overseas income will be inflated when converted into yuan. Fosun International and Fuyao Glass Industry Group are some of the firms that stand to benefit for that reason. Liang Xinjun, Fosun’s chief executive, said that the company’s net profit would increase 12 percent if the yuan falls 10 percent. In the fourth group, these companies present their accounting statements in Hong Kong dollar or US dollar. China is the source of their main income. These are firms that will suffer the most from a weaker yuan. Companies like Lee & Man Paper Manufacturing and Vinda International Holdings belong to this category. Interestingly, since the second half of last year, seven Hong Kong-listed companies have decided to change their presentation currency from Hong Kong dollar or US dollar to Chinese yuan, including Want Want China Holdings, Tingyi Cayman Islands Holding (00322.HK), Hengan International Group Co. and Sino Credit Holdings. Changing the presentation currency is a big move as it involves the restatement of all income, costs, assets and liabilities. In fact, no Hong Kong-listed firm took such a move between 2012 and 2015. Nevertheless, investors should bear in mind that the change of presentation currency won’t change company fundamentals. EURASIA
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HEADLINE NEWS ASIA Capacity normalisation at AGI Glasspac India India’s second largest producer of container glass, AGi Glasspac, which has been running below its optimum capacity for more than three years, is in the process of heating up its idled furnace at Santhanagar ( near Hyderabad in state of Telengana) facility. AGI Glasspac with a total installed capacity of 1600 TPD of container glass from its two manufacturing facilities located at Bhongir and Santhanagarin the newly created state of Telengana
( earlier part of undivided state of Andhra Pradesh). Bhongir facility has an installed capacity of 950 TPD of container glass, while the Santhanagar factory has a capacity of 650 TPD of container glass. The company produces container glass for food & beverage, pharmaceutical and chemical industries. Some of the key client of AGI include Nestle, Coca- Cola, Carlsberg, Molson Coors and Pepsico.
With a depressed demand of container glass in Indian market for more than two years, the company had shut down one of its furnaces (300 TPD) at Santhanagar factory. However, as demand started to pick up in India in the second half of 2016, the company decided to put back the idled furnace into operation. Currently, the refractory work at the furnace is under-process and company expects to light it up in the
month of February. According to R B Kabra, a senior executive of parent company, HSIL, “Since the growth has been good in packaging business and we have started losing orders we are not able to serve the customers as per their requirement. So, we have started work on lighting up the idled furnace. We expect to light it up and put back in production in the month of February.”
Hon Hai-Sharp LCD venture eyes major plant in Guangzhou Taiwan/China An LCD panel venture between Hon Hai Precision Industr y and Sharp has been announced that will result in the building of what is expected to be one of the world's largest screen factories in par tnership with the Chinese city of Guangzhou. The venture, called Sakai Display, and the Guangzhou government signed a 61 billion yuan ($8.78 billion) investment agreement for the plant, as well as a greater industrial park around it, bringing together advanced technology on screen panels, internet-connected "smar t" TVs and other fields. Hon Hai chairman Terr y Gou repeatedly stressed the impor tance of the deal at the signing ceremony in Guangzhou. Sharp used to be a world leader in liquid cr ystal display screens, but was unable to make investments in the last few years, he said. One of Gou's first tasks following Hon Hai's acquisition of Sharp over four months ago was to bolster the latter's investments.
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The Guangzhou plant will produce cutting-edge 10.5-generation panels. It will use larger glass substrates to achieve higher productivity, with hopes of beating South Korean competitors in cost competitiveness and quality. Construction will begin in March, with plans to bring the plant online around September 2018. Sakai Display hopes to star t mass production there in 2019. There are high hopes for the plant's ability to produce 8K ultra high-definition TV screens. It fell behind South Korea's Samsung Electronics and other rivals on the existing 4K models. The Japanese company hopes to regain a dominant role in the global market by concentrating its know-how on 8Ks in Guangzhou. Hon Hai, also known as Foxconn, is eager to bolster Sharp's LCD panel business, and the Guangzhou plant will be a symbol of its new aggressive stance in the field. It plans to buy some Sakai Display shares from Sharp,
turning the venture into a subsidiar y. Sakai Display is expected to stop supplying large LCD panels to Samsung and China's Hisense by the end of 2017, with plans to renegotiate business terms amid a recover y in panel demand. Sakai Display will also supply more of its products to Sharp, which is looking to bolster TV sales. Sharp announced Dec. 22 that it will buy back a European TV business it had previously sold. It is rebuilding its global strategy for TVs and other screens, and the Guangzhou plant will be a significant step for ward. Gou on Friday said he will be investing in Guangzhou again. He said that in the future, he will focus on using the "internet of things" and big data to develop new businesses, instead of individual products like screens and TVs. Taiwan-listed Hon Hai is the world's largest contract electronics manufacturer. It was eager to acquire Sharp
because of the company's brand and know-how as a comprehensive electronics maker. The Guanghzou plant will test whether the purchase was truly a beneficial decision.
NEWS IN BRIEF AzerFloat has concluded with German company Horn Glass an agreement for the construction of a glass sheet manufacturing site in the Sumgait Chemical Industrial Park, Baku (SKSP/SCIP). The Ministry of Economy of Azerbaijan (MOE) said the €89 million factory will manufacture 8 million m2 of sheet glass a year. "The enterprise will be commissioned before the end of 2018," the MoE said in a statement. The AzerFloat factory will meet domestic demand and export under the brand name Made in Azerbaijan and employ 125 people.
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Tempering sector all set for take-off India The Indian processing glass industry is increasingly showing a keen interest in glass tempering equipments. Earlier considered as a domain of select few big glass processors located in and around metro cities, tempering furnaces are gradually becoming the first choice of mid scale glass processors in the smaller cities and towns in the country. Currently, catered by 280 tempering equipments, the country is expected to add another 140- 160 tempering furnaces by the end of 2017. In the light of current slowdown in the primary market, the number of proposed installations during next 12 months looks quite imposing, so Asian Glass decided to interact with major tempering equipment suppliers in the market. Country’s tempering equipment market, which was dominated by European suppliers a decade back witnessed the entry of Chinese
made tempering furnaces around 2008. Companies like Land Glass, North Glass, Mountain and Yuntong supplied more than 75 % of the glass tempering machinese sold in the 20082014 period, rest accounted by European suppliers and in house development by multinational glass producers such as Saint Gobain and Asahi Glass. However, Indian a number of Indian equipment suppliers have started to offer glass tempering furnaces on the lines of Chinese machines. Ghazibad based SK Glass , Faridabad based Bhambra International and Pune based Acumech have sold about 20 tempering furnaces in last two year period to Indian processors. Speaking to Asian Glass, Gurdit Pal, CEO and owner of SK Glass told, “ We are providing high quality glass tempering equipments to Indian and African markets. In the last two years, we have installed about
a dozen tempering furnaces to our customers.” He shared the details of a number of his customers, who would be installing tempering furnaces in next 12 months. Gurdit told, “ We will be installing our furnace at Mico Glass ( Meerut), JK Toughned Glass ( Jalandhar), Jivan Industries ( Raipur), Swastik Toughned Glass ( Sonepat), Amit Glass ( Jaipur), Global Industries ( Sonepat), Infinity Glass Industries ( Faridabad), Ramdev Enterprises ( Mumbai) and Apple Safety Glass ( Bangalore).” Another prominent tempering furnace producer, Bhambra International’s CEO Balwinder Singh told Asian Glass, “ We will be installing six tempering furnaces by April 2017. Due to clients requests, we would not be able to share their names at this stage.” When asked about the rising popularity of Indian made glass tempering furnaces, he said, “
Price differential and assurance of after sales service from the domestic companies are two main factors, which have propelled the glass processors to go for domestically produced glass furnaces. In past, we have seen several issues with Chinese produced tempering furnaces. In a number of cases, the processors were forced to shut down the furnaces for extended period of time as technicians from China were able to attend the complaints after a long time.” When contacted, international sales manager of leading Chinese tempering furnace supplier Land Glass, Joe told, “ As such, we are experiencing no problem in Indian market. In fact, we have installed record number of equipments in 2015 and 2016 in India. We are looking forward to more installations in coming year as Indian glass tempering and value added glass market is still under initial phases of development.”
Düzce Cam float line now fully operational Turkey Fives, well-known in the design and supply of equipment for glass production, successfully started a new complete float glass line with a melting capacity of 800t/day to produce a glass thickness from 3mm to 10mm for the Turkish glassmaker Düzce Cam. The start-up took place as planned on November, 15, 2016 in the presence of the company, commissioning teams and suppliers at Düzce site, some 220 km from Istanbul. The new float glass line incorporates the latest melting technologies, in compliance with quality, output and energy performance objectives, for the production of both residential
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and automotive glass. The major asset of this new float glass line is Fives proprietary furnace technology with ultra-low energy consumption Prium® Melt Float L.E.M.® (Low Energy Melter)*. Thanks to its geometry, the furnace makes it possible to save up to 20% energy compared to conventional technologies. The furnace is also equipped with a comprehensive digital control system and smart software for production optimization providing a comprehensive vision of the glassmaking process. After its successful entry into float glass production, Düzce Cam is now ready to embark
on a major expansion. The first float glass line of 600 t/day was already supplied by Fives Stein in 2010. *Thanks to L.E.M.®, Low Energy Melter Technology, developed by Fives, melting energy can be dramatically r e d u c e d , w i t h o u t compromising with glass quality. The combination of proprietary technologies, in combination with the
use of modern refractory technologies, allows achieving unrivaled low consumption, down to 1200 kcal/kg (5 GJ/ tonne) for architectural and automotive applications.
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News
Salavatsteklo to build in Novosibirsk Russia The company has announced its intentions to build a glass factory in the Novosibirsk region. The original idea for the factory actually appeared 5 years ago, but was shelved as a result of a regional drop-off in glass demand. However, with an upturn in industry fortunes, the factory is back on the agenda. The company, Salavatsteklo,
is now considering a number of sites, all of which would enable it to construct an area of at least 20 hectares. Minimum requirements are proximity to major railway junctions, as well as electricity, gas and water links. The intended capacity is estimated at about 700 tonnes of float glass per day, as well as energy-efficient glass
in thicknesses of 2-12mm. Automotive glass will also be one of the principal products once output commences. Initially, the project cost was estimated at 8.5 billion rubles, but because of the current state of global macroeconomics, this may well increase. One of the main problems lies in the fact that in the Novosibirsk
region is not suitable sand deposit for the glass industry. Therefore, the raw materials have to be brought from the Ulyanovsk region. The production plant the company intends to sell in the roars of Siberia and the Far East, as well as exported to Kazakhstan, Mongolia and other countries.
Recycling conformity sought across industry India Glass manufacturers are seeking a regulatory framework to increase use of glass in packaging and an incentive model to streamline recycling of glass containers, an official from manufacturers' federation has claimed. "Glass is 100 per cent recyclable without any loss in quantity and quality. It is an ecofriendly material while packaging is concerned. We seek regulatory framework to increase glass in packaging," said All India Glass Manufacturers' Federation's Secretary Vinit Kapur. In the European countries, the recycle rate of glass bottles is 80 per cent while in India, it is hardly 40 per cent, he said at the sidelines of International Conference on Advances in
Glass Science and Technology (ICAGST-2017) in association with The Council of Scientific and Industrial Research (CSIR) - Central Glass and Ceramic Research Institute. "In the few European countries, there is bottle bank concept. In this model, government or agencies take some deposits and refund the deposits to consumers on returning the bottles. This kind of incentive model must be in place in India so that people do not litter anywhere and the same time, it will help streamline the process of recycling the bottles," Kapur said. According the Federation, Indian glass container market is estimated to be around $1.1 billion and by 2020, it is poised
to grow to $2.2 billion. "Glass container industry is growing at about 18 per cent," he added. According to the federation, flat glass manufacturing capacity in India is at 5,000-6,000 tonnes per day while container glass capacity stands at 13,000 tonnes per day. Manufacturers also sought in subsidy in inputs, particularly in natural gas, which comprises 30 per cent of the cost, so that prices of glass products could be brought down, Kapur said. In terms of using architectural use of glass, Glazing Society of India's Director G.N. Gohul Deepak said Energy Conservation Building Code 2007 has been revised with better standard and almost 80 per cent states have
notified it for implementing in their bylaws. New codes from Bureau of Indian Standard in terms of using glass in building have also been launched. "National Building Code is getting revised and the revised version will be come up soon. This will include a complete code required for glass selectivity, design, fabrication, testing and maintenance," Deepak said. In the conference, representatives from International Commission on Glass mentioned that world is entering into a glass era with use of glass in optical fibre and solar sector. They also recognised CSIR - Central Glass and Ceramic Research Institute as one of the top research outfit in the world.
Float glass dumping claims investigated Philippines The Tariff Commission (TC) is conducting a formal investigation on allegations made by AGC Flat Glass Philippines Inc. (AGPH) of dumping of clear float glass and bronze float glass from China on the endorsement of the Department of Trade and Industry (DTI) which found an affirmative preliminary determination of dumping. In a notice, the TC said the investigation will be fact-finding and administrative in nature. It will conduct a public hearing this month to allow interested parties to submit their position. Conclusion of the investigation
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is set on March 22, which is the end of the validity of the existing provisional duty on the imports. In his Nov. 7, 2016 order, Ramon Lopez, DTI secretary, slapped a provisional duty in the form of cash bond – a range of $44.55 per metric ton to $142.23 per MT on imported clear float glass and $23.06 per MT to $104.09 per MTon imported bronze float glass from the People’s Republic of China – for four months effective Nov. 22, 2016. The dumping duty covers the price difference between local cost and the imports. In his order, Lopez said AGPH
alleged that clear float glass and bronze float glass are being imported from PROC at dumped priceswhich caused material injury to the domestic industry producing like product. The order said DTI’s period of investigation for dumping or the price difference covered import transactions made in 2015. The probe also considered relevant information between 2012 and 2015 or four years in determining injury to the local industry. Hammered by illicit trade practices, AGPH had focused on the production of float glass, which is its main product line,
and enjoyed protection through higher duties on imported figured glass, clear and tinted float glass, and glass mirror for several years until 2013 through the Safeguard Measures Act. AGPH then opted to petition for dumping, which is exporterspecific, to fully adjust from the industry caused by unabated smuggling and dumping of cheap imports especially from China. The company had expressed fears China can easily dump its excess glass products to Asia due to the construction and economic slowdown in that country.
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Pharma glass market gets Gerresheimer uplift India Gerresheimer AG has announced that it has acquired the majority shareholding in the Indian company Triveni to further accelerate its growth in the emerging markets. Triveni is a leading manufacturer of plastic containers and closures for the pharma industry with a strong track record of more than a decade production of regulated pharma packaging. “This acquisition is well aligned to our strategy of enhancing our footprint in the emerging markets. Triveni is a leading and fast growing company with excellent profitability that provides high
value for us. Our global expertise combined with the excellent local manufacturing capabilities of Triveni will speed up our growth in the emerging countries,” commented Hans-Jürgen Wiecha, CFO of Gerresheimer AG. Triveni Polymers Ltd. Pvt. is a leading producer of pharmaceutical plastic packaging in India with more than 300 employees with office in New Delhi and with a plant in the nearby city of Kundli (Haryana Province, India). Established in 1979 it was the first Indian company in 1995 to get approval by the American FDA (Food and
Drug Administration) for crucial Drug Master Files (DMF) for plastic containers and closures. In the 2011/12 financial year, Triveni generated annual revenues of approximately INR 1.3 bn (around EUR 20 m). Gerresheimer acquires a 75% stake in the company for an EBITDA multiple of approximately 10 times. The owners retain 25% of the shares, among them the current managing director who will continue to serve in this position. Closing of the acquisition is expected still in December 2012. In April 2012 Gerresheimer
took over Neutral Glass, a leading Indian manufacturer of pharmaceutical glass packaging products. With five plants in South America, six in China and now two plants in India, as well as a representative office in Moscow, Gerresheimer is well represented in the fastgrowing emerging countries. Gerresheimer’s declared objective is to double revenues in the emerging markets from EUR 100m in 2010 to EUR 200m in 2013. In the financial year 2011 Gerresheimer achieved revenues of about EUR 140m in the emerging markets.
CCI approves Koch takeover of Guardian India Fair trade regulator CCI has approved the proposed acquisition of US-based glass products maker Guardian Industries by Koch Industries. As per the deal entered into by the companies in November last year, Koch Industries through its wholly-owned subsidiary KGIC Merger Corporation would acquire sole ownership of
Guardian Industries. Koch in 2012 had bought about 45 per cent stake in Guardian Industries. "The deal is an all-cash transaction for the remaining 55.5 per cent outstanding shares of Guardian Industries common stock not already owned by affiliates of Koch," a company press release said.
The Competition Commission of India (CCI), which keeps a tab on unfair business practices, has approved the deal, as per the regulators website. Both the companies have presence in India. Koch Industries is a privately held US Corporation which owns a diversified group of companies in refining, chemicals, biofuels,
PT Asahimas commences production at new float plant Indonesia PT Asahimas Glass Tbk, the leading Indonesian flat glass producer has commenced commercial production at its new float glass factor y at Cikampek in West Java. Coming up with an investment of 16 billion Japanese Yen ( about 155 million USD) the new plant can produce 210,000 tons of float glass per year. The new plant is located adjacent to the company’s Cikampek automotive glass factor y. With the new float glass line, Asahimas has reached to an installed production capacity of 630,000 tons of float glass per year. Earlier, the company was operating with an installed capacity of 570,000 TPA.
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However, with the closure of one of its furnaces at Jakar ta plant ( capacity 150,000 TPA) in October 2016, the total installed capacity had come down to 420,000 TPA. Before the closure of the furnace, Asahimas was operating two furnaces each at Jakar ta and Sidorio plant( total four furnaces). The total number of furnaces with the opening of new float line have remained same, but the overall installed capacity has jumped by 11% ( from 570,000 TPA to 630,000 TPA). The new float glass line is capable of producing higher quality architectural and automotive glass as compared to the outgoing Jakar ta
furnace. Close proximity to the company’s automotive glass assembly will also enable the company to save logistics costs. In order to meet increasing market demand and suppor t government initiatives, Asahimas will also install an off-line magnetron coater at Cikampek facility. The 6 million square per annum capacity coater, which would be installed in the first half of 2018 will allow the Company to expand energy saving product range by improving the per formance of glass in both solar control and thermal insulation, while still providing appropriate level of light transmission.
fertilisers, forest and consumer products, among others. Guardian Industries through its subsidiaries is active worldwide in businesses including manufacturing float glass and fabricated glass products and distributing building materials for commercial and residential applications.
NEWS IN BRIEF The official ceremony of laying the foundation of a new enterprise for the production and processing of float glass, building under the Chinese commercial and industrial company "Minyuan sylu", was held on December 16 in the free economic zone Jizzakh Uzbekistan. The total cost of the project is about 110 million US dollars. According to plans, the first phase will be commissioned in May 2017, and the full commissioning in September 2019. Since then, the company "Minyuan sylu" will become the largest manufacturer and supplier of flat glass in Central Asia.
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Gas price drop should boost sheet glass sector Indonesia The government has said that it aims to lower gas prices for the ceramics and sheet glass industries this year, adding to three other industries previously set for reduced tariffs. Last year President Joko “Jokowi” Widodo ordered his Cabinet to slash down gas prices to below US$6 per million British thermal unit (mmbtu) for 10 industries and one industrial zone starting from January. However, Energy and Mineral Resources Ministerial Regulation No. 40/2016, issued last December, only stipulates the reduced rate at around $6 per mmbtu for the petrochemical, fertilizer and steel industries starting from Jan. 1. As yet, although glass has been mentioned, nothing as yet has happened that is concrete. For example, Industry Minister Airlangga Hartarto said that discussions on price cuts for the ceramics and sheet glass industries would commence by February. “Both of them have strategic potential. In terms of ceramics, the raw materials can be found in Indonesia and this makes our competitiveness strong. Similarly, sheet glass can be used as part of photovoltaics, which contributes to renewable energy,” Airlangga recently said. The minister also pointed out that the strong competitive edge of both industries will enable them to cope with technology changes. For more than a decade,
Southeast Asia’s largest economy has struggled with deindustrialization. The domestic manufacturing industry expanded by 4.25 percent last year, lower than the economic growth of 4.79 percent. In its heyday before the 1997-1998 financial crisis, the industry outpaced the economic expansion. Expensive energy prices have been touted by business players as one of the factors hampering industrial activities and high productivity, which the government has long tried to address. At $8 to $16 per mmbtu, gas prices in Indonesia are among the highest in Southeast Asia, beating those of its neighbors at between $3.50 and $7.50 per mmbtu. The high prices have forced many factories in North Sumatra and East Java to close down and 20,000 workers have been laid off since 2000, according to the Association of GasConsuming Companies (Apigas). The government has made some headway by passing the ministerial regulation. Although President Jokowi cited 10 sectors and one industrial zone, a presidential regulation issued last May only required that gas prices be cut for seven industries, namely fertilizer, petrochemical, oleochemical, steel, ceramics, glass and rubber gloves. Energy and Mineral Resources
Minister Ignasius Jonan said the government would focus on pushing down prices for the remaining four industries and was currently discussing how best to move forward. “We have many things to consider if we want to cut prices: should we cut tax and non-tax revenues? If we cut the prices, how would that affect our agreements with oil and gas contractors?” he said. The average selling price at the upstream level is $5.90 per mmbtu, comprising several components, namely capital and operational expenditures, the contractor’s share and the non-tax and tax revenue for the state. Lowering the upstream gas prices to $3.82 per mmbtu is possible if the government is willing to remove both the non-tax and tax revenue components, but at the cost of losing $1.2 billion in revenues per year. Nevertheless, the Industry Ministry has estimated that the economic benefits of lowering gas prices can amount to Rp 32 trillion ($2.38 billion) if the prices were cut to $4 per mmbtu, with additional distribution and transportation costs of $1.50 to $2. ReforMiner Institute researcher Pri Agung Rakhmanto said current price cuts were still insignificant as it only applied to three industries as opposed to the seven listed in the presidential regulation.
But when? However, nothing is guaranteed. Indeed, The uncertainty on gas prices and the increased regional competition continue to haunt the performance of sheet glass industry as 2017 gets into full swing. Chairman of the Sheet and Safety Glass Association (AKLP) Yustinus Gunawan said that glass manufacturers are still cautious of their 2017 production plan. “They’re still monitoring the situation and condition. [They] work based on existing orders, they don’t dare to increase their production,” Yustinus said on Tuesday, January 3, 2017. Uncertain production cost is their main concern. They are still waiting for the government’s promise in reducing the prices of industrial gas. Furthermore, according to Yustinus, Indonesia currently has a new emerging competitor in Malaysia. A China-owned factory in Malaysia will start production this year, which can potentially decrease Indonesia’s market share in the region. A survey conducted by Markit showed that Indonesian factories have reduced their production in December, while in fact, their output reduced drastically since July. Factory managements reported a 22 percent decrease in production volume. The production cut followed by the low level of demands has caused the lack of stock of the finished products and raw materials at the factory's warehouses.
Chinese equipment suppliers “optimistic” on India China/India Faced with stagnating demand in their domestic market, Chinese equipment suppliers for glass industry are increasingly targeting foreign glass markets. Among Asian markets, India seems to be the clear favorite for a number of these producers due to large size and low penetration of value added glasses in Indian market. A leading producer of
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insulating glass ( IGU) producing equipments in China, Beijing Hanjiang Automatic Glass Equipments Company Limited sold a complete automatic line to Mumbai based glass processor, Esspee Glass. Adrina Lee, Regional Sales Manager for South Asian market says, “ India is emerging as one of the key markets for glass processing
equipment suppliers. However, its is not an easy market to operate in as competition is high in the market. Though, a number of our competitors are not present in the market but their products are available through their agents in the countr y.” North Glass Technology Company, a producer of autoclave equipments for
laminating glass is getting aggressive in the Indian market. Company’s General Manager told Asian Glass, “ We have received a number of enquiries from existing Indian glass processors. Though, I would not be able to share their names, but I am confident that we will be installing more than a couple of laminating glass machiner y in next six months.”
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News
Flat glass industry in the dumps? India A prolonged slowdown in construction segment in the country and recent demonetization move by the government has hit the Indian flat glass industry severely. Most of the flat glass producers, Asian Glass spoke to expressed the pains faced by flat glass industry faced in last few years. India, which has added only one float glass line in last five
years continues one of the lowest per capita flat glass markets worldwide, is served by just nine float glass line. Even, some of the existing lines are not operating at full capacity as construction sector in the country is experiencing its slowest growth period in decades. Indian flat glass industry, which got accustomed to growth
of 10 + % growth rates in pre 2012 years is barely averaging a growth of 3- 4 % in last four years. Along with tapering demand, float glass imports from China, Saudi Arabia, UAE ( despite the anti dumping duties) and Iran has made domestic producers look helpless. Vivek Sharma, a key executive at Saint Gobain for Institutional Sales in Delhi region told Asian
Dumping cases reach all time high
Glass, “ Last three years have been the most challenging times for Indian float glass industry in recent memory. Demand had not slackened by these levels even at the height of financial crisis in 2008. Though, demand from automotive segment is largely intact, but construction sector, which accounts for four fifth of total demand of flat glass has been quite lackluster.”
NEWS IN BRIEF
China Chinese companies were the target of a record number of trade dispute cases in 2016, the Ministry of Commerce (MOFCOM) has announced. In a bid to tackle possible tougher trade friction in 2017, China is beefing up efforts to transform its economic growth model by upgrading and innovating industries to enhance the competitiveness of Chinese products, experts noted. Roughly 27 countries and regions filed 119 trade remedy cases against China-made products in 2016, an increase of 36.8 percent from the previous year, ministry spokesperson Sun Jiwen said at a press conference in Beijing on Thursday. Trade volume involved in the cases was $14.34 billion more than last year, up 76 percent year-on-year, MOFCOM data showed. "Trade disputes grew politicized last year, and trade remedies tended to be extreme," Sun said. Xu Hongcai, deputy chief economist at the China Center for International Economic Exchange (CCIEE) said that the situation will become even tougher this year as the world is widely plagued with uncertainties. "Trade barriers and protectionism keep rising across the globe since major world economics like the US, Japan and some European countries and regions do not recognize China's market economy status, which will bring tougher times for the country in 2017," Xu told the Global Times on Thursday. US President-elect Donald
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Trump named Robert Lighthizer, a harsh critic of China's trade practices, as his chief trade negotiator on Tuesday, according to media reports. "We do not expect a trade war between China and the US, and we still hold a wait-andsee attitude toward Trump's measures on Chinese products after he takes office," Xu said. Targeted industries In 2016, many countries and regions put restrictions on Chinese products such as photovoltaic panels, ceramic tiles and tires, said Sun, the ministry's spokesperson. There were also a number of trade disputes involving chemical engineering and light manufacturing, according to MOFCOM. Meanwhile, "more than half of the trade dispute cases involved the Chinese steel industry," Sun noted. China's steel sector has become a prime target because the products are competitive and steel is a core industry in many foreign countries and regions, Liu Jianying, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Thursday. "For a long time, China's steel production was mainly for domestic demand. The country did not encourage large amount of steel exports, and had adopted a series of measures to restrict steel exports including increasing tariffs on certain products," Liu noted.
"Employing protectionist measures will not help solve problems [such as overcapacity] in the global steel sector; instead, it would further hit the international trade order," she said. In a bid to address such problems, China will continue to make efforts to cut steel overcapacity, experts said. The local government of Tangshan, North China's Hebei Province, on Thursday announced plans to reduce 8.61 million tons steel in 2017, according to media reports. The China Council for the Promotion of International Trade (CCPIT) is endeavoring to urge foreign countries and regions to drop the surrogate country approach against Chinese steel products in overseas markets to secure the legal rights of domestic companies, Liu Chao, deputy director of the council's Legal Affairs Department, told a meeting held in Beijing on December 29, 2016. The current approach allows foreign countries and regions to easily impose high tariffs in trade disputes. The CCPIT had set up 102 trade friction alert institutions across the country by the end of 2016, covering sectors such as steel, heavy machinery and tea. "Trade remedies are a double-edged sword," MOFCOM spokesperson Sun said. "Given the sluggish global economy, we hope that each country and region will apply trade remedies cautiously." China would prefer to cooperate
The authorities of Kerch, a city of regional significance in the east of the Crimea, Russia, bolstered investor's project for the construction of a plant producing glass containers in the city. This measure will allow to revive glass production in the Crimea and create over 200 jobs at the enterprise, the head of Kerch city administration, Vladimir Podlipentsev, announced on his social network account in January. Thus, a consulting company “Sevastopolinvest” offers to build a glass container production facility. The project has already been examined by a working group, which found the plant construction to be feasible and crucial for the city. Apart from the production itself, the project envisages building of two houses for the enterprise's employees. with other countries through negotiations to address trade disputes, in order to encourage a faster recovery of the global economy, according to Sun. In a bid to address trade friction, Chinese enterprises are expected to keep improving competitiveness of their products, said Xu, the expert with CCIEE. He noted that cutting costs in the manufacturing industry is helpful. China is prepared to deal with the upcoming challenges and the government will continue to support globalization as well as trade liberalization, Xu said.
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Reliability of TPedge Modules Successfully Tested Within the scope of the »TPedge« project, Bystronic glass has cooperated with scientists from the Fraunhofer Institute for Solar Energy Systems (Fraunhofer ISE) in Freiburg regarding the development of a process for the industrial production of innovative PV modules based on a Fraunhofer patent. Numerous prototypes of these TPedge modules have now been subjected to comprehensive tests which confirm the high reliability of the module concept. TPedge modules are edge sealed, double glass PV modules that have a great similarity to insulating glass windows. The solar cells are fixed in gas-filled spaces using adhesive pins between the glass panes. TPedge eliminates the need for traditional encapsulation foils and the module frames so that both material costs and time consuming lamination processes are removed.
Within the scope of the project »TPedge – Development of a Technology for Edge Sealed Solar PV Modules«, the Fraunhofer ISE has cooperated with Bystronic glass in the technological development that is incorporated into the the industrial production of innovative solar module concepts. “We have successfully taken the leap from a
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laborator y prototype to the standard industrial size (with 60 solar cells),” said Max Mittag, Project Manager at the Fraunhofer ISE and Tobias Neff, Solar Product Manager at Bystronic glass, explained that “With the TPedge technology, the costs for the module production can be lowered considerably – with an envisaged cycle time of 45 seconds per module line.“ The Fraunhofer ISE was able to take automated production systems for TPedge modules into operation in its »Module Technology Center« and use them to manufacture various prototypes in different setups. The industrial manufacturing processes have been developed further and optimized. The weight of the TPedge modules have been reduced by 30 percent by utilising 2 mm thin glass. The prototypes that were manufactured together with Bystronic glass were subjected to comprehensive
module tests in accordance with IEC 61730/61215. The results confirm the high resistance and the technical maturity of the module concept. Many different TPedge design setups were tested, using the conventional glass-foil-laminate and glass-glass-laminate modules as a reference. The resistance to hail and sur face load were also tested.
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FIC Boost ad 254mm x 86mm
BGI completes system upgrade
14/12/16
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News Page 1
, Tomorrow s Technology Today
Thailand Bangkok Glass Industries group, Thailand’s largest provider of glass and packaging, decided to install SIL system to 4 lines in Ayutthaya Glass plant and 3 production lines in Pathumthani Glass plant in the south of Thailand. The installation was successfully completed in June 2016 with the implementation of SIL for the lines and quality control management of both
plants and an additional furnace is scheduled to receive the next SIL extension in Ayutthaya plant soon. With more than 25 years of experience in IT solutions for the Glass Industry and over 100 plants equipped worldwide, SIL is bringing state-of-the art solutions to the plants of the group to help improve operations and performance.
Şişecam invests €100m. Turkey Şişecam Group, a global actor in all the main fields of glass production, has announced a new investment of around 100 million Euros to build a glass fiber production plant in Turkey. Noting that the glass fiber is the main component of many leading industries and primarily automotive and textile industries in Turkey, Prof. Dr. Ahmet Kırman, Vice Chairman and CEO of Şişecam Group, said that the investment is a strategic decision to support the growth strategy and that the Group will continue to grow through new investments, new partnerships and acquisitions. Şişecam Group, a global actor in all main areas of glass production such as flat glass, glassware, glass packaging and glass fiber, as well as soda and chromium compounds, continues its investments also in the New Year at full speed. Şişecam Group will be investing approximately 100 million Euros to build a glass fiber plant with a capacity of 70 thousand tons/year. Şişecam has a growing global presence with more than 21,000 employees. Globally it operates in 13 countries and its sales operations expands to 150 countries, Prof. Ahmet Kırman, Vice Chairman and CEO of Şişecam Group, stated "We are the world's third largest manufacturer of glassware and the fifth largest manufacturer in glass-packaging and flat glass fields. Besides, we are No. 1 in Europe in the field of flat glass. In
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addition to being the world leader in chromium chemicals, we rank among the top 10 soda producers of the world." Stating that the Group moves towards its goal of ranking among the world's top three manufacturers in its fields of activity, Prof. Kırman said: Stating that they have made a strategic investment decision in the field of glass fiber, the main component of Turkey's leading industries which mainly include the automotive and textile industries, Prof. Ahmet Kırman continued: " Kaolinite and boron are among Turkey’s main raw materials and this investment will help turning domestic resources into value added products". Stating that Şişecam Group has been operating in the field of glass fiber, one of the main inputs of the composite industry, since 1974, Ahmet Kırman continued, "Şişecam has a leading position in starting and developing the Turkish composite industry, which has now reached a volume of 1.2 billion Euros. It has recently gained further importance for the wind power, electronics, aviation, space and defense industries in addition to the leading industries of our country. The new plant, which is to be commissioned in the second half of 2018, will have an initial annual production capacity of 70,000 tons and will reinforce our glass solutions and services with further value added products for all the industries we serve.”
The world’s leading glass companies come to FIC with their electric boost/heating projects E-glass Installations up to 3,500kW in oxy-fired furnaces for
extra tonnage, improved glass quality and no strand breakages.
Container glass Various installations in flint and coloured glasses, up to 2,500kW, for increased output and quality.
Float glass Boosting installations, from single-zone 1,000kW to 3-zone 6,000kW designs, to increase clear output, maintain tinted output, save energy and reduce emissions. Multiple bubbler installations.
Display glass Numerous installed power projects, up to 1000kW for TFT/LCD glasses - using tin oxide electrode blocks for exceptional glass quality. Electric furnaces New designs for most glasses, including
opal. Complete technical back-up for melting quality improvement from raw materials through to forehearth and all operational problems. Troubleshooting service on all existing furnace designs.
Tel +44 (0) 1736 366 962 Fax +44 (0) 1736 351 198 Email general@fic-uk.com
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Global View
Pilkington to upgrade auto glass facility UNITED STATES Glass manufacturer Pilkington North America Inc. plans to invest $7.5 million in technology and manufacturing upgrades at its Versailles facility, Gov. Matt Bevin has announced. “For the past 30 years, Pilkington North America has proven itself a reliable job provider in Woodford County and an important member of Kentucky’s thriving automotive engineering and manufacturing industry,” said Bevin. “Their latest investment reaffirms the company’s commitment to the community and its mission to provide high-tech products for its customers. The commonwealth is pleased to support this project and help ensure many more years of continued growth.” Pilkington will buy new equipment to meet current and future customer demands. Using the most modern Advanced Press Bend process for laminated windshields, the company’s newly developed proprietary technology will support production of its formed glass pieces, as well as the polyvinyl butyral inner layer used to assemble windshields with Head-Up Display (HUD). Pilkington North America
is part of NSG Group, a leading manufacturer of glass and glazing products for the architectural, automotive and technical glass sectors. The Pilkington name is used as the product brand throughout the world. The company established its Versailles operation in 1987, where it employs about 300 people. “This investment will help strengthen NSG Group’s market leadership in the value-added product segment,” said Rick Frampton, regional director automotive, North America. Sen. Julian Carroll, of Frankfort, said the investment will positively impact the region. “Congratulations to Pilkington on updating the technology at its Versailles facility to better meet its manufacturing needs,” he said. “Versailles, Woodford County and the surrounding region welcome the growth that will be generated and stand ready with a skilled workforce to meet any future needs.” Rep. James Kay, of Versailles, said the project highlights the pro-business partnership between the company and Woodford County.
“It is a great day for Woodford County to see Pilkington expand their Versailles glass operation, which already employs nearly 300 people, many of whom are Woodford Countians,” he said. “It’s further proof that we have everything a business needs to grow and thrive in today’s economy. It’s clear, Woodford County is open for business.” Versailles Mayor Brian Traugott expressed his gratitude for the company’s commitment to the community. “We are grateful that Pilkington North America is investing in their future in Versailles,” he said. “They are an important part of our industrial base and provide many high-paying jobs.” Woodford County JudgeExecutive John Coyle shared his appreciation for everyone involved. “We are truly grateful for the confidence Pilkington North America’s investment has shown in our Woodford County workforce,” he said. “This investment in technology will continue the successful partnership between Pilkington and Woodford County. We appreciate the combined
efforts of Gov. Matt Bevin, the Kentucky Cabinet for Economic Development and our Woodford Economic Development Authority in bringing this project forward.” To encourage the investment and job retention in the community, the Kentucky Economic Development Finance Authority in January preliminarily approved the company for tax incentives up to $700,000 through the Kentucky Reinvestment Act. The performance-based incentive allows the company to keep a portion of its investment over the agreement term through corporate income tax credits by meeting job retention and investment targets. In addition, Pilkington can receive resources from the Kentucky Skills Network. Through the Kentucky Skills Network, companies can receive no-cost recruitment and job placement services, reducedcost customized training and job training incentives. In fiscal 2016, the Kentucky Skills Network provided training for nearly 95,000 Kentuckians and 5,000 companies from a variety of industry sectors.
Container glass welcomes EU proposals EUROPE The European Container Glass Industry warmly welcomes the ambitious proposals that have been adopted by the European Parliament’s ENVI Committee on the Circular Economy Package. The request for mandatory separate collection across all EU Member States is particularly important as it guarantees the highest quality of recycled secondary raw materials for manufacturing. This is fundamental for the Container Glass circular economy model centered on the closed loop recycling of glass waste to be reused in new production. “Focusing on quality of recycled material, in particular
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for food contact materials, is more important than setting targets, which are there to channel investments in the right direction”, commented Adeline Farrelly, Secretary General of FEVE. “That is why we pay particular attention to separate collection and safe and circular recycling, and we hope the European Parliament will be strong in upholding its position on this point in plenary” This goes hand in hand with the strong position of the ENVI Committee to focus the Packaging Waste targets on recycling only, and not combine them with preparation for re-use which would water down the
recycling ambition by artificially boosting figures with businessas-usual activities. However, the European Parliament position remains ambiguous on re-use: “It already makes perfect business sense to re-use packaging before it becomes waste. But setting a flat re-use target for all packaging without differentiation between consumer packaging and business or transport packaging will not encourage any step changes on promoting re-use among consumers”. The ENVI Committee has also sent mixed signals by singling out bio-based packaging over other packaging materials. This fails to acknowledge that
the circular economy is about keeping resources productive without requiring the input of new resources, whether renewable or not. Permanent materials which can be recycled several times do not need to be renewed. “Surely this legislation must remain material neutral and focus on setting rules and principles on end of life for all materials to fulfil”, concluded Adeline Farrelly. The European Container Glass Industry looks forward to continuing the debate with Member States and the European Parliament on how legislation can support a genuine Circular Economy.
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Chinese Company constructs float glass plant MALAYSIA One of the largest float glass producers in China, Kibing Glass Group is in the process of finalising two float glass lines in Malaysia. Kibing Glass has invested 1.17 billion Yuan to build a 600t/d Low-E online coating glass production line and a 600t/d high-end diversified glass production line in Seremban, Negeri Sembilan, Malaysia as part of the company’s strategy of establishing the first overseas
glass production base. Kibing Group has bought assets of Samsung Corning in Malaysia Negeri Sembilan in early 2016 to set up these production facilities. Seremban assets include land, buildings (structures), equipment and other production and living and office assets. Kibing Glass is one of the leading glass manufacturers in China. It was founded in 1988 and has been listed on the
Shanghai Stock Exchange since 2011. The company employs over 8,000 employees, lead by an internationally experienced management team. Kibing Glass products include clear float glass, ultra clear (low-iron) glass, tinted glass, low-emissivity (Low-E), coated glass , on-line solar control coated glass and photovoltaic solar glass. Kibing Group’s investment in Malaysia is in line with the
strategic concept put forward by the President Xi Jinping, to construct the 21th Century Maritime Silk Road. By investing and building factories in Malaysia, Kibing Group intend to make a breakthrough to all ASEAN countries and reach out to South Asia and Middle East from ASEAN. The project is expected to completed by the month of March 2017.
Vitro expands PPG asset collection MEXICO The Mexico-based glassmaker that bought PPG's flat glass business in July has made another major local investment in a former PPG asset. Vitro, S.A.B. de C.V. announced it has signed a deal to buy Pittsburgh Glass Works LLC, the North Shore-based automotive glass manufacturer, for $310 million. Vitro is buying it from LKQ Corp., which will keep the aftermarket glass distribution
portion of the business. When added to the company’s $750 millon buy of PPG’s flat glass business in July, which included a manufacturing operation and R&D facility in Harmar, Vitro’s total investment in former PPG assets now totals well over $1 billion. The deal includes “seven manufacturing plants, two satellite facilities and two float glass furnaces in the United States, one manufacturing plant in Poland and an equity
share in two joint ventures located in North America and China,” according to a company announcement by Vitro. Vitro also agreed to a multiyear purchase agreement with LKQ as part of the larger deal. The deal to Vitro marks the second time this year that the brunt of Pittsburgh Glass Works has been sold this year, after PPG originally dealt the division to LKQ, an automotive parts manufacturer, in February. LKQ
bought Pittsburgh Glass Works in conjunction with Kohlberg & Co., LLC, for $635 million. In a prepared statement, Vitro Chairman of the Board Adrian Sada Gonzalez called the acquisition complementary to the recent acquisition of the construction glass business from PPG and automotive glass a key business for Vitro as the company works to build its customer base as well as its geographic territory.
Drujba Glassworks purchase gets green light BULGARIA Bulgaria's competition regulator has granted approval to Portugal’s BA Vidro to acquire Greek glassmaker Yioula’s Bulgarian unit Drujba Glassworks. As the Portuguese company is not present on the Bulgarian glass container market, the market
share of Drujba Glassworks will not change as a result of the acquisition, the Commission for Protection of Competition said in a statement. Drujba Glassworks has two glass container plants in Bulgaria - in Sofia and Plovdiv.
Outside of its home country, the Greek group also owns glass container plants in Romania and Ukraine. The deal with BA Vidro includes Yioula’s Romanian unit, Stirom, but excludes the Ukrainian glass container business, the Greek
Glaston seals deal for tempering furnace CHILE Glaston has closed a deal with Comercial Dialum of Santiago, Chile, for an FC Series flat tempering furnace with Chinook convection system. The order was booked in Glaston’s fourth quarter 2016 order book. Measured by size, this is the biggest flat tempering furnace that Glaston has ever sold in South America, according to company officials. The furnace
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will be delivered to Chile during summer 2017. Comercial Dialum is one of the leading architectural glass fabricators in Chile offering highquality tempered and laminated glasses. In addition to their home market, products are exported to Latin America and the United States. “In South America, the glass processing market has been
very slow during the past years. However, some early signs of positive development [are] perceptible in Chile, Peru and Colombia and especially for highquality tempered glass,” says Moreno Magon, Glaston’s vice president of sales and service, South America. With its state-of-the-art Chinook convection system, the FC series meets all the requirements
group announced in October. BA Vidro has eight factories five on the Iberian peninsula, two in Poland and one in Germany, with a total of 2,400 employees. The group has an annual production of around 5 billion glass containers. for demanding low-emissivity glass coatings, according to Glaston officials. “Technological innovation has enabled us to be leaders, delivering high quality products to the South American market. By incorporating an FC furnace, we will increase our production capacity, considerably reduce anisotropy and be able to process large glasses, which the local market does not currently offer,” says Fernando Diez, executive president and owner of Commercial Company Dialum.
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People and Places
Dr. Guido Bonati to take over as new CEO at LIMO Germany On February 1, 2017 Dr. Guido Bonati will take the reins at LIMO Lissotschenko Mikrooptik GmbH as the company's new CEO. Dr. Paul Harten and Dr. Chung-En Zah will also continue to serve as managing directors. Dr. Bonati brings with him over 20 years of extensive experience in the laser industry. After serving in a management capacity for many years as a managing director at several Jenoptik Group companies, he most recently held the position of Director Business Development & Product Line Management and was a member of the executive board at Coherent GmbH in Göttingen, Germany, a subsidiary
of the US laser manufacturer that goes by the same name. Bonati has a doctorate in engineering and, in addition to over 16 years of management experience in the
fields of product and corporate development, is also a recognized technology expert and proven authority on international markets for lasers and optics, with a strong customer- and market-oriented focus. LIMO is thrilled to bring Dr. Guido Bonati on board as the company's new CEO and wishes him a warm welcome to Dortmund. The year 2017 marks an anniversary for LIMO. For 25 years, LIMO Lissotschenko Mikrooptik GmbH has been an international success story, with the company ranking among the world's leading specialists for laser beam shaping since its inception in 1992. At LIMO headquarters in Dortmund,
an international team of 200 specialized experts develops, produces and markets innovative optics and laser systems. LIMO is the world's only company whose core competence profile features the unique combination of micro-optics design, diode laser systems, and materials processing know-how. This makes LIMO an important and reliable partner for companies across various industries – for example, in semiconductor production, the flat-panel display industry, the production of medical devices, and the automotive industry – all of whom are in need of individual laser solutions.
Juha Liettyä to lead Glaston Emerging Technologies unit Finland Juha Liettyä, Senior Vice President, Americas and member of the Executive Management Group, has been appointed Senior Vice President, Glaston Emerging Technologies as of 2 January 2017. Liettyä will continue to be a member of the Executive Management Group, reporting to President & CEO Arto Metsänen. Liettyä will be based in Florida, USA. In accordance with its strategy published in March 2016,
Glaston is actively seeking new business opportunities in emerging glass technologies. “The establishment of the Emerging Technologies unit will support our growth targets, bring clarity to our business model and distinguish us from our competitors,” explains Glaston's President & CEO Arto Metsänen. Glaston’s global market leadership in flat glass tempering is based on superior technological expertise. In
addition, close customer relationships with the world’s leading glass manufacturers make Glaston an attractive, credibility-enhancing partner for companies developing and commercialising smart glass inventions. “We believe that emerging glass technologies and value-adding glass products are making a strong entry into the market. As a pioneer and technology leader in our sector, we want to be involved in this
development,” adds Metsänen. The Emerging Technologies unit will offer consulting and planning services for smart glass and energy glass production as well as solar energy applications. The unit will also sell, supply and service the machines and equipment required for production. Glaston’s investment in a Californian nanotechnology company is part of the Emerging Technologies unit’s activities.
XPAR Vision and Bucher Emhart Glass extend cooperation agreement World Following the cooperation agreement made in June 2014 under which Bucher Emhart Glass launched its new BlankRadar (based on two of XPAR Vision’s products, the Gob Assist (GA) and the Blank Temperature Control (BTC)), XPAR Vision and Bucher Emhart Glass extended this agreement. Under the extended agreement, Bucher Emhart Glass will sell the XPAR IR-D system under the Bucher Emhart Glass brand “FlexRadar”. It will replace the actual FlexRadar system which was developed by Bucher Emhart Glass. As with the BlankRadar Bucher Emhart Glass will provide full
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support for the FlexRadar system, including Sales & Marketing, Documentation, Installation and Maintenance, Training and System integration. XPAR Vision will continue to sell, market and support their own IR-D system independently. Also, XPAR will continue to implement future enhancements and developments to the system based on customers’ and Bucher Emhart Glass requests. The new FlexRadar will be available through Bucher Emhart Glass from Q2 2017 onwards. The extended cooperation takes the business relationship between XPAR and Bucher Emhart Glass to the next level
and will allow both companies to focus on their core competencies and achieving the strategic goals. For Bucher Emhart Glass it is to realize the End-to-End vision for container glass production by automating the process from gob forming to the inspection of glass containers. For XPAR it is to develop hot end sensors, data integration and robotics for the purpose of efficiency improvement, weight reduction and automation. This agreement does not interfere with any other agreement that either party already has. “The new FlexRadar system contains state-of-the art sensor
technologies developed by XPAR which will enable Bucher Emhart Glass to focus on automation and production support, including closed loop developments. In a broader context, this extended agreement between XPAR and Bucher Emhart Glass leads to an unrestricted strategic partnership in the future,” confirms Martin Jetter, President of Bucher Emhart Glass. “This agreement is an important step forward. Our joint forces will optimize the container glass production process and make the container glass more competitive with other packaging materials,” says Paul Schreuders, CEO of XPAR Vision.
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Batch Indian Customs rescinds soda ash duty India // Soda Ash The CBEC in its recent notification no’s 55 and 56 issued on Dec 21 has rescinded the anti-dumping duty imposed on imports of soda ash from 9 countries. This step has been taken though the final findings of the investigation were challenged in the High Court of Gujarat and the court is yet to give its final verdict. Soda ash is generally used in commercial, domestic and laboratory uses or more simply used in the production of various types of glass (flat glass, container special packaging glass, fibreglass for insulation and other glass products) alkali products, detergents and soaps. India imports soda ash from China (P.R), EU, Kenya, Pakistan,
Iran, Ukraine, U.S.A, Turkey and Russia. In its notification the CBEC details that in its earlier notification No.15/28/2014-DGAD, dated July 21, 2015, DGAD (Director General of Anti-Dumping Duty) had initiated a mid-term review investigation of soda ash from these countries. The final investigation that concluded on September 23, 2016 revealed, although dumping of soda ash continued from the above listed countries, there has been no adverse impact of the same on the volume, prices and profitability of the Indian industry. In its notification the CBEC lists out the following points in support of revoking the anti-dumping duty on all the 9 countries. • Although dumping
has continued despite the antidumping duties in force and the dumping of subject goods from the subject countries is positive during the Period of Investigation (hereinafter referred to as POI), the adverse impact of the same on the volume, prices and profitability of the domestic industry is absent during the POI as well as post-POI Both undercutting and • underselling are negative during POI as well as post-POI The injury margin is • negative during POI as well as post-POI • The likely injury margin, on the basis prices of third country exports by the subject countries during the POI are also negative • Price suppression and
price depression effects are absent All most all volume • parameters and price parameters of the domestic industry are positive during POI and postPOI and there is a remarkable improvement of lasting nature in the performance of the domestic industry Although dumping continues, neither it has caused injury to the domestic industry, nor is there any likelihood of causing injury in the event of revocation of the anti-dumping duties and has recommended revocation of the anti-dumping duties imposed on the imports of the subject goods, originating in or exported from the subject countries.
CO2 capture to provide new source of soda ash? India // Soda Ash A breakthrough in the race to make useful products out of planet-heating CO2 emissions has been made in southern India. A plant at the industrial port of Tuticorin is capturing CO2 from its own coal-powered boiler and using it to make soda ash. Crucially, the technology is running without subsidy, which is a major advance for carbon capture technology as for decades it has languished under high costs and lukewarm government support. The firm behind the Tuticorin process says its chemicals will lock up 60,000 tonnes of CO2 a year and the technology is attracting interest from around the world. Debate over carbon capture has mostly focused until now on carbon capture and storage (CCS), in which emissions are forced into underground rocks at great cost and no economic benefit. The Tuticorin plant is said to be the first industrial scale example of carbon capture and utilisation (CCU). There is already a global market for CO2 as a chemical raw material. It comes mainly from industries such as brewing
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where it is cheap and easy to capture. Until now it has been too expensive without subsidy to strip out CO2 from the relatively low concentrations in which it appears in flue gas. The Indian plant has overcome the problem by using a new CO2stripping chemical. It is just slightly more efficient than the current CCS chemical amine, but its inventors, Carbonclean, say it also needs less energy, is less corrosive, and requires much smaller equipment meaning the build cost is much lower than for conventional carbon capture. The new kit has been installed at Tuticorin Alkali Chemicals. The firm is now using the CO2 from its own boiler to make soda ash – a base chemical with a wide range of uses including glass manufacture, sweeteners, detergents and paper products. The firm’s managing director, Ramachandran Gopalan, told BBC Radio 4: “I am a businessman. I never thought about saving the planet. I needed a reliable stream of CO2, and this was the best way of getting it.” He says the
plant now has virtually zero emissions to air or water. Carbonclean believes capturing usable CO2 can deal with perhaps 5-10% of the world’s emissions from coal. It’s no panacea, but it would be a valuable contribution because industrial steam-making boilers are hard to run on renewable energy. The inventors of the new process are two young chemists at the Indian Institute of Technology in Kharagpur. They failed to find Indian finance and were welcomed instead by the UK government, which offered grants and the special entrepreneur status that whisks them through the British border. The firm’s headquarters are now based in London’s Paddington district. Its CEO, Aniruddha Sharma, said: “So far the ideas for carbon capture have mostly looked at big projects, and the risk is so high they are very expensive to finance. We want to set up small-scale plants that de-risk the technology by making it a completely normal commercial option.” By producing a subsidy-free carbon utilisation project,
Carbonclean appears to have something of a global lead. But it is by no means alone. Carbon8 near Bristol is buying in CO2 to make aggregates, and other researchers are working on making plastics and fuels from waste CO2. At last, it seems, the race to turn CO2 into profit is really on.
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AG 17-1 asianglass
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News Anaylsis
News
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CSG and Kibing: locking horns at the top of industry C
hina Southern Glass Holding Co., Ltd. was established in 1984. In 1992 CSG became one of the earliest public-listed companies in China and now it has a worldwide staff strength of near 10,000 with the total assets of RMB 15 billion. There are 4 main glass business divisions that made up the group - flat glass, architectural glass, solar glass and electronic glass. Over the years, CSG has won many accolades both in China and overseas and has been the leading glass company from China supplying quality facade glass to many high profile architectural buildings around the world. With its strong foundation, it seems like CSG is poised to continue its dominance for many years to come. However recent big changes from within the top management of the company leave many to wonder the fate of this glass giant and the aftermath on the China glass industry as well as the global glass industry. Back in 2015, Baoneng Group which is a conglomerate whose businesses span from property development to health care acquired enough of CSG shares to be its largest shareholder. From then onwards the old guards led by its founder chairman ZENG Nan had an uneasy relationship with its new owner. This tension eventually broke up with the surprised resignation of ZENG Nan together with WU Guobin (CEO), LUO Youming (CFO) and 4 others key appointment holders who also sit in the board of directors on 14th November 2016. Baoneng Group has accepted their resignations and the fact remains that its current management team is new and inexperience with the glass industry. Earlier in 2016, there has been a steady exodus of key personnel from CSG. To date, the numbers have been rumored to be between 100 to 200. Those who have left were mainly the pioneers and elites with CSG holding management, technical and sales portfolio. They were reported having
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been employed by another glass company Kibing Group. Although neither companies have verified this but someone who is familiar with Kibing Group has confirmed that there have been many high level interactions, sometimes on departmental level between the 2 companies since early 2016. When Kibing started building its
ULTIMATELY, THE GLASS INDUSTRY IN CHINA WILL BE GEARING UP FOR SHOW DOWNS first glass float lines in Malaysia, there were speculations that CSG will build its architectural glass processing factory next to the Kibing float lines. Just before the mass resignation incident in CSG, Kibing Group made its public announcement to go into a joint venture with 2 other companies - Fu Long Intenational and Shenzhen Qian Hai Yu Sheng Investment on 21st Oct 2016. This involves the setting up of 3 production bases for processed architectural glass in Malaysia and China (Huizhou and Shaoxing). Each of these production bases will be equipped with a state-of-the-art soft coating line for low e glass as well as 3 double glazing lines. The new setup will compliment with the glass floatlines that Kibing has in its vicinity and they seems to mirror that of a a typical CSG setup. This has made many to wonder and
question who is holding rein to the new joint venture with Kibing holding less than 50% shares. The stage is set where Kibing who was once a float glass producer with 25 float lines (2 more coming up in Malaysia) will be stepping up to supply architectural glass. They are reportedly able to do triple silver low e coating, a technology that only a handful of Chinese glass makers have mastered, CSG being one of them. There is a Chinese idiom “adding wings to a tiger�. If the new Kibing joint venture is indeed made up of personnel formerly from CSG, this will give the company experiences that the 10 year old Kibing did not have. Coupled with the production muscle of Kibing, it will make this new company a force to be reckoned with. So what next for CSG? Current employees of the company maintain that life still goes on as they watch the high level drama being unfolded in the boardroom of the company. The foundation that the pioneers has laid will ensure that the company will be able to ride the tide over in the short term period. However the glass industry in China is itself going through an overhaul. Domestically glass companies face pressures from the government level on the environmental issues as well as stiff market competitions. At the same time they need to keep abreast of the new technologies in glass to keep their products relevant and up to date. With a new management team that does not have a proven track record as its predecessor, many are keeping their fingers crossed to see what happens next. Ultimately, the glass industry in China will be gearing up for show downs and with a new empowered Kibing, it remains to be seen who will be the next dominant leader in China. The new leader will also be eyeing on a piece of the pie in the overseas market and this will definitely cause a ripple effect from China to the rest of the world.
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ANALYSIS: Container glass
The gloves glass aims for PET knock-out blow
Rohan Gunasekera digs beneath the surface of the ongoing PET v Glass debate in the sub-continent, and exposes some surprising viewpoints…
I
ndia’s container glass industry is suffering from excess capacity, having added production lines at a rate in the past few years, in anticipation of a boom in demand that did not materialise, and seeing market share severely eroded by polyethylene terephthalate (PET) or plastic containers. PET continues to gain ground as the debate on its safety and whether glass or plastic is better rages on. Moves by container glass majors to upgrade furnaces and revive ones that had been shut down when demand fell indicate the market has bottomed out and a recovery may be in sight, although no new investments in capacity are planned for the foreseeable future. The container glass industry and non-governmental organisations representing consumers and environmentalists argue that PET bottles are harmful and tend to leach toxic materials under hot, humid Indian conditions, with the medicines inside getting contaminated by chemicals used to make plastic. They also highlight the glaring waste disposal problem that use of disposable plastic containers create. Glass, they maintain, is an inert material and does not react with the contents in containers while also being environmentally friendly, being fully recyclable.
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An Indian government panel recommendation to ban use of PET for medicine consumed by vulnerable groups like children, the elderly and pregnant women has been opposed by the plastics industry and pharmaceutical sector and has not been implemented. Lab tests by government agencies that found contaminants in plastic bottles with medicines and prompted recommendations that PET be banned have generated controversy after they were challenged and found to be inadequate. . In recent years, use of PET in a range of industries – from food and beverage to pharmaceuticals – has been growing with Indian glass container manufacturers losing market share. Among the family of plastic packaging, PET is expected to grow the fastest. According to the Packaging Industries Association of India, packaging is among the high growth industries in India and developing at around 22-25% a year. In India, the fastest growing packaging segments are laminates and flexible packaging, especially PET and woven sacks.
PET for bottles
Most of the PET available in India is used in the production of bottles. In recent
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ANALYSIS: Container glass
are off… years, PET bottles have become ubiquitous in the Indian market, with annual growth rate in consumption exceeding 20%, according to the Ken Research Report. Aerated beverages in urban centres are increasingly being packaged in PET bottles, as are energy drinks and fruit juices. Sanjay Somany, Managing Director of Hindusthan National Glass & Industries (HNGIL), one of the largest manufacturers of container glass in India, estimates the industry is running only at about 70% capacity with the shortterm outlook not encouraging. HNG itself is in the red and has accumulated heavy losses in the last four years owing to over supply in the container glass market and consequent fall in capacity utilisation coupled with sluggish growth in demand. Somany believes the Indian government’s demonetisation move where big currency notes were withdrawn from circulation with the stated aim of combating black money has worsened sluggish market conditions. “The market, post-currency issue, is flat,” Somany told Asian Glass. “We’re running at reduced capacity. Customers are also full of stock and are running reduced shifts. All are operating at minimum load levels. Industry capacity usage is about 70%. The whole market is down by 30-40%.. The capacity to buy is not there from the customer, so there’s no one to buy it. PET manufacturers are also struggling.” Total Indian active container industry capacity is under 5,000 MT a day with utilisation around 3,000 – 3,400 MT/ day, according to Somany. “PET bottles have eaten into the share of the glass market,” he acknowledged. “The pharma market too is down across the board and it is the same with the liquor, beer and food sectors. There is no liquidity in the market.” Kolkata-based HSIL Ltd (formerly Hindustan Sanitaryware & Industries Ltd) also acknowledges that sales across the glass packaging industry continued to be impacted due to weak user demand with the market being flooded with PET containers. The firm is India’s leading sanitaryware player and second largest in Packaging Products business. It believes there is strong growth potential in the long term given that the per capita consumption of packaged goods in India is still very low compared with other markets. HSIL’s Packaging Products Division claims a 17 per cent market share and the company’s packaging products range includes PET bottles as well as glass containers. HSIL believes the slowdown caused by the demonetisation move is temporary but is cautious about the short term growth prospects. HSIL Ltd CFO Sandeep Sikka, in a recent conference call, said in the medium-term to long-term around 15% growth in building products is expected and the growth in packaging products could be between 6% to 10% depending on the market conditions. “Although the growth in the last two quarters has been good but we still like to analyze on the packaging product as we move forward,” he said. “We are bullish on the business right now; but markets are a bit uncertain today as we move forward.” R. B. Kabra – president, building products of HSIL, said that because of the money circulation crisis there could be temporary setback to the sales. “But in the long-run, it will be very good for the organized industry like ours because there is no cash sales from our side, everything thing is invoiced, everything is done on record and we are not like small scale people who are part invoicing and the part is taken in cash. So, going forward with GST and with this kind of a thing, all organized companies will get benefited in the long-run but may be short-term may be in 30 days - may be 45 days may be 60 days there could be a temporary setback.”
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AGI Glaspac
Location – Glass bottles in Sanathnagar, Hyderabad, (Telangana) and Bhongir (Telangana). PET Bottles in Selaqui Uttarakhand) and Dharwad (Karnataka). Security Caps & Closures in Medak (Telangana) (under construction). Products – Flint, Amber & Green glass bottles in sizes of 10 ml to 2,500 ml Markets – Liquor, beer, Food & Beverages, Pharmaceuticals and Chemicals sectors The Kolkata-based HSIL Ltd (formerly Hindustan Sanitaryware & Industries Ltd), is the second largest manufacturer of container glass in India. Its Packaging Products Division consists of glass and PET bottles, available under AGI and Garden Polymers brands. AGI Glaspac is also the biggest player in South India. The firm manufactures glass containers such as chemical bottles, beer bottles, jars, and personal care product bottles. AGI Glaspac’s capacity is 1,300 tonnes per day, down from 1,600 tonnes, with a 300 tonne kiln having been shut down.
HNG
Location – Rishra, West Bengal, Bahadurgarh, near Delhi in Haryana, Neemrana in Rajasthan, Rishikesh in Uttarakhand, Puducherry, Naidupeta in Andhra Pradesh and Nashik in Maharashtra Products – bottles from 5 ml to 3200 ml containers Markets – pharmaceuticals, beverages, processed foods, cosmetics and liquors Hindusthan National Glass & Industries (HNGIL) has seven plants with total installed capacity of 4,395 tonnes a day, the latest being greenfield and brownfield expansion programmes, at Naidupeta, in Andhra Pradesh and Nashik in Maharashtra. HNG Group operates 10 furnaces and 42 production lines and makes 6 million bottles per day ranging from 5 ml to 3200 ml containers.
Cogent Glass
Location – Mehboobnagar, near Hyderabad Products – Type 1 borosilicate glass vials and tubes Markets – pharma industry Cogent Glass Limited, which makes Type 1 borosilicate glass vials and tubes, and caters to the packaging needs of India’s pharma industry, is controlled by Oaktree Capital Management. Oaktree, a US-based privateequity fund which also holds a controlling stake in SGD, a French company supplying the pharmaceutical and perfume-cosmetics industries. Cogent’s manufacturing site is located in Mehboobnagar, near Hyderabad, close to most of the medium and large pharma companies in India. It has a production capacity of one million pieces a day of Type I moulded vials and half-a-million pieces of tubular glass containers.
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ANALYSIS: Container glass
Hope for growth
Anticipating dramatic increase in demand, big glass manufacturers had gone for rapid capacity additions around 2010. HNGIL added one furnace each in Nashik, Maharashtra and Naidupeta, Andhra Pradesh) with a capacity of 1,300 MT, HSIL added 475 MT of capacity at its Bhongir plant in Andhra Pradesh), Piramal Glass added 165 MT of capacity at its Jambusar plant in Gujarat, and Canpack entered the container glass market in India by adding 800 MT of capacity at Aurangabad, Maharashtra. All told, the majors have added a total of 2,740 MT since 2010. Piramal Glass, a major player especially in the pharma sector, recently completed relining of two important furnace at its Kosamba site. This was the relining and up gradation of 45 tonnes per day for Type 1 glass and relining of 35 TPD of the Cosmetics & Perfumery furnace along with expansion of capacity to 60 TPD. A turnaround in the market is indicated by moves by HSIL in February 2017 to light up a glass furnace which was closed for three years because packaging business growth had slowed. “We have started losing orders we are not able to serve the customers as per their requirement so we have started work on lighting up the furnace,” said Kabra. According to S. N. Panigrahi, Vice President-Commercial) of AGI Glaspac, the packaging products division of HSIL Limited, the firm had deliberately shut down a 300MT capacity furnace three years ago it was unable to sell and absorb its capacity since there was no demand and stock levels piled up. Even now, though, there are concerns that there’ll be not enough demand to take up the capacity. “Glass packaging is not doing so well in volumes and value terms right now,” said Panigrahi told Asian Glass. “A lot of capacity is underused. AGI Glaspac also has unutilised capacity. There’s a lot of encroachment by PET bottles and demand expected from major segments like beverages has come down.” The erosion of the market share held by glass is particularly severe in the pharma industry, especially in sales of syrups and other liquids, where much of it has switched to PET bottles. Even Dettol, on which the container glass industry had placed much hope as it had always been sold in glass bottles, had now turned to PET bottles. “Especially with cool drinks and other beverage markets, the growth rate is not as expected,” said Panigrahi. “There is a decline in the share of glass bottles. The alcohol sector has continued to use glass bottles but even there the threat from PET packaging is a growing concern. Many state governments have begun placing restrictions on liquor consumption such as a recent ban on highway sale of liquor that’s also hitting demand. As a result the requirement for glass is much below expectations. Although the glass industry has been lobbying for greater use of glass, especially in consumption of medicines, the lobby has not been strong enough to prevent its market share being eroded by plastic. The pharmaceutical industry and PET manufacturers’ lobby is seen as stronger and appears to have prevailed at least for now. The outlook is not so bright. Panigrahi estimates it might takes another 2-3 years to absorb the industry’s present capacity given the natural growth in different market segments, mainly from the liquor industry. Exports are also not an option to absorb excess capacity. “From India, exports are not viable,” said Panigrahi. “Our exports in the 2 – 3 years has come down drastically. We were especially targeting the African market but it has been severely impacted because of the shortage of dollars. So there’s not much scope for expanding as demand has come down.” Switching production between different segments – from low demand sectors to those where there is growth – is also not an option given the overall slowdown in growth, contrary to expectations, especially in the pharma segment. “The beverage industry growth rate in demand has not been as expected,” said Panigrahi. “So there’s not much of a pick up there.”
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Piramal Glass
Location – Kosamba and Jambusar, Gujarat Products – USP Type-I,II & III glass containers of amber/flint colour, and of 2ml to 2.5 ltrs Markets – Cosmetics & Perfumery, Specialty Food & Beverages and Pharmaceuticals industries Piramal Glass Limited manufactures glass containers for Cosmetics & Perfumery, Specialty Food & Beverages and Pharmaceuticals industries. Cosmetics & Perfumery is the largest segment of the container glass business. It supplies a range of USP Type-I,II & III glass containers of amber/flint colour, and of 2ml to 2.5 ltrs. Piramal’s Indian facilities consist of two sites at Kosamba and Jambusar, both of which are strategically located near major seaports. The Kosamba facility has six furnaces – three each for Pharma and Cosmetics & Perfumery with a combined capacity of 340 tonnes per day. These produce USP Type I, II and III Amber and Flint Bottles and Vials for the pharmaceuticals business, Type 3 glass for Nail Enamel, Perfumes, Skin Care, Foundations, Aroma Oils, Miniatures etc (from 5 ml to 150 ml) and coloured perfume bottles. The Jambusar facility is one of the world’s largest with a 355 tonnes per day installed capacity for pharmaceutical packaging in amber glass. The product range includes Type 3 amber for food and pharmaceuticals vials and bottles and Type 3 flint for food and perfumery bottles.
Canpack
Location – Aurangabad, India Products – beverage containers Markets – food and beverage sectors Can-Pack India Pvt. Ltd., which has a glass bottles plant in Aurangabad, India, is part of Can-Pack Capital Group, a Polish multinational and one of the biggest packaging manufacturers in Europe. It has two furnaces and six production lines in Aurangabad manufacturing 325,000 tons of glass a year.
Firozabad Ceramics Private Limited
Location – Firozabad, Uttar Pradesh Products – glass containers, table and kitchenware and decorative ware Markets – supplies several sectors, from liquor to food and cosmetics Firozabad Ceramics Pvt Ltd., based in Firozabad, Uttar Pradesh, makes glass containers, table and kitchenware and decorative ware, supplying several sectors, from liquor to food and cosmetics. It has a total installed glass capacity of 120 tons per day although actual usage is lower. The company has been catering to restaurants, pharma companies and cosmetic companies among others. The firm is of modest size but has a long track record of operations and experienced promoters with more than three decades in the glass manufacturing industry.
Haldyn Glass
Location – Vadodra, Gujarat Products – Soda Lime Flint & Amber Glass containers, clear glass bottles, clear glass 3ml to 2500ml Markets - Food, pharmaceutical, beverages, liquor and beer industries Haldyn currently has total melting capacity 320 tons per day comprising of two Glass Melting Furnaces (of 220 and 100 tons per day capacity) and 10 I.S. machines which enables it to make a very wide range of containers. The I.S. machines are capable of producing 1.5 million high quality containers every day.
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HY.GENTM
H2
The Hy.GEN produces hydrogen by converting natural gas with Steam Methane Reforming.
N2 / H2
N.GENTM
Hy.RECTM
N2
The N.GEN separates nitrogen from air using a filtration technique called the Pressure Swing Absorption.
The Hy.REC reduces overall gas consumption by half and decreases emissions of dust and other harmful components significantly.
O.GENTM
O2
OFF GAS
N2 / H 2
The O.GEN separates oxygen from air using a filtration technique called the Pressure Swing Absorption.
COST-EFFECTIVE GAS SUPPLY
ANALYSIS: Container glass
The main growth prospect appears to be the liquor industry where natural growth is continuing. HSIL believes that while plastic is replacing glass as packaging material in many segments, the premium appeal and better barrier properties of glass make it indispensable for beer and liquor industry. Also, expensive, highquality products such as injectables, security drugs, and liquids are mostly packaged in glass as it is much better for preservation, guaranteeing a much longer shelf life. Beauty and personal care products, as well as organic and healthy food products are using glass as a packaging material. But when it comes to aerated drinks, the urban Indian market is flooded with PET bottles and aluminium cans, although the rural market still relies on refillable glass packaging. The demand for returnable glass bottles for packaging soft drinks, especially in rural and semiurban areas, continues to grow. Liquor and beer represent the largest user segments of container glass. More than 50% of the container glass is used to package liquor and beer and this share has been growing. Within the alcoholic beverage industry, beer is a rapidly expanding segment. It is currently ranked as the third largest and second fastest growing market in the Indian alcoholic beverages industry. Since beer has to be packed in either glass bottles or metal cans, this provides a fillip to the packaging industry. In 2015, the beer market in the country was estimated at 250 million cases, with over 98 per cent beer packaged in glass bottles with crown closure. HNG’s Somany says sale of glass to the beer and other segments remains robust. However, future investment will be in improving manufacturing processes and technology and not in capacity. “No one is running to full capacity, so if you add capacity you will not be able to use it,” he said. “The turnaround is going to take some. We are positioned to deliver but if the market has no capacity to buy what do you do? You can cut costs and do everything else possible but without selling glass you don’t have a future.” Even the smaller players in the container glass business have been affected by the slowdown in demand. Rajendra Prasad Jain of Firozabad Ceramics Pvt Ltd. (FCPL) acknowledges that there is a threat from PET containers. “PET does affect the market. It is consistently gaining ground, mainly because of the fragile nature of glass,” he told Asian Glass. “PET scores on this aspect inspite of all the issues surrounding it like environmental pollution.” Jain sees PET in a favourable position right now and feels that in future a lot depends on government policy. “The government does not discriminate between glass and PET. If it recognises and gives incentives to the glass industry by considering glass as eco-friendly, than the market for glass will grow.” Jain believes that government regulations imposing restrictions on PET use will have a favourable impact on glass, if they come through, such as the rule on packaging medicine for the elderly, children and pregnant women. “The plastics industry is lobbying against,” Jain said. “If it comes it will
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EVEN THE SMALLER PLAYERS IN THE CONTAINER GLASS BUSINESS HAVE BEEN AFFECTED BY THE SLOWDOWN IN DEMAND
be good. But the impact will not be that significant because medicines for children and pregnant women do not have a big market share.” FCPL manufactures glass ware, table ware and PET jars and has an installed capacity of 120 tons per day. Its sales and profit have fallen slightly. For FY2015–16, FCPL reported profit after tax (PAT) of Rs.0.49 crore on operating income of Rs.33.75 crore, as compared with PAT of Rs.1.13 crore on operating income of Rs.34.16 crore for FY2014–15. The company had sales of Rs.14.00 crore for HY2016-17. Inventory levels have also risen, to a high of 212 days in FY2015-16 from 168 days in FY2014-15. However, Jain believes demand for glass will grow in the long run. “The market for food packaging is growing as there’s a lot of awareness among consumers who are asking for glass bottles,” said Jain.
Premium elements
Glass containers carry a higher quality or premium image compared to plastic and metal containers, thereby facilitating growth of the container glass segment. The predominant packaging material for foods and beverages is glass. This is because glass does not deteriorate, corrode, stain or fade, enabling products inside glass containers to retain their original freshness and purity, according to HSIL. It believes there is significant headroom for growth of container glass as a medium for packaging food and beverages. This is because the low per capita consumption of packaged beverages and food in India. In the next five years, the expenditure on this category is projected to increase by 14 per cent annually, driven by growing disposable incomes, urbanisation and a young population. The container glass industry has tried light-weighting bottles to reduce costs and weight and make them more appealing to consumers in the face of heightened competition from the likes of PET containers and to make up for the drop in profits. Adopting advanced technology to lightweight glass can cut manufacturing cost and freight charges. Indian manufacturers
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ANALYSIS: Container glass
have adopted the ‘narrow neck press and blow’ (NNPB) technology to create lightweight glass packaging for their end users. HSIL, for instance, has lightweighted saline and pharmaceutical bottles to make them more user and environment friendly, enabling better margins, to overcome competition from lighter, unbreakable packaging alternatives such as rigid plastic and pouches. Used NNPB technology, with significant capital investments, it has also made several varieties of lightweight bottles for the beverage industries. According to rating agency CRISIL, container glass companies’ operating margins are expected to gradually improve over the next two years, aided by softening of raw material (soda ash) cost and low fuel cost (owing to slide in crude oil prices), with alcoholic beverages to drive container glass growth at 5-6%. It said that the polymer packaging segment’s revenues are expected to grow at a moderate pace. Over the past few years, polymer packaging has been gaining share from glass and metal packaging. Polymer has been either replacing or being used along with paper in secondary and tertiary packaging. As a result, polymer is the largest segment in the packaging industry. Going forward, increase in demand for polymer packaging is expected to be driven by end-user sectors such as food products and personal care segments. However, polymer packaging companies’ profitability is expected to decline in 2016-17. Polymer packaging companies’ raw material costs declined significantly in 2015-16, thereby resulting in expansion of operating margins. Over next two years, CRISIL expects margins to contract owing to gradual increase in raw material cost. In October 2016, a government panel asked the Union health ministry to ban use of plastic bottles to pack liquid medicines after a Calcutta laboratory detected lead among other contaminants in bottles containing medicines. The Drugs Technical Advisory Board (DTAB), India top statutory authority on standards for medicines, recommended that the health ministry should draft rules to prohibit the use of PET or plastic containers for packing liquid oral formulations prescribed to children, the elderly, pregnant women and women in the reproductive age group. The health ministry has not taken a decision on the recommendation from the board after the All India Institute of Hygiene and Public Health, Calcutta, submitted a report documenting lead and other contaminants in plastic bottles containing medicines. It tested five medicines, including a cough syrup and a multivitamin syrup, and several brands of cold drinks - all sold in plastic bottles - for various plastic-linked contaminants. The report said antimony, chromium, lead and diethylphthalate were present “even at room temperature” in all the five pharmaceutical preparations examined but did not specify the results of the analysis of the soft drinks. The DTAB had made a similar recommendation to ban PET bottles a few years ago but was challenged by the Indian Drug Manufacturers Association which branded the recommendation as “unjust as they seem to be based on neither robust scientific fact nor on established global practices”. IDMA maintained that PET bottles are being used widely in packing of oral liquids and tablets worldwide, including in Europe, Japan, and the US, and that the Indian industry follows prescribed pharmaceutical guidelines. PET industry representatives have also said PET contains no lead and that while very small amounts of antimony compounds used in the production of PET
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asianglass AG 17-1
can make trace amounts of antimony to migrate into water or beverages bottled in plastic and exposure to hot environments, these were so small that they posed no health concerns. The issue has become confused and controversial with a temporary high level committee formed under the health ministry finding fault with the government lab results. The committee maintained there was no clear proof of PET bottles contaminating medicines inside them but recommended that PET and plastic packaging continue and standards be set for it. It acknowledged that there were no standards in India for safe plastic packaging, unlike in countries like the US. In 2014, a study by the Indian Council for Medical Research concluded that leaching from plastic bottles had been demonstrated in various studies, and these bottles should not be used for packaging drugs meant for the pediatric age group and pregnant women. The pharma industry and the plastic packaging industry had argued against the ban. Somany of HNG feels that some drugs should be mandatorily packaged in glass to avoid the leaching problem. “The government rule on pharma has not been implemented yet. There is degradation of product and doctors are up in arms. It is only a matter of time and the ruling will go through. Some drugs are critical and they have to go to glass.”
Backing the ban
Indian industry heavyweights are backing the PET lobby, saying that the world over plastic is the packaging of choice for consumer products and suggesting further study to continue using plastic while addressing its environmental and health concerns. A study undertaken by Strategy& India with support from the Federation of Indian Chambers of Commerce and Industry (FICCI) says that a ban on plastic packaging would hit poor Indian consumers as it would make low price points unviable resulting in withdrawal of low price point products from the market. A ban on plastic packaging will compel the FMCG packaging industry to switch from plastics, and use alternatives as materials for packaging. Consequently, consumers will see three major impacts: increase in the price of most FMCG products as manufacturers shift packaging to alternatives; the ‘wipe-out’ of various low price point products such as shampoo sachets, detergent pouches, and biscuit packets as production at these price points becomes unviable. Such price points play a significant role in allowing first time consumers to experience categories at an affordable price, and play a key role in serving the rural market, according to the study. A ban will also have an adverse effect on food safety and hygiene issues because, as low price points disappear and costs increase, consumer dependence on unpackaged materials for essentials such as milk, edible oils and food will increase - and food safety and hygiene issues will come to the forefront.
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ANALYSIS: Float glass
China: after th policy dictates slower growth in 2017
As China gets to grips with slower economic growth and a more orderly expansion of tis glass industries, AG works with a number of respected authorities within the country to ascertain how development will keep being managed throughout the coming year.
T
he glass spot market situation in 2016 as a whole was similar to that of other building materials, and is now moving out of the tendency of incessantly rising and growing profit. As a periodical commodity, glass production is in increasingly close relation with any adjustment and fluctuation of the real estate market. At the same time, reform measures on supply side as well as corresponding policies are facilitating the glass industry development. And we are in a prudently optimistic attitude towards the glass industry development in 2017. Talking about the industrial cycle, as a result of a fast development in 2016, the demand and supply condition has been improved from a weak balance to a tight balance status. As far as fund is concerned, the funding pressure in 2017 is comparatively small as that of 2016, which on the one hand, is helpful for relief of a funding pressure caused by production cost escalation and, on the other hand, can help to postpone the time of production capacity reduction. The China glass comprehensive index on 25 November, 2016 was 1,070.96 point,
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asianglass AG 17-1
higher by 183.91 point than that for the same day of last year. The China glass price index then was 1076.69 point, higher by 201.66 point. The glass confidence index was 1,048.02 point, higher by 112.87 point. The average price for clear glass was RMB 1,476/t, higher by RMB 276/t. The capacity utilization rate of float glass was 73.45%, higher by 3.27%. And the capacity in production was 932 .34 million cases, more by 66.72 million cases and the inventory was 31.38 million cases, less by 1.23 million cases. The inventory time was 12.28 days, less by 1.47 day. It is our analysis of macro policy in 2017 that in a short period there will be no room for monetary policy relaxation. In consideration of the dramatic decline of the actual profit rate after economic re-inflation (especially the price increase of housing), the accumulated effect of monetary and financial policy relaxation since 2015 is sufficient enough to maintain a comparatively steady economic growth in a short period. Furthermore, a tendency of short term inflation is not to support a continuous monetary policy relaxation and, according to our prediction, CPI in the fourth quarter of 2016 will remain about 2% and, thereafter, PPI will have a quick increase. And the current housing price is higher than that in the same period last year.
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ANALYSIS: Float glass
he burn THE AUTOMOBILE INDUSTRY IN 2017 WILL REMAIN GOOD AND IT IS POSSIBLE TO SEE AN INCREASE OF ANNUAL SALES AMOUNT BY 7.2% While financial policy in 2017 is to play a major role in a steady growth of economy, the combined policy will mostly facilitate increasing consumption needs rather than investment spending. Hopefully the financial policy can help, by means of tax deduction and subsidy increasing, to enhance resident income and consumption growth, as well as increase public spending for education, medical service and poverty alleviation. Just as we indicated in a recent report that the financial deficit of a general sense in 2016 could be close to 10% of the GDP, therefore, it will become more important to increase the efficiency of financial policy relaxation in 2017, namely to increase the rate of return for financing. It is predicted that the effect of replacing business tax with valueadded tax can last into the first half of 2017 and, at the same time, policies likely tend to push consumption increase by means of tax deduction and subsidy increasing. And it is proved by facts that for purpose of increasing enterprises’ profit and general demand, a policy of tax deduction and subsidy for resident income and consumption is more helpful than continued investment increase for infrastructures.
Real estate
It is our analysis that the enthusiasm of commercial bank for individual loan has reached the top and it can hardly rise any further due to financial policy effect and, hence, there will be a turning point in 2017 towards interest rate increase for mortgage loans and, consequently, the sale amount of commercial housing will have a dramatic decline. However, we believe that given a sound balance sheet and a rational strategy target, there will not be a dramatic drop of housing price in 2017. In addition, we believe that the low cost proportion by construction and
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installation in housing price will lead to continued speed increase of development investment in year 2017. We also noticed that currently commercial housing has an increasing financial feature and, many people prefer housing to bonds or certificates just because of a continued up-going housing price and little potential of price decline. Many people purchase houses not for residence purpose or better living conditions but for financial consideration. The growing financial feature of commercial housing is not only changing people’s purchase consideration from per capita residence area and living environment or conditions to financial purpose, but also having an expanded effect on prediction of housing price variation and, consequently, a large sales fluctuation of commercial housing in 2017 can be foreseen, and also an uncertainty of the real estate market both due to the high fluctuation of sales and the uncertainty of policies to be coming after year 2017. Currently the policy implementation for disciplined market order, but its continuity after a market adjustment of several months could be an uncertainty, not to mention such variations from abroad as have effect on the macro economy of China, plus the uncertainty of China’s monetary policy, uncertainty of target for estate price control. It is our analysis that if the current policy should go throughout year 2017, the sales of commercial housing in 2017 would then have a dramatic decline. Development investment is not going to decline with the cooling down of the market. During the flourish sales period in 2016, what we observed were increased housing price and sales amount, without company of dramatic investment for development. And it is our analysis that when the market moves into adjustment period in the fourth quarter of 2016, a large decline of development investment can hardly be seen either. In spite of the reduced land acquisition area in recent
AG 17-1 asianglass
37
ANALYSIS: Float glass
Export volume and value of flat glass on month in 2016 Export volume
Month Kg
will be reduced to zero by 2018 and, therefore, the second half of 2017 can possibly see some consumption of 2018 in advance.
Export value
Growth rate (%)
US$
Growth rate (%)
Export
In September 2016, China’s float glass export volume was 113,155.446 tonnes, more by February 86,953,257 1.32 24,052,665 -22.49 9.59％than that of the same month last year, but less by 18.09％than that of the previous March 121,429,427 20.74 33,445,001 2.60 month. The export value was USD 32,450,975, April 103,729,745 5.53 29,123,522 -4.03 less by 12.19％than that of the same month last year, and less by 16.14％than that of the May 97,417,494 -16.31 28,467,604 -23.91 previous month. While in the period from June 111,512,084 3.69 31,818,961 -2.66 January through September 2016, our float glass export volume was 966,511.783 tonnes, July 100,592,931 -4.82 28,740,715 -22.50 more by 7.93％than that of the same period last year; and the export value was USD August 138,147,546 61.60 38,694,969 42.55 273,701,086, less by 8.81％than that of the September 113,155,446 9.59 32,456,925(?) -12.19 same period last year. After 2007 export value of float glass original plate is largely reduced due to the following factors. The first factor is period, the land area already acquired but waiting for development is very large, an adjustment of the state system for export tax rebate. The second factor is a and it is clear that so long as the enterprises have desire for development, the limited increase amount of the demand in the world market, with the increase concern of no land for development doesn’t exist at all taking the overall country amount of building construction demand over the preceding month much less into a whole consideration. than that in the domestic market. And another factor is the progress achieved Another factor more important is the low proportion taken by construction and in the domestic processing market that, in turn, resulted in a pretty change in installation in the housing price and, therefore, even though the market moves into the glass export structure. Export of processed glass products is in annually rising a dull period, the possibility is very low for the enterprises to have an immediate tendency. For example, after years development, a couple of industrial bases for reduction of construction work. When the proportion taken by construction and export of processed glass products have been established, including Guangzhou, installation in the housing price is increased, even if facing an uncertain sales Tengzhou and Shengfang, all having standard scale. And the processed glass amount, the cost amount saved through construction and installation suspension products exported covers a large variety such as furniture, household appliances, is much smaller compared with fund return through sales should the construction building decoration materials, as well as glass products for daily use. be kept going on. In other words, the enterprises likely tend not to stop housing construction in spite of large uncertainty of sales fund return. And our analysis Coal price based on the above lead to this understanding that the speed of investment for Since the implementation of reform by the state at the beginning of 2016 on real estate development in 2017 is not going to largely slow down but will remain supply side, many positive changes have been made in coal industry mostly on the increasing instead. following aspects. January
93,573,853
Automobile industry
1.19
26,906,674
A review of automobile marketing of 2016 indicates an increasing trend. The total number of vehicles sold in the period from January through September was 19.36 million, showing an increase of 13.2%. And out of that, 16.75 million are passenger cars, an increase of 14.8%, and 2.61 million are commercial cars, indicating an increase of 4.0%. The quick increase of sales of vehicles in 2016 mainly attributes to the preferential policy that cars with discharge less than 1.6 liter purchased before 31 December, 2016 will be subject only to 50% of the vehicle purchase tax. The number of passenger cars with discharge less than 1.6 liter sold in the period from January through September amounts to 12.04 million, indicating an increase of 21.9% over that of the same period of the previous year in terms of number, accounting for 72.7% of the annual sales, which is more by 4.2% than that of the same period of 2015. It is our expectation that the automobile industry in 2017 will remain good and it is possible to see an increase of annual sales amount by 7.2%. Taking into consideration the following, we are optimistic over 2017’s sales amount, predicting a better increase of sales amount than the expectation. First, after macro adjustment of real estate development and due to the consideration of a steady development, policies issued for automobile consumption may be more friendly, because automobile industry is the second largest industry immediately preceded by the real estate industry, and an important industry to facilitate consumption and domestic demand. Second, it is our assumption based on the current market situation that the purchase tax deduction amount in 2017 for cars with discharge less than 1.6 liter will be reduced to 75% of the previous deduction amount, and
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-24.85
A. The price rise
Starting from April 2016, coal price in China began to rise again as a recovery, power coal and coking coal both having a large price rise. Up to November 20th, power coal in the area around Bohai Sea has a price index of RMB 604/t, while prime coking coal in Lvliang region has a price of RMB 1,400/t. And it is our analysis that with progress of the reform on supply side, the coal price tends to stay steady in the whole coming year, with power coal in Bohai Sea area having an average price over RMB 550/t, and coking coal having an average price over RMB 1,000/t in 2017, both having a large price rise compared with that of 2016.
B. Coal production capacity reduction
During the progress of the reform on supply side, a total production capacity of 250 million tonnes has been cut down in 2016, and another 250 million tonnes was scheduled to be cut down in the next three years to come. The state policy for coal production capacity reduction is well implemented in 2016 in many provinces, and in the well developed provinces of east China, the tendency is to shut down coal mines in the future for coal production capacity reduction. And it is expected that coal capacity reduction in China will continue in a few years to come, until the time around year 2020.
C. Debt burden relief
While the coal price is going up, some large coal enterprises successively got
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www.fivesgroup.com
ANALYSIS: Float glass
Number and capacity of float glass lines on region East China
South China
North China
Southwest
Northwest
N*
C*
N*
C*
N*
C*
N*
C*
N*
C*
N*
C*
N*
C*
2006
54
163
44
125
31
85
14
36
10
27
7
19
160
455
2007
56
171
51
153
40
111
14
36
10
27
7
19
178
517
2008
61
192
53
161
45
126
14
36
11
33
8
21
192
569
2009
69
221
54
166
55
160
14
36
15
48
8
21
215
652
2010
79
258
56
177
68
209
15
40
15
48
8
21
241
752
2011
85
278
62
216
77
250
15
40
17
56
9
25
265
865
2012
88
289
64
224
84
280
17
47
19
63
13
39
285
942
2013
91
305
73
266
95
330
20
64
19
63
16
49
314
1,079
2014
95
321
81
298
98
341
24
90
23
81
16
49
338
1,181
2015
96
324
86
319
100
351
24
90
25
94
17
55
348
1,233
2016
96
324
89
333
102
363
24
90
26
100
18
59
353
1,269
Year
Northeast
Total
N – Number of float glass lines; C – Capacity of float glass lines (m.cases/y)
recovered to make profit and subsequently their debt burden began to relieve The amount of debt defaults published this year is quite small, and most of coal enterprises have paid off their debts due by means of bank credit, issuing new bond or government subsidy. With some poor coal mines being shut down, the coal enterprises are recovering to make profit and paid off their old debt.
D. Employment reallocation
With deep moving of the reform, some coal enterprises transferred some functions to local government, such as water supply, power supply, and materials supply etc, plus job reallocation within its own enterprise and so on. By all these measures, the staff number of coal industry could be possibly reduced by 2-5% this year, helpful to reduce the burden of the coal enterprises. Our study indicates a changing power coal price in 2017, from high to low. We foresee that the average price of power coal in 2017 can be over RMB 550/t, higher by RMB 60-70 than the price in 2016; price of coking coal in 2017 will likely have a little bigger fluctuation than power coal price, with an average price being over RMB 1,000/t, higher by RMB 100-200 than the price in 2016.
Soda ash price
The soda ash production capacity of the world in 2016 is about 65.95 million tonnes, and the consumption is about 57 million tonnes. China has a production capacity of 29.70 million tonnes, amounting for 45% of the global capacity. The capacity in North America is 15 million tonnes, and American Green River natural alkali mine has rich resources. ANSAC is the largest exporter of natural alkali in the world, having an annual export value of 4 million tonnes approximately. First, a largely increased demand for soda ash dense by plate glass production put a pressure to the supply. Domestic soda ash dense production in the period January through October was 13.3602 million tonnes, higher by 2.7% than that of the same period last year; on the other hand, soda ash light production in the same period declined by 6.5% compared with the same period last year. Since the second half of this year, short supply of soda ash dense continued and, at the same time, soda ash light production didn’t have a good market, which made them reduce the production of soda ash light and turn to soda ash dense production and, this doing, in turn, caused a dramatic production drop of soda ash light, some factories only had a monthly production of 400 tonnes or even 200 tonnes. After October, soda ash price in China began to rise high quickly, a rise of RMB 50-100/t for soda ash light, and RMB 100-150/t for soda ash dense. And November witnessed a continuous large price rise much higher than expectation,
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asianglass AG 17-1
with soda ash light having a price rise of RMB 300-400/t, indicating a rise rate of 23.65%, and with soda ash dense having a price rise of RMB 200-300/t, a rise rate of 16.3%. And the reason for such a high rise rate in as follows. Second, there were some obstacles such as delayed shipment from Qinghai and Inner Mongolia, insufficient railway transport facilities, high freight of highway transportation, severe weather conditions, even including collusion of factories to push the price rise. Under the circumstance of short supply, it is easy for the suppliers to take certain measure to add to the situation, and in East China region the factory price for soda ash light of good quality even came up to RMB 1,850/t. Another reason is marketing actions, such as panic rush to purchase, the concept of purchasing at rising price, supplying factories’ measures to push the price further up, even including intentional inventory by certain business man. On the other hand, glass factories of coastal area turned to international market, and in November about 30,000 tonnes of American soda ash was exported to Guangdong Port. And it is reported that another 70,000 tonnes of soda ash will successively arrive, which is helpful to relieve the short supply situation mentioned above. The downstream users of soda ash light have some complaints about the expensive products. Domestic glass factories have a steady purchase order for the whole year, and their production is also stable. Some of the downstream users are able to transfer the product price to further downstream users, for example, transferring the price of sodium metasilicate and sodium sulphate anhydrous to users in the production series. For these users in the production series, their primary work is to ensure row material supply so as to maintain a normal production, and they have no choice but to accept the high price. But some downstream product prices can’t be transferred further downstream, and the production cost is rising largely. And some small users expressed their concern that after completion of the orders they received, if the loss continues to last, they will halt production for an early holiday. The final users of soda ash light have some complaints about the expensive product. Domestic glass factories have a steady purchase order for the whole year, and their production is also stable. When the substantial economy is downturn, a large price rise is bound to make the situation worse for some middle-product factory. While the soda ash factories begin to have improved profit level, with work load increasing recently. Before the New Year, the sodium market can maintain a rising situation, but the continued price rise is giving a pressure to the market after the New Year.
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ANALYSIS: Float glass
Leading container glass producer for cosmetics industry: India & The Middle East Company Piramal Glass Haldyn Heinz Fine Glass HNGL Gerresheimer India Mahmood Saeed Glass Industry Company Saver Glass Frigo Glass Jabel Ali FZCO Majan Glass Pragati Glass LLC Gulf Glass Manufacturing Company
Change of production capacity
Location
Country
Kosamba, Jambasur
India
695 TPD ( India only)
Vadodra
India
330 TPD
Multiple cities
India
4400 TPD
Kosamba
India
25,000 TPA
Jeddah
Saudi Arabia
360 TPD
RAK
UAE
150 million bottles (UAE facility)
Dubai
UAE
320 TPD
Sohar Industrial Estate
Oman
250 TPD
Nizwa
Oman
135 TPD
Mina Abdullah, Industrial Area, Safat
Kuwait
280 TPD
The market conditions began recovery since the second half of 2015 and it encouraged enterprises to recover their production. Currently there are not many newly set up production lines, the increased production capacity is mostly from production lines that finished cold repair. It is estimated that up to November 27th, there are all together 353 float glass production lines throughout China, with a total capacity of 1269 million cases, out of which 238 lines are in operation with a total capacity of 938 million weigh-bows, and this indicates that the capacity efficiency is 73.45%, showing an increase of 3.27% over that of the last year. Excluding the ones out of production due to reasons such as suspension, moving, or hopeless to recover within a few years, currently there are 273 float glass production lines, with a total capacity approximately 1,050 million cases, and the capacity efficiency after adjustment is 88.70%, indicating an increase of 3.93% over that of the last year. Seven new production lines are set up and ignited in 2016 that increased annual capacity by 36 million cases. Fourteen lines are suspended for clod repair that reduced annual capacity by 47 million cases. Twenty-one lines are put in operation after cold repair that have an annual capacity of 78 million cases. Thus this year’s production capacity is increased by 67 million cases, and the increase rate of capacity in operation is 7.79%. We have carried out statistics and analysis over the up-down changes of float glass production lines in 2017, which indicates that most of the lines completed in recent years have been put into operation and there will not be much demand for new lines in the coming years. And in addition, the stricter state policy for environment protection is of a major effect on the up-down changes of production capacity. It is our information that in 2017 there are 47 lines having the conditions for cold repair, with a total capacity of 185 million cases; 15 lines are ready to restart production after cold repair, with a total capacity of 47 million cases; 7 newly set up lines are ready for ignition, having a total capacity of 32 million cases. Decision making for clod repair depends on many considerations, including life of the melting tank, the market price then, and fund for the line and so on. If the market situation in 2017 is good, the financial status of the production enterprises is not too severe, and there is no further stricter policy is issued by the state for environment protection, the production enterprises are willing to extend the life of production lines, therefore, it is our understanding that few enterprise likes to have their lines stopped for cold repair.
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asianglass AG 17-1
Installed Capacity
Industrial policy
On May 18th, 2016, General Office of the State Council issued a document titled Guidance to Building Material Industry for Steady Development, Structure Adjustment and Efficiency Increase (the State Council [2016] No.34), and it instructed that before 2020 further capacity reduction of cement clinker and float glass shall be carried out to came back to a rational capacity efficiency, and for the top 10 cement clinker and float glass enterprises the rate of production concentration shall come up to 60%. The State Council Guidance issued in the general background of state reform on supply side for a healthy development of China’s industry towards a powerful manufacture country and for an upgrading of the building material industry. The State Council Guidance indicates stricter requirement to control newly added production capacity so as to eliminate it from the source, which is to lay a foundation for a healthy further development. The Guidance, on the basis of successful trial operation in some area, indicates more time and room for staggering production peak measures to realize more obvious capacity control seasonally and regionally. It requires to upgrade the product structure of supply, for example, to stop production of 32.5 grade Portland cement and turn to production of cement 42.5 grade and above, to develop high-end glass, upgrade the standard for building energy conservation, to encourage use of Low-E plate glass, hollow glass, safe glass, individualized glass curtain, glass product of photovoltaic and photothermal function, and doors and windows of energy conservation feather to meet the needs of energy conservation buildings. As for merging and reorganization, we don’t foresee much progress in 2017, and we believe that it will take more time for a high degree of industrial concentration. The implementation of stricter policy for environment protection will continue through 2017 and steel industry, coal industry, glass and cement industries all have to bear a high expenditure for environmental control purpose. And we believe that in a certain period of time environment control expenditure is bound to increase for production enterprises, which, we understand, is also a major element to restrict production capacity increase of glass industry.
Price trend
In 2016 the rising trend of spot price for flat glass exceeds people’s expectation at the beginning of the year, and both the extent of rising and the time period it lasted broke the record in recent years, which made the glass production enterprises more confident for profit creation and production capacity increase.
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#GPD2017
ALL EYES ON GLASS.
GLASS PERFORMANCE DAYS 2017 JUNE 28 - 30, 2017. TAMPERE, FINLAND 1
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OCTOBER 31, 2016 First selection of speakers will be done during November 2016. Second deadline for abstracts January 20, 2017. Second selection of speakers February, 2017.
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ANALYSIS: Float glass
On 25 November, 2016, the China glass comprehensive index was 1,070.96 point, an increase of 183.91 point over that of the same period last year. The price index was 1,076.69 point, an increase of 201.66 point over that of the same period last year; and the confidence index was 1048.02 point, an increase of 112.87 point over that of the same period last year. The average price of clear glass throughout China on the day was RMB 1,476, an increase of RMB 276 over that of the same period last year, and the extent of rising is 23%. In January the spot market experienced a period of slack sales as a whole where there was a traditional market status of better sales in south and depressed situation in north, and the large extent of spot price fluctuation affected the market confidence. The northern region was subject to the weather conditions that were not suitable for real estate construction or building decoration, and consequently the number of effective orders actually dropped. While the market sales in southern region were comparatively stable with better sales and a small extent of price rising. And toward the end of January, which was the vacation season of further processing enterprises, the trading firms kept certain amount of supplies in stock, and as a whole, the production enterprises had a quick rising inventory. The price in Shahe area that is deemed as the indication of the spot market had an obvious fluctuation in this month, the price difference between here and the markets nearby reduced obviously, and the sale radius got extended quickly. In February, the market was subject to effect of the Spring Festival with a large reduction, which is a conventional market situation. For this, most of the production enterprises took certain promoting means before the Spring Festival to attract trading firms to keep a bigger stock, but the effect was just so-so. Further, a production accident and the subsequent stoppage in Shangdong Haihua soda ash factory lea to a price rise of soda ash in East China and North China, therefore, production enterprises were reluctant to reduce their price. And after the Spring Festival, many production enterprises raised their price one after another to create a good market atmosphere, but the effect as a whole was not quite clear. One point noticeable is that in East China and Central China regions the desire to have new production lines and more production by cold repaired lines was strong, which was unfavorable for spot price stability or price rise later. In March the market was generally going up with fluctuation, and while the quotation of production enterprises was rising slightly, there appeared some difference among regions. Although the market was going up as a whole, the price going down in Central China region was having certain effect on the market price trend in Sough China, East China and Shahe regions. On the supply side, the fact that while some production lines were suspended for cold repair more and more new lines were seen to be set up suggested that the production enterprises were not lack of market
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confidence but were thinking of exceeding their competitors by means of expanding production scale. Currently, the total inventory of production enterprises and trading companies is slightly less than that of the same period last year, but in general, they are not willing to have increased inventory so as to reduce their business efficiency loss. In April the spot market as a whole changed to have a trend of a depressed South and a strong North. Also subject to the weather, the demand of glass products in Northern market for building decoration was increasing to be better than that of the preceding month, and further processing enterprises received more orders. While in South region the rainy weather was affecting the market, and increased number of production lines were put into operation again after cold repair in South China and Central China regions, which, as a result, quickened the price going down over there. In Shahe region the price rising of building glass was large enough to come up to about 60 Yuan, and both production enterprises and trading companies had a steady reduction of inventory, both production and sales looking good, and the main reason is the increased number of orders in this region for further processing purpose. In May the spot market was so good to exceed the expectation at the beginning of the month, and while the price was going up as a whole, the inventory of production enterprises was also reduced to certain extent. The main reason is the increased demand of glass and glass products for real estate building decoration in May. And one point deserves our attention is the fact that under the situation of spot price largely going up, the pace of putting new lines into operation and some lines for cold repair is quickened. In June the spot price was comparatively steady but was a little lower than that of the preceding month. One reason for this is the declined number of orders due to a busy agriculture harvest around the Dragon Boat Festival, and another reason is the raining season in South that is unfavorable for glass products storage and transportation, which pressed production enterprises to reduce inventory in a hurry by means of sale. Furthermore, the excessive fast increase of production capacity in North China and East China regions in May made the trading companies and further processing enterprises more prudent about purchase. In July the market experienced a slight rising in a general steady situation, and the sales of the production enterprises was better than expectation, having increased production and price as well as reduced inventory. After middle of July the flood in South ended and the market price began to rise quickly. And after recovery of river navigation in Yangzi River, the market price in Central China region also began to rise to certain degree, and the previous situation changed. After the obstacle to road transportation caused by heavy rain was solved, the market demand in
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ANALYSIS: Float glass
North was good with certain price rise. The general market situation was better than expectation, and there was a large price rise even in a slack season. In August the overall market situation was better than expectation, both production and price were increased and the inventory of production enterprises greatly reduced. The large rise of the spot price mostly attributed to reasons such as the production enterprises’ desire for a higher price, the trading companies’ intention to have a bigger storage, and people’s demand expectation from the peak season. Unlike the conventional pattern of the peak season where price rising is from North to South, this year the large price rising started in South China market, and it was quickly followed by Central China market. And after the East China meeting held in middle August, the price in both East China and North China regions also rose quickly, which in turn supported the price rise in South China market, and then a healthy cycle of price rising was formed throughout the domestic market. In September however, compared with August, the market situation was not as good as before. An overestimated market demand plus insufficient processing capability against the received orders resulted in serious adverse effect on the existing market situation. The large price rise by production enterprises in South China provided a good opportunity of long time for other regions glass to take market shares here in Sough China region. Then, a large decrease of the price in South China region, in turn, caused adverse effect on pricing in markets of Central China and East China. Furthermore, the new regulations about highway transportation issued in the second half of September added to the fragile spot market. Then, storage increase of production enterprises plus large decrease of the spot price gave a sudden surprise to the production enterprises. In October both production and sales of the production enterprises were different from that of the last year. The market price was higher largely than last year, but the inventory of production enterprises was much higher than that of the preceding month. Most of the production lines that had ignited before were in normal production. The glass production statistics of January through September by the State Statistics Bureau and statistics of production capacity increase by us ourselves are both quite high. As for the market situation after October, a decline with fluctuation will be the main trend, and the decline in North will be faster than the decline in south due to the effect of climate. The cost of glass production will rise due to possible price rise of soda ash and coal. But one point noticeable is that acceleration for real estate building decoration in some regions can increase the demand for glass to certain extent.
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asianglass AG 17-1
China float performance: 2016 Output 2016
This month
Cumulative in this year
‘000 cases
Growth rate %
‘000 cases
Growth rate %
Nov
41805.1
5.14
436596.3
-0.02
Oct
42377.1
4.36
402142.2
-0.94
Sept
39615.1
0.32
356811.1
-0.42
Aug
39980.6
1.19
321775.6
-2.06
Jul
39884.2
-2.57
273797.7
-1.65
Jun
39798.6
-2.49
237324.6
-5.87
May
38495.3
-4.27
188497.3
-5.44
Apr
37893.9
-5.82
153008.1
-3.26
Mar
41,686.70
-5.89
122194.8
-6.98
Feb
39822.1
-14.7
79915.6
-16.5
Sales This month 2016
Cumulative in this year
‘000 cases
Growth rate %
Sales rate (%)
‘000 cases
Growth rate %
Nov
45726.1
8.18
111.77
436,356.30
-0.07
Oct
40718
-7.97
96.08
398192.7
-1.4
Sept
36479.9
-9.06
92.02
354159.7
0.73
Aug
43021.7
4.22
107.61
324079.3
1.45
Jul
41107.1
4.01
103.07
273724.5
2.18
Jun
40862.2
1.15
102.67
235739.2
0.07
May
39,972.90
0.04
103.84
183473.3
-0.65
Apr
41766.4
-0.02
110.22
147251.1
-0.77
Mar
42612.5
0.79
102.22
110044.9
-1.12
Feb
30387.7
-9.84
76.31
67115.8
-12.95
‘000 cases
Growth rate %
Average price
Increased by*
Increased by**
Nov
38011.5
-13.17
68.26
1.05
14.12
Oct
43,928.40
-13.99
67.21
0.6
9.28
Sept
44889.3
-12.5
66.61
3.73
8.31
Aug
41324.9
-18.92
62.88
3.68
10.24
Jul
43314.2
-18.74
52.2
1.22
6.33
Jun
45198.1
-14.17
57.98
0.93
2.16
May
43600.3
-15.06
57
2.42
1.13
Apr
45955.9
-10.81
54.58
0.84
-2.13
Mar
53834.2
-2.41
53.74
-1.24
-2.45
Feb
53475.2
-2.25
54.98
1.84
-1.51
Stock 2016
Price (RMB/case)
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ANALYSIS: Float glass
Analysis summary
A review of the spot market trend of 2016 suggests that “increased production and price, increased cost, recovered profit, and a quick production recovery” could be an outlined summary to the entire industry. The formation of above trend is closely due to the adjustment on the demand and supply side as well as on the supply side both starting from the second half of 2015. Since the second half of 2015, the adjustment on financial policy and monetary policy, the changes in real estate industry, and adjustment on RMB exchange rate led to a big change for commercial market expectation and demand. And since 2016, due to the effect of production capacity deduction and increased demand, the price change of steel, coal and other products exceeds the major expectation of people in glass industry. And the price of glass is also going well. We are prudent but optimistic about the market trend of 2017. Having experienced the fast growth of 2016, the demand and supply status of glass industry is improved in a certain degree, and is changed from a weak balance to a balance with new challenges. The state adjustment on real estate policy will be certain restriction to the continuity of market demand in next year, and it is our expectation that the demand for glass by real estate market in 2017 will decline, but thanks to the large base number as well as the steady demand in first line cities, the second line cities and third line cities, the decline is likely not big, in other words, it can be a small and stable decline.
As far as the supply side is concerned, the total production in 2017 can be slightly reduced but not by a large extent. On the one hand, the number of new production lines will be restricted and so is the production capacity, and the production capacity increase will be mostly from the old lines after cold repair. On the other hand, most of the production lines put into operation around 2008 are in the condition for cold repair. The adjustment of market price may have certain effect on production capacity decline, while the major factors to decide the change of production capacity are the market price change and fund improvement of production enterprises. About the cost, the cost of glass production in 2017 will rise by certain extent, in a rising pattern from high to low. In the fourth quarter of 2016, cost of soda ash and fuel went up and it gave a pretty big pressure to the economic effectiveness of glass production. And we foresee a continued price rising of soda ash and fuel in the first half of 2017 till the second half when the situation will improve. As for the price, the price level as a whole in 2017 will be higher than that of this year. The demand and supply relation will be in a weak balance status, but on the other hand, the rise of production cost and improvement of business operation as well as improvement of fund statue all will be a support to the spot price. And with the market competition growing mature, the production enterprises will have better acknowledgement about production capacity reduction and efficiency increase.
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AG 17-1 asianglass
47
ANALYSIS: Glass packaging
Lipstick, powd cosmetic consumption drives container demand
Yogender Malik looks at how rising awareness of cosmetic products across the Middle East and Indian sub-continent is having a major impact on packaging glass demand.
I
n order to remain competitive, companies in the cosmetics industry are more than ever, be attentive to changes in the market. In these circumstances, packaging of their products has become one the top priorities for these producers in order to offer product and package differentiation. This factor has resulted in a steady growth of usage of glass in cosmetic packaging in global and Asian countries. Cosmetics sub-segment, the smallest segment of overall container glass market on volume basis is also the most lucrative sub-segment for container glass producers. Although, as compared to other sub-segments, the demand volume from this sub-segment is only at a small fraction of total container glass industry volume, but better profit margins and increased focus on glass packaging by a number of cosmetic producers in last few years has made this sub-segment one of the most sought after for the container glass manufacturing industry. No surprises that a number of container glass producers in the Asia, with activities in the food and beverage industry, are increasing their footprint in the cosmetics segment in recent years. Besides, domestic producers a number of established European cosmetic container glass producers have set up their bases in Asian countries to take advantage of expected huge growth from cosmetic subsegment in coming years.
Market overview
The global production of glass containers in 2015 was 50.63million tons. In terms of revenue, the market was worth $51.76 billion in 2015. The Asia Pacific region leads the market with a market share of 33.7% (16.88 million tons) on the volume basis in 2015. Glass for cosmetic industry at 1.01 million tons per year (figures for 2015) forms a small but important part of the Asian container glass industry. In India and the Middle East, cosmetic container glass production at 193,000 tons/ year forms about 6 % of the total container glass production (figures for India, UAE, Kuwait, Oman, Bahrain, Qatar and Saudi Arabia)
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On percentage basis, cosmetic industry accounts for about 6 % of the entire container glass industry on the volume basis. However, the figure rises to about 9.50 % in terms of value of total container glass production, due to high prices of container glass for cosmetic industry. The cosmetic and perfume glass bottle market is segmented on the basis of product into high-end cosmetic and perfumes, mid-range and low range. The midrange cosmetic and perfumery market is anticipated to register the highest growth in Indian and the Middle East cosmetic and perfume glass bottle market in coming years. By application the cosmetic and perfume glass bottle market is segmented into hair care, skin care, make-up, fragrances, bath and shower and others. Where skin care and fragrances is anticipated to be the major contributor of the cosmetic and perfume glass bottle market. Currently, four sub-segments (body care 17%, facial care 15%, hair care 14% and bodily hygiene 14%) account for 60% of the cosmetic markets. These are followed by the important area of menâ&#x20AC;&#x2122;s and womenâ&#x20AC;&#x2122;s perfumes, with a share of 12%. The remaining 28% comprise a number of areas: oral hygiene, make-up, products for hands and lips, menâ&#x20AC;&#x2122;s products, dermal products for children and gift boxes. Each of these product areas uses a varied range of packaging. 72% of products are used by women and 28% by men. The primary packaging used by the cosmetics sector can be grouped into five main categories: glass packaging, plastic packaging (including flexible laminates), flexible tubes, metal tins and paper wrapping. Glass containers (bottles, flasks, jars, etc.) have a share of 18 % of total primary packaging used for packaging the various cosmetics products in India and the Middle East. Over the last ten years the share of the glass containers has dropped from 24% to 18%. The greatest presence of glass is in the perfume industry, where the bottles cover a share of 89%, glass is also used for packaging hand care products. Some of the important players in the Indian and the Middle East cosmetic and perfume glass bottle market are Heinz-Glas Group Holding, Saver Glass,
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ANALYSIS: Glass packaging
der and paint
Gerresheimer AG, Hindustan National Glass Limited ( HNGL) and Piramal Glass.
Packaging trends
Cosmetic glass sub-segment, which hitherto was a much neglected sub-segment in Indian and the Middle Eastern container glass industry, has gained a lot of importance in the regionâ&#x20AC;&#x2122;s container glass industry in recent years. Taking cue from European industry, where glass packaging for cosmetic industry has a significant value and dedicated producers, container glass producers in India and the Middle East have started to realize the importance of the sub-segment. Alternate packaging materials are posing a stiff challenge for glass in cosmetics packaging industry. For example, cosmetic jars made of plastic are increasingly used by cosmetic producers in the low price segment, where they are appreciated for their low cost, but also in the high-end segment, as technology now allows producing heavy jars with thick walls and more luxury external features.
Euro involvement
Untapped potential, rising disposable income, increased spending on personal grooming and anticipated huge growth in regionâ&#x20AC;&#x2122;s cosmetic industry has made dedicated European cosmetic glass producers to enter Indian and The Middle Eastern markets by setting up their manufacturing facilities in the region.
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Heinz Enters South Asia
One of the oldest companies in global container glass industry, Heinz Glass has entered into South Asian container glass market by forming a JV with an existing Indian container glass producer. Heinz Glas is one of the most recognized names in the container glass production for cosmetic industry. Founded in 1622, Heinz Glas specializes in the production and decoration of glass flacons for perfumery and cosmetics market. The company claims that it offers different methods of decoration and continues to develop new technologies through research and constant innovation. Some of the important offerings of the company are : lacquered in one or several colors whether partial, total or degraded, tinted to acid, tinted to the sand, thermo-engraving, tampo-grafia, silkscreen printing and partial or total metallization. Indian container glass producer, Haldyn and Heinz Glass signed the joint venture agreement for manufacture and marketing of glass containers for the
AG 17-1 asianglass
49
ANALYSIS: Glass packaging
India- Cosmetic Container Glass Demand, Production and imports & exports 2011
2012
2013
2014
2015
120,775.52
126,935.07
132,774.09
139,280.03
147,219.1
+ 4.3 %
+ 5.1 %
+ 4.6 %
+ 4.90 %
+ 5.70 %
112,971.02
118,958.49
125,025.37
132,401.87
141,000.8
Production Growth
+ 3.78 %
+ 5.20
+ 5.10
+ 5.90 %
+ 6.54 %
Export
7,504.70
8,128.62
9,087.40
10,210.06
12,118.04
Import
15.308.1
16,105.6
16,836.1
17089.53
18337.6
Demand Demand growth Production
All Figures in tons
cosmetics and perfumery industries in June 2015. Coming up with an estimated project cost of INR 60 million, each company has invested INR 20 million, while rest 20 million has been funded through borrowings. The new formed company, Haldyn Heinz Fine Glass Private Limited has started the operations in the country. Haldyn Glass is located at Vadodra in the state of Gujarat. The company has an installed capacity of 320 tons of container glass from its two furnaces ( 200 and 120 TPD). Equipped with ten IS machines, the company can produce glass containers from 10 ml to 1000 ml. According to the Heinz Glass management, “With about 400 years experience and tradition, we offer various decoration methods and continues to develop different techniques through constant research and innovation. With our experience, technical ability and innovation, we offer our customers with a one stop providing premium quality, excellent service and all round flexibility.” Speaking to Asian Glass, a key executive at Haldyn Heinz Glass told , “It is true that some of the sub-segments in cosmetic market are slightly down at the moment, but we remain confident about an upcoming rebound. To remain in the race in this global competition between glassmakers, we have decided to enlarge our offers from the high end to mass market. Besides, there are other niches in cosmetics which are growing rapidly, such as foundations and skincare products in general. To meet the needs of this market, we constantly create new offerings.”
SGD Glass Enters India
Leading French container glass producer for pharmaceutical and cosmetics industry, SGD Group has entered into India in 2015 by acquiring a stake in Hyderabad based Cogent Glass. Though, Cogent Glass is a dedicated container glass producer for pharma industry, yet footprints in Indian container glass manufacturing industry has made it easier for SGD to tap into lucrative cosmetic glass industry of India through its plants in Europe.
Gerresheimer
Gerresheimer is another prominent container glass producer, which has entered into Indian market in recent years. The company, which acquired Kosamba, Gujarat based Neutral Glass & Allied Industries in the year 2012 is a major producer and supplier of cosmetics glass from its European operations. Though, Neutral Glass is a producer of pharma container glass, but by acquiring it Gerresheimer has ideally positioned itself in the country to reap benefits from the country’s cosmetic
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container glass market. Gerresheimer produces container glass for cosmetic industry in its plant located at Tettau, Germany and at Momignies in Belgium. Besides offering its first line of perfume bottles to Mercedes, the famous automotive brand, Gerresheimer also supplies container glass to skincare ranges of Yves Saint Laurent, Helena Rubinstein, Lancôme, or Avon, Clarins and L’Occitane, among others. According to the Gerresheimer management, “ In developing and producing cosmetic glass for perfume flacons or cream jars, we place highest demands on our processes and product quality. In the past year, we have developed some 100 new products for cosmetics industry. At the same time, we produce several hundred variants of these different types of glass cosmetic packaging, in some cases applying elaborate finishing technologies such as spray-coating and metallization.”
Major players Piramal Glass
India’s Piramal Glass is one of the largest producer of container glass for cosmetic industry. Besides glass for cosmetics & perfumery (C&P), the company produces glass for speciality food & beverages (SF&B) and pharmaceuticals industries. However, cosmetics and perfumery is a focus area for the Piramal Glass and it accounts for 50% of the total revenue of the company. The company serves some of the leading names such as Lauder, Mary Kay, LMVH and others. The fancy bottles of perfume brands like Pur Desir, Chevignon, Puma Flowing and Dior, also come from Piramal’s furnaces in India. The company has two major container glass production facilities at Kosamba and Jambusar, in the state of Gujarat. The Kosamba facility has six furnaces with a combined capacity of 340 tonnes per day. Company’s three furnaces at this facility are dedicated to cosmetic glass production. Piramal Glass produces type 3 glass for nail enamel, perfumes, skin care, foundations, aroma oils and miniatures in the range from 5 ml to 150 ml at this facility. Company’s other facility at Jambusar is one of the world’s largest installed capacity for cosmetics and pharmaceutical packaging in amber glass with an installed capacity of 355 TPD. It produces feeder coloured perfume bottles at this production facility. Besides India, the company has container glass manufacturing facility in USA and Sri Lanka. The company has a widespread distribution network across Europe,
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ANALYSIS: Glass packaging
Leading container glass producer for cosmetics industry: India & The Middle East Company Piramal Glass Haldyn Heinz Fine Glass HNGL Gerresheimer India Mahmood Saeed Glass Industry Company Saver Glass Frigo Glass Jabel Ali FZCO Majan Glass Pragati Glass LLC Gulf Glass Manufacturing Company
Location
Country
Kosamba, Jambasur
India
695 TPD ( India only)
Vadodra
India
330 TPD
Multiple cities
India
4400 TPD
Kosamba
India
25,000 TPA
Jeddah
Saudi Arabia
360 TPD
RAK
UAE
150 million bottles (UAE facility)
Dubai
UAE
320 TPD
Sohar Industrial Estate
Oman
250 TPD
Nizwa
Oman
135 TPD
Mina Abdullah, Industrial Area, Safat
Kuwait
280 TPD
South America and Asia, which strengthens its presence across the globe. It has its offices located in Germany, the UK, France, Sweden, Egypt, Nigeria, the UAE, Vietnam, Philippines, Indonesia and Brazil. According to Vijay Shah, Managing Director of Piramal Glass, “Some of the most reputed brands have gained from our skill in the field of premium cosmetics and perfumery bottles. The fact that every third nail polish bottle in the world is manufactured by us speaks volumes of our expertise as perfume and cosmetic bottle manufacturers.” He further adds, “We have relationship with 17 out of the 20 top customers, who constitute 80 per cent of global premium market. Any multinational in India if they want anything in glass they buy from us. So bottles for nail polish — L’oreal, Revlon and Tips and Toes — are all made by us. “Ponds’ ‘White Magic’ and ‘Age Miracle’ bottles were crafted here.”
The Middle East
The Middle East Asia has emerged as one of the key markets for container glass industry for cosmetic industry on account of a number of reasons. Markets in Saudi Arabia and the UAE, which together account for a lion’s share of the Middle East cosmetic market have registered huge growth in consumption in last few years. Other countries in the region are also catching up and consumption of cosmetic products is increasing at a very healthy rate in these countries. Saudi Arabia is at the forefront of the regional beauty spend, with the Kingdom set to rack up sales of fragrances, hair care, skin care, colour cosmetics, men’s grooming, and bath and shower products worth US$9.3 billion by 2020. Currently, with a national $5.3 billion spent on cosmetics in 2015 Saudi Arabia is the largest market, but the UAE has the highest per capita spend at $239. Besides leadership in the region UAE is placed at 9th position in global ranking in per capita spend on cosmetic products. With sales of $5.8 billion, fragrances and perfumes were the region’s bestselling product types in 2015, followed by hair care ($4.2 billion) and skin care ($3.5 billion). Contarary to the perception , that only MNC cosmetic and perfume producers are successful in the lucrative Middle East market, a number of local producers have come up in last two decades, giving a boost to container glass consumption in the region. Salim Kalsekar, managing director of Dubai-based fragrance manufacturer Rasasi Perfumes, a company, which is engaged in the production of cosmetics and perfumery since 1979, explains how home-grown brands are dealing with
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Installed Capacity
Major Producers of Cosmetics Glass India Company - Piramal Glass Location - Kosamba and Jambasur ( Gujarat) Products- Container glass for cosmetics industry Markets - Domestic and Exports Others - Piramal Glass is one of the largest manufacturers of flacconage glass for cosmetics industry, with an installed capacity of 1,115 tonnes per day, and sales of more than $200 million worldwide. The company has invested more than $110 million in creation of significant new capacity, and is among the top five manufacturers of perfumery bottles in the world. The company operates two manufacturing plants in India in the state of Gujarat. Piramal’s container glass manufacturing plants at Kosamba and Jambasur are equipped with the state-of-the-art technology from leading European and American technology suppliers. Besides India, the company has two more container glass production facilities in neighbouring Sri- Lanka and USA. With a cumulative production capacity of more than 1100 TPD from its four manufacturing plants located in three countries, Piramal Glass has emerged as one of the largest producers of container glass for cosmetic industry.
strong international competition. “It’s certainly true that international brands are targeting the Middle East, specifically the GCC, as it is a very lucrative market for cosmetics. But, local products are giving these companies a run for their money.”
Saver Glass
One of the most recognized names in container glass production for cosmetic industry, France based Saver Glass has entered into the Middle East by setting up a manufacturing plant in 2013 in United Arab Emirates. Saverglass is one of the top five producers of container glass for cosmetics industry. The company’s products are exported to more than 80 countries. Built with an outlay of Euro 75 million, the UAE factory is built on an area
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ANALYSIS: Glass packaging
of 100,000 square meters. Set up to take advantage of lower cost of production in the region, the UAE factory has an installed capacity to produce 150 million bottles a year. The UAE factory is the first facility by the company outside France. Founded in 1897 in Northern France, Saver Glass is a worldwide specialist in the manufacture and decoration of upscale bottles and offering packaging solutions to groups and brands operating in the premium and super-premium fragrances, cosmetics and wine and spirits categories. The company has three container glass production plants and three decoration facilities in France. Cumulatively ( including UAE) , the company has an installed capacity to produce 400,000 tons of high quality container glass for cosmetics, wine and sprits industry. According to Saverglass, “The UAE site has enabled it to meet the demand in the Southern hemisphere and serve markets including South Africa, Australia and New Zealand.”
Mahmood Saeed Glass Industry Company
Jeddah, Saudi Arabia based Mahmood Saeed Glass Industry Company has become one of the leading names in production of container glass for cosmetic industry. Established in 1992, the company has a current installed capacity of 360 TPD. The company with its state-of-the-art technology provides high quality products ranging from perfume & cosmetic containers, decorative tableware products to glass containers for the food and pharmaceutical industry. Company’s sister- concern, Saudi Perfume & Cosmetic Industry (SPCI), which was the established in 1982,is a leading manufacturer of quality perfumes and cosmetics in Saudi Arabia and wider GCC market. It has fully integrated production facility for perfumes and cosmetics with six combined manufacturing operating units. SPCI produces over 20 million bottles and more than 1,000 product references including perfumes, cosmetics, soaps, shampoos and household products. In addition to supplying most of the demand of SPCI, Mahmood Saeed Glass Industry Company supplies container glass to most of the established cosmetic & perfumery producers in the region. According to Bilal Ahmad, International Sales Manager of Saudi Arabian container glass producer, Mahmood Saeed Glass Industry Company, “Besides perfumery, glass is also suitable for make-up, offering jars for eye shadow and lip gloss, while glass bottles and droppers are ideal for blushers, highlighters and foundations, for example. In skin care, too, glass offers a variety of options for serums, tonics and creams, such as droppers, jars, bottles and vials, to name just a few.”
The future
In future, the fierce competition in cosmetic industry would force the cosmetic and perfumery industry to choose more innovative and better glass packaging solutions which is anticipated to be the driving factor for the Asian cosmetic and perfume glass bottle market. The increased disposable income and growing inclusion of cosmetic and perfumery products into everyday grooming practices is projected to the driving factor for the regional cosmetic and perfume glass bottle market. On the other hand the growing use of other packaging materials such as plastic and metals in cosmetic and perfumery packaging, which have major shares in the price sensitive Asian market is likely to be the major restrain in the growth of the regional cosmetic and perfume glass bottle market.
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Company - Haldyn Heinz Fine Glass Location - Vadodra ( Gujarat), India Products - Container glass for cosmetic industry Markets - Domestic and Export markets. Others - Heinz-Glas GmbH & Company manufactures glass flacons and caps for perfume and cosmetics industry. The company offers customized and decorative flacons and jars; and crystal-white, opal, and colored glass containers. Headquarters in Oberfrankisch Kleintettau, the company produces for “Who’s who” of the perfume and cosmetic industry. Some of it’s customers include Victoria’s Secret, L’Oréal, Estée Lauder, Yves Rocher and Mäurer & Wirtz. The company operates 17 manufacturing sites in 12 countries around the globe. The company offers customised solutions to cosmetic producers as ‘complete packaging’ solutions from a number of German and other locations worldwide. In addition to customized products for customers, Heinz Glass also offer standard bottle lines – Glas Meister Werke, as well as refinements and decorations plus caps and closures. Heinz Glas’s partner in India, Haldyn Glass is a Gujarat based producer of container glass with an installed capacity of 330 TPD from its two furnaces. Engaged in container glass production for more than two decades, Haldyn Glass has recently invested in a state of the art manufacturing production line. Company - Saverglass LLC UAE Location - Ras Al Khaimah ( UAE) Products - Container Glass Markets - Domestic and Export markets. Others - France based, Saverglass is one of the leaders in the design and manufacturing of high quality glass bottles for cosmetics and wine industries. With a capacity of 400,000 tons of glass per year, the company operates 3 factories located in France, and one furnace based in the United Arab Emirates in Ras Al-Khaimah. Saverglass offers bottles, decanters, hocks, miniatures, bordelaises, bourgogne, and new concept products for premium and super premium wine and spirits, fragrances and cosmetics segments. The company was formerly known as Societe Autonome de Verreries SA and changed its name to Saverglass sas in 1990. The company was founded in 1897 and is based in Feuquieres, France with operations in the premium spirit and high-end wine production zones in Europe, the United States, the Middle East, and Latin America, as well as distribution subsidiaries and offices worldwide.
Company - Mahmood Saeed Glass Industry Company Location - Jeddah, Saudi Arabia Products - Container Glass Markets - Domestic and the Middle East Others - Established in 1992, Mahmood Saeed Glass Industry Company is one of the leading producers and suppliers of glass containers to cosmetic producers in Saudi Arabia and the Middle East. The company has an installed capacity to produce 360 tons of glass products per day using latest state-of-the-art technology at its Jeddah plant. Mahmood Saeed Glass Industry supplies glass containers to the most of the renowned cosmetic producers in Saudi Arabia and greater Middle East region. A large share of the company’s container glass production goes to its sister concern, which is one of the largest perfume producers in the region.
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ANALYSIS: Automotive
The long and winding road autoglass makers face political challenges
AG looks at how developing political tensions globally may have major effects on the supply, demand and place of manufacture for many of the world’s leading carmakers, and hence the consequent effects on the glass supply chain.
C
ao Dewang became a billionaire by making glass for the world’s top carmakers, but his recent decision to move part of his operations to the United States has some asking whether the days of China as a manufacturing haven are over. In The Beijing News in late January, Fuyao Glass chairman Cao, 70, was quoted as saying the US was a cheaper and better place to make glass because taxes were much lower than in China. His comments come as some companies are reconsidering their p resence in China, and as US president-elect Donald Trump is trying to lure firms back to the US under his “Make America Great Again” slogan. Meanwhile, the Chinese government is levying higher taxes and increasing social welfare payment obligations on companies, making it harder to run a factory. “I just told the truth and spoke out about the problems,” Cao said, explaining eneral his decision to invest US$1 billion in the US, including taking over a former G Motors plant in Dayton, Ohio. He said manufacturing businesses in the mainland paid about 35 per cent more in taxes than their counterparts in the US, and value-added tax had become the biggest burden for companies. Ironically, the central government has tried to portray its VAT reform as a tax-cutting move, saying it translated into a 500 billion yuan (HK$558 billion) reduction in burdens on businesses. But according to Cao, the high taxation rates have made profits in manufacturing “very thin”. Even though wages for a factory employee in the US were about eight times higher than for those in China, the US remained an attractive place to invest, Cao said. “I just want to remind the government and businessmen and let everybody be aware of the risks, telling them to be careful” of the country’s weakening cost advantages, he said. Many good firms had relocated to Europe and the US while small and medium-sized enterprises had moved plants to countries such as Vietnam and
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Cambodia, where materials and labour were cheaper, he said. Already, there are signs of manufacturing losing momentum. Capital spending from the private sector rose just 3.1 per cent in the first 11 months from a year earlier, compared to an investment growth rate of 20 per cent by the state sector. Observers have said the nation’s US$10 trillion economy is becoming increasingly subject to the whims of state enterprises and state intervention, forcing many private businesses to move abroad. Niu Li, a researcher at the State Information Centre, a think tank affiliated with the National Development and Reform Commission, said Chinese companies had to face rising costs in labour, environmental protection and even costs in dealing with bureaucracy. “It is fair to say, apart from the direct labour cost advantages, Chinese enterprises have heavier operational costs than their peers in the US,” Niu said. Zhao Yang, chief China economist at Nomura, said rising land prices had also pushed up manufacturing costs in China, and competitiveness had become a greater concern than tax rates. “Advances in technology and market competition are needed to move China up the industrial chain and improve its manufacturing advantages,” he said.
Thailand: a market under pressure?
Honda Motor will halt one of its three automobile assembly lines in Thailand by the end of March, a move that amounts to a capacity reduction in a market short on growth. One of the two lines at the Japanese automaker’s plant in Ayutthaya Province, each of which can roll out 150,000 vehicles a year, will go idle. Honda’s annual production capacity in Thailand will fall to 270,000 vehicles, narrowing a wide gap with output. Thailand is Honda’s main production hub for southeast Asia. Beside the Ayutthaya plant, Honda also has a factory in Prachinburi Province with an assembly line capable of making 120,000 units annually.
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ANALYSIS: Automotive
HONDA WILL HALT ONE OF ITS THREE AUTOMOBILE ASSEMBLY LINES IN THAILAND BY THE END OF MARCH
Most auto plants operate on two shifts -- day and night. But Honda has been running all three Thai lines on just one shift, with its 2016 Thai output coming to only 200,000 units -- less than half of capacity. This makes for an inefficient use of the plants’ capital. This year, the company plans to build 220,000 autos in Thailand, so it has decided to stop one line. All of the roughly 5,000 workers at the two plants are expected to keep their jobs. The Brio and another compact model assembled at the first line in Ayutthaya will be moved to the second line, which will then build a total of eight models, including sport utility vehicles, in day and night shifts. The Prachinburi plant, which makes models that are selling briskly, will operate on two shifts from the end of January. Thailand’s market for new autos peaked in 2012 at 1.43 million units thanks partly to generous tax breaks for buyers. But sales quickly fell after these incentives ended, and now hover between 750,000 and 800,000 units a year. Total domestic car sales are expected to rise for the first time in five years in 2017, by 4.06 percent to 800,000 units, Toyota Motor Corp’s Thai unit said on Tuesday, citing new models and strong government spending among factors. Toyota, which commands about a third of the Thai market, predicted its own 2017 auto sales in the Southeast Asian nation to rise 8.1% to 265,000 vehicles from last year, Kyoichi Tanada, president of the Toyota Thai unit, told reporters.
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The end of a five-year restriction on people selling cars bought under a government subsidy scheme will also help boost car sales, he said. Overall domestic car sales contracted 3.9% in 2016, the fourth straight year of decline, hurt by weak consumption and the fading effect of the car scheme that ended in 2012, when sales surged. Mr Tanada said 2016 was “a tough year” for the Thai auto market, despite government measures to spur economic growth. The military government has introduced stimulus measures and ramped up investment in infrastructure projects in a bid to revive growth in Southeast Asia’s second-largest economy, which has lagged peers. Thailand is a regional production and export hub for the world’s top carmakers, and the sector accounts for about 10% of the nation’s gross domestic product. Mr Tanada said the trade protectionism of the United States should not have an impact on the firm’s exports and imports in Thailand. “We don’t have any direct business here with the US whether it’s the export or imports there,” Mr Tanada said, adding about a third of its exports from Thailand go to the Middle East region. However, car exports from Thailand are expected to drop 11% to 282,000 units this year, largely due to fewer orders from Middle Eastern countries as oil prices stay low, he said.
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ANALYSIS: Automotive
Japan: external pressures
Foreign vehicles now hold a record share of the Japanese auto market even as U.S. President Donald Trump assails what he sees as unfair access hurdles, a sign that the struggles of some car companies have more to do with appeal than legal barriers. Foreign automakers sold 295,114 vehicles in Japan last year, up 3.4% from 2015, according to the Japan Automobile Importers Association. Foreign imports’ share of all registered vehicles rose to 9.1%. But American cars have not shared in this growth. Ford Motor pulled out of the Japanese market in 2016. General Motors sells only around 1,300 vehicles a year here. U.S. automakers accounted for more than 30% of Japan’s vehicle imports in 1995, but last year that figure was around 5%. Even hot-selling European makers have complaints about the market, one popular target being Japan’s more favorable tax treatment for minivehicles known as kei cars. Germany, which unlike the U.S. boasts strong small-car offerings and advanced environmental technologies, has repeatedly sought redress through channels such as Japan’s economic partnership agreement with the European Union. Japan levies no tariff on auto imports. But hurdles such as unique fuel economy standards pose a challenge for foreign players, according to the JAIA, which is calling for a review of Japan’s technological and environmental standards. Trump’s administration has recently made much of the fact that Japanese automakers control more than 30% of the American market while U.S. automakers have a scanty presence in Japan. Trump himself has claimed this country makes it “impossible” to sell American cars. Yet Japanese manufacturers have met the demands of the American market and bolstered U.S. production accordingly. Their American counterparts, meanwhile, have pulled away from the Japanese market, skipping the annual Tokyo Motor Show since 2009, for example. “There are many automakers in Japan, and competition here is fierce -- if you can’t come up with attractive offerings, you won’t make it,” Audi’s Saito said. It goes without saying that U.S. makers need to polish their cars’ appeal. But Japan’s government and business leaders also need to assure the world that this country’s auto-market policies are just, and that Japan is open for business to all who can attract buyers.
China: growth spurts
The Chinese market for new automobiles enjoyed double-digit growth last year, an industry group reported in January, as consumers took advantage of a smallvehicle tax break and Germany’s Volkswagen reclaimed the throne. Total sales rose 13.7% on the year to 28,028,200 domestically produced autos on a factory shipment basis, including commercial vehicles and exports, according to the China Association of Automobile Manufacturers. Passenger cars shot up 15% to 24,376,900 units, while commercial vehicles climbed 5.8% to 3,651,300. Growth stood out for passenger cars qualifying for the tax incentive launched in late 2015.
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The growth was the strongest since the 13.9% of 2013 and kept China as the world’s No. 1 auto market for an eighth year. VW, its management shaken by the diesel emissions cheating scandal, nevertheless snagged the top spot back from General Motors. The American giant fell short of overall market growth as its sales climbed 7%. South Korea’s Hyundai Motor, the No. 3 seller, faced intensifying price wars with Chinese competition. Its sales grew 4.6% -- the slowest among major automakers. Japan’s Nissan Motor came in fourth, followed by U.S. automaker Ford Motor. Honda Motor claimed sixth place, and fellow Japanese automaker Toyota Motor seventh. Great Wall Motor jumped 26% to 1.07 million vehicles, becoming the first Chinese automaker focusing solely on its own brands to break the 1 million mark. Sport utility vehicles sold particularly well. For 2017, the association sees sales growing roughly 5% to 29.4 million. This despite the extension of the tax break, originally slated to expire at the end of 2016. Nissan Motor has begun auto production in Myanmar, where sharp growth is expected in the new-vehicle market thanks to changes in regulations. The Japanese company said Wednesday it is now assembling the Sunny mainstay sedan at a plant of local partner Tan Chong Motor (Myanmar). The partners plan to build a few hundred units a year for sale within Myanmar. Nissan started selling vehicles in Myanmar in 2013. The Tan Chong facility building the Sunny has an annual capacity of a few hundred units. In 2016, the partners secured land to build a new plant in the Bago region, not far from Yangon. The factory’s construction will begin by the end of this year, with a goal of opening in 2019 with an annual volume of 10,000 units, Nissan said. Related investment is seen coming to $50 million. The Myanmar government tightened import restrictions on used vehicles this month to improve traffic safety and attract more automotive manufacturers to the country. The move is expected to propel expansion of the new-auto market. Nissan hopes that local production will put it ahead of the game in this small but booming market. Rivals Toyota Motor and Ford Motor also operate in Myanmar. And Suzuki Motor in December began constructing a new plant in the Thilawa economic zone near Yangon.
Major changes
However, automakers operating in China are bracing for the possibility of a seismic shift in 2018, when the government plans to begin restricting production of environmentally friendly vehicles even while introducing strict new rules on sales. “Everything is a mess,” an executive at a Japanese automaker said. “We need to seriously rethink our business in China.”
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ANALYSIS: Automotive
Philippines outlook
Last November, the Philippine automobile industry, buoyed by first semester sales, raised its 2016 total sales target from 350,000 units to 370,000 units. The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) saw the higher target as a stepping stone towards achieving “Vision 2020,” the industry’s goal to sell 500,000 units by 2020 mainly through the Comprehensive Automotive Resurgence Strategy (CARS) program. CARS is the government program that would revitalize the auto industry by attracting fresh investments worth $1.2 billion, generating some 200,000 new jobs, and propelling economic activity estimated at P300 billion. Last week, CAMPI announced that together with the Truck Manufacturers Association, it had sold 359,572 vehicles in 2016, up 24.6 percent from the 288,609 units sold in 2015. Even though this did not quite meet the 370,000 target, the group of 15 auto manufacturers was confident that it would be achieved when CAMPI sales are combined with the total sales chalked up last year by the Association of Vehicle Importers and Manufacturers (AVID). Their bullishness paid off when AVID released last Monday the full year sales report of its 10 members: 93,179 vehicles sold in 2016, a remarkable 60 percent growth over 2015’s 58,256. AVID’s report pushed up total industry sales to 417,356, way above the 370,000 goal. Rommel Gutierrez, CAMPI president and Toyota Motor Philippines Inc. vice president, said that the association was glad to have surpassed the sales target. “Successful introductions of new models, complemented by various events and promotions, enabled us to meet the increasing customers’ demands in an expanding Philippine market.” Ma. Fe Perez-Agudo, AVID president and Hyundai Asia Resources, Inc. president and CEO, said: “2016 was indeed a banner year for the automotive industry as AVID sales surged with an impressive 60 percent growth. As such, AVID looks forward to 2017 with limitless possibilities and opportunities, as we continue to delight the Filipino market with an array of innovative and value-laden products and services.”
A looming issue
Although a dark cloud is looming over the industry in the form of a proposed tax reform package endorsed by the finance and transportation departments that will increase excise tax rates on new car purchases, CAMPI and AVID still hope to attain their Vision 2020. Meanwhile, the 2016 sales reports of CAMPI and AVID show increasing customer preference for light commercial vehicles (LCVs) over passenger cars (PCs). In the CAMPI sales report, LCVs cornered 64.43 percent market share compared to 37.04 percent for PCs while in the AVID report, LCVs accounted for the bulk of sales with the LCV segment growing by 60 percent. The strong demand for LCVs—sport utility vehicles, minivans, multipurpose vehicles and pickup trucks—is traced to the declining price of oil last year. But with pump prices increasing almost every week now due to the recent decision of petroleum exporters to cut production, consumers may give fuelefficient, affordable PCs a second look. However, the grand total number of 452,751 units reported for 2016 have been bloated by including twice the sales numbers of Ford Group Philippines, Inc. (FGPI) and Auto Nation Group (ANG) in the counting? The question is a valid one since both the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Association of Vehicle Importers and Distributors (AVID) claim Ford and ANG as their members. The 452,751 grand total was arrived at by adding the 359,572 units reported sold by CAMPI in 2016 and the 93,179 vehicles reported sold in 2016 by AVID. In both the CAMPI and AVID 2016 sales reports, Ford sold a total of 33,688 vehicles in 2016. But there was a difference between the two groups regarding ANG’s 2016
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India: slides as money issues hit
Passenger vehicles sales at India’s top three automakers slipped in December despite an aggressive sales push to beat the year-end sluggishness and the impact of demonetisation of high-value banknotes. However, firms with a relatively smaller base and new models in their line-up saw sales advance at a brisk pace over the year-ago period, showed monthly sales data released by auto firms on Monday. Two-wheeler firms could not overcome the impact of demonetisation and most companies, particularly those with higher rural sales, saw steep declines in numbers. Passenger vehicle sales at Mahindra and Mahindra Ltd, market leader in utility vehicles (UV), dropped 8% to 18,197 units over the year-ago period. Pravin Shah, president and chief executive, automotive sector at the firm attributed the lower sales to the “short-term effects of demonetisation as well as reduced and postponed purchase decisions”. But the fall in Mahindra’s volumes was less than what analysts expected. “Stronger than estimated automotive segment performance has surprised us as our checks suggest UV sales have seen a sharp impact,” said Nitesh Sharma, analyst at PhillipCapital Pvt. Ltd. Sales at Maruti Suzuki India Ltd and Hyundai Motor India Ltd fell 4% each during the month, the companies said. Typically, December is a slow month for car sales as buyers tend to postpone purchases to the new year. For the same reason, companies tend to lure buyers with attractive discounts and offers. This time around, with demonetisation prompting buyers to curtail purchases of discretionary items like automobiles, carmakers had to go the extra mile to attract buyers into showrooms. Besides discounts, most of them offered zero down payment schemes. Such schemes, however, only partially helped to drum up volumes, said a Maruti dealer who spoke on condition of anonymity. In a research note on 28 December, analysts Kapil Singh and Siddharth Bera of Nomura International, wrote that they expected December sales (dispatches to dealers) to be impacted by a sharp decline in retail sales due to demonetisation, and inventory de-stocking by companies to clear off 2016 inventory. “Our channel checks indicate that rural retail has been impacted more (double-digit decline) compared with the urban segment, due to the liquidity crunch. They expect sales to pick up only by February-March 2017, when the cash availability improves. We expect strong double-digit growth by H2FY18F, off the low base,” said Singh and Bera. Helped by new models and a low base, sales at Tata Motors Ltd, Renault India Pvt. Ltd, Toyota Kirloskar Pvt. Ltd and Nissan Motor India Pvt. Ltd rose at a brisk pace. After hitting a multi-year high in September, passenger vehicles sales advanced at a tepid 1.82% in November, the slowest since February 2016, industry body Society of Indian Automobile Manufacturers (Siam) said on 9 December. Faced with the impact of demonetisation, two-wheeler market leader Hero MotoCorp Ltd’s December sales skidded 34% to 330,202 units from a year earlier. The firm’s manufacturing facilities at Gurgaon, Neemrana and Haridwar were closed between 26-31 December for annual maintenance, it said. Motorcycle volumes at Bajaj Auto Ltd dropped 11% to 106,665 units. Sales at TVS Motor Co. Ltd also fell 8% to 153,413 units, inclusive of scooters’ sales. S. Ravikumar, president-assurance and business development at Bajaj Auto, said the two-wheeler industry contracted 25% in December compared with last year, the steepest in many years. The impact, he added, was more pronounced in rural pockets. The Asian Development Bank (ADB) on 16 December reduced India’s growth forecast for the current fiscal to 7%, from 7.4% estimated earlier, on account of the effect of demonetisation.
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ANALYSIS: Automotive
Myanmar: a future bright spot
Although it has a population of 51 million, only 5,000 new cars were sold in the Southeast Asian country formerly known as Burma during the last financial year. “The future is very good, potentially. But right now it’s a very primitive market,” says Htoo Aung Lin, executive committee member of the Authorized Automobile Distributor Assn., which represents Myanmar’s new-car industry. Having only a tiny assembly base, the country’s vehicle market for the time being essentially consists of imports. That this situation even exists is something of a turnaround. Car imports effectively were banned under the military regime until September 2011. A half-million cars were imported during the previous quasi-civilian government’s 5-year tenure that ended in April. This sudden influx of vehicles has caused congestion in the commercial capital of Yangon, as well as a number of arguably misguided policies designed to lessen it. For instance, Yangon’s municipal authority in January 2015 introduced a policy requiring applicants for car-import permits to prove they have a parking space. The policy apes similar rules that apply in Japan, the source of most imported vehicles in Myanmar. The policy created a black market in parking-permit recommendation letters, which cost applicants and estimated 700,000 kyat ($590) each. When Myanmar’s first democratically elected government in 50 years came to power in April, it did so on an anti-corruption platform. A government committee announced June 20 it would allow certain commercial vehicles to be imported without permits. Passenger cars, however, remain subject to the permit requirement. “It’s a rough patch we’re going through and businesses are suffering,” says Michael Rudenmark, managing director-automotive at Yoma Strategic Holdings. The Singaporelisted local company is the Myanmar importer and distributor of Volkswagen vehicles and Bridgestone tires and distributor of Mitsubishi vehicles. Rudenmark predicts sales will be down 20% this year compared with 2015, adding it is too early to tell whether the new government will be more businessfriendly than its predecessor. Other industry experts say they are optimistic the new government will adopt longer-term policies that are properly enforced and which will promote sustainable growth of new-car sales. “I’m sure the new government doesn’t want Myanmar to keep being a dumping ground for used Japanese vehicles,” says AADA’s Htoo Aung Lin. Soe Tun, president of the Myanmar Automobile Manufacturers and Distributors Assn., which acts as a bridge between policymakers and the private sector, says Japanese regulations are ineffective in the context of Myanmar. “In Japan, authorities will go to a car owner’s house to check the address registered. In Yangon the permits are fake and there’s no public or private parking.” The MAMD submitted 16 proposed solutions to lessen traffic congestion to the government two months ago, but none have been implemented. Soe Tun
says up to 80% of vehicle sales in the country take place in Yangon, whose population is about 5.2 million. Another issue that ultimately may encourage new-car sales is that many imported used cars are right-hand-drive Japanese brands. As a former British colony, motorists in Myanmar drove on the left side of the road until 1970, when the superstitious former dictator General Ne Win changed the law overnight because his astrologer believed the country had moved too far to the political left. “The biggest challenge for the importers and distributors of new (left-handdrive) cars and trucks is primarily used-car imports,” says Mike Pease, general manager-Ford distribution at Capital Automotive in Yangon. “While there have been some moves to curtail (used RHD) imports on the basis that they are clearly unsafe and do not meet the legislated left-hand-drive requirement, progress has been slow.” Chevrolet is keeping a close eye on these developments, having opened one of its largest showrooms in Southeast Asia in November 2014 through a joint venture between Singapore’s Alpine Group and Myanmar’s AA Medical Group. According to General Manager Samuel Eaks, the company’s 250 deliveries last year made it Myanmar’s No.2 new-car seller, sandwiched between Mazda and Mercedes.
THE VIETNAMESE GOVERNMENT HAS OFFICIALLY PROMOTED THE AUTO INDUSTRY WHILE SIMULTANEOUSLY RESTRICTING ITS ONLY MARKET
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Room to grow
“I wouldn’t say Myanmar’s market is crowded with brands yet, but it’s becoming more so day by day,” Eaks says. When he came to Myanmar two years ago, Eaks says, newly sold vehicles comprised less than 1% of all registered passenger and commercial autos. Data from the country’s Road Transport Administration Dept. shows new cars’ share has grown to 3%. Many in the industry complain the automotive sector is overtaxed. “It seems that the government sees the car industry as an easy target for collecting tax,” says an industry source who asked to not be named. Taxes on commercial vehicles are comparatively lower than those on passenger vehicles, in part because Myanmar’s economy is driven by agriculture. “The new-vehicle segment is 70:30, with 70% being commercial and 30% are passenger,” Rudenmark says. As for vehicle manufacturing, Myanmar’s proximity to established major production hubs such as Thailand makes the potential for local assembly negligible. “You have countries manufacturing cars next door and free trade (in the ASEAN regional single market) soon – why would you move all that just to please a very small market?” Rudenmark asks. That said, about 800 Suzuki vehicles are assembled annually in Yangon and Nissan is building an assembly plant in Bago, 56 miles (91 km) from Yangon. “The investment required in local assembly requires a combination of a strong domestic sales base together with supportive government investment policies,” says Ford’s Pease. “At this stage, the size of the market for LHD new cars is small, which makes the business case challenging.”
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ANALYSIS: Automotive
Brexit: the auto glass challenge
The automotive industry in Asia is busy weighing up the implications of last year’s decision by the UK to leave the EU - whether the outcome of the referendum represents an opportunity for their businesses or in fact a threat. The impact so far in terms of currency fluctuations has been significant. The first question asked is whether there will be a significant fall in vehicle demand in the UK and Europe in the coming months and years as a result of “Brexit”. Political leaders worldwide, international institutions and global companies in the months leading up to the referendum were quick to warn of the hugely adverse economic implications a Brexit vote would have on the UK and EU economies, and even beyond. Economic growth in the region no doubt will be affected by the uncertainty surrounding future UK trade relationship with the EU, particularly if it takes between 5-10 years to reach the necessary trade agreements as feared. Domestic and foreign direct investment (FDI) in particular will likely slow during this period of uncertainty, with inevitable implications on corporate spending, employment, consumer confidence and ultimately consumer spending. To better analyse what’s at stake for the Asian automotive industry, it is necessary to dive into some essential stats. Last year a total of 15.8 million new motor vehicles were sold across the 28 EU states, according to data collected by the association of European automobile manufacturers (ACEA). The UK market alone accounted for almost 3.1 million units, or close to 20% of the EU total, and was second in size only to Germany - where some 3.5 million vehicles were sold last year. Almost 2 million Japanese branded vehicles were sold in the EU last year. South Korean companies sold a further 374,000 vehicles, while sales of other Asian brands, including Chinese, were negligible. Vehicle manufacturers such as Toyota, Nissan, Honda and Hyundai-Kia have already invested in significant production capacity in the EU. But overall, Asian manufacturers still depend heavily on exports from Asia. A total of 1,292,000 vehicles where imported into the EU from Asia last year, including 480,000 from Japan; 376,000 from South Korea; 242,000 from China; 99,000 from India; and 95,000 from Thailand. A large part of exports from Thailand were also Japanese brands, while exports from India were largely Japanese and Korean brands. This dependence on exports leaves the Asian automotive industry highly susceptible to swings in currency valuations, with consequences for revenues, local competitiveness and earnings. Long-term investment planning and purchasing strategies are important parts of currency hedging. Japanese vehicle manufacturers have been caught out by the rising value of the yen. The yen has appreciated by over 20% against the British pound since the beginning of the year, including a 14% jump immediately after the Brexit result was announced. Against the euro, the yen is up just 10% year-to-date. Exports from Japan account for around 25% of Japanese brand sales in the EU. This is down from around 32% just five years ago, but still significant nevertheless. Some Japanese manufacturers are more exposed than others to the strong yen and will be under significant pressure to localize production in the EU. For other major vehicle exporting economies, currency fluctuations have been more muted. The Chinese yuan, Korean won, Indian rupee and Thai baht are up by around 10% on average against the British pound year-to-date, but are largely flat against the euro. On the recent currency valuation alone, the UK has become a more attractive investment location for Asian vehicle manufacturers since the beginning of the year. If most of the doomsayers are correct, and the pound continues to slide, the UK will become even competitive in the coming years. Access to the EU’s markets remains a key factor affecting decisions, however. Potentially, the EU could impose a post-Brexit 10% duty on imports from the UK, the current tariff applied to non-EU countries, which would no
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doubt be reciprocated. Europe automakers have the most to lose if tariffs are applied, particularly if the pound depreciates further against the euro. Last year, more than 2.1 million EU-made vehicles were sold in the UK, according to the UK’s Society of Motor Manufacturers and Traders (SMMT), including 962,069 vehicles from Germany alone. On the other hand, the UK exported a total of 747,000 vehicles to the EU last year, or around 60% of its total exports. A further 480,000 were exported to markets outside the EU. The weak pound has made UK products more competitive globally - in the UK, in the EU and further afield in markets such as China and the USA. If import tariffs are applied between the UK and the EU, Asian automakers may see this as an opportunity to gain some useful market share both in the UK and in the EU. Given the size of the UK vehicle market within the EU, the likes of Hyundai-Kia and some of the smaller Japanese brands, for example, along with their suppliers may find it necessary to hedge their European operations with production facilities in the UK. Local content of UK vehicles already has increased significantly in the last five years, according to some reports, which means more component production in the UK. This trend will no doubt continue if the pound continues to slide. On the flip side, currency swings are unpredictable and if the UK does well out of Brexit the British pound could well appreciate against the euro in the medium and long term. Hence the need for an effective hedged production strategy.
Vietnam: booming at last
After many years of slow growth and stagnation the last couple of years have seen a significant boom in car sales in Vietnam. The country most known for its staggering motorbike population now appears to be rapidly heading for the age of the automobile. What has caused this change of fortunes for the auto industry, and will this new trend create a strong domestic auto industry in Vietnam? The car market in Vietnam saw an exceptional 2016, with sales for the first quarter of the year up 38 per cent compared to the same period last year. And that is keeping in mind that 2015 was a record-breaking year, reaching 244,914 sold units according to the Vietnamese Automobile Manufacturers’ Association. Some would say it was about time the market started taking off. Foreign manufacturers have been in Vietnam since the mid-1990s, seemingly waiting for this moment. But, overall, the car market has been growing slowly. Vietnam has developed into a country of motorbikes. Motorbikes now number about 45 million nationwide, and play an essential role both in the economy and for everyday mobility all across the country. The car has so far had a disputed position in Vietnam. The Vietnamese government has targeted car manufacturing as a ‘spearhead industry’ — one of the areas set to lead the country’s quest for a more value-added industrialisation. Yet, while car import taxes have understandably been high in light of this goal, domestically produced cars have also been subject to a range of frequently changing taxes and fees due to the need for state revenue as well as concerns about urban congestion. This has made cars very expensive and has led to a situation where the Vietnamese government has officially promoted the automobile industry while simultaneously restricting its only market. International markets are not an option as production costs are too high for Vietnamese cars to be competitive exports. As has been argued elsewhere, the policy regime governing the Vietnamese automotive industry is confusing and the car has held a contradictory position as both a development driver and dilemma. Why, then, is the car market suddenly booming?
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ANALYSIS: Automotive
The simplest answer is economic growth and stability. After some years of slower economic growth, the Vietnamese economy is looking stronger again, and Vietnam’s income per capita is reaching a stage where increasing car ownership is to be expected. This provides people with the confidence to make the significant investment a car represents for most Vietnamese. There are also other factors that make cars a more tempting option, such as improvements in infrastructure, the worsening of both traffic and air pollution in cities (making the car a safer and ‘healthier’ option) and, importantly, the increasing social normalisation of car ownership. Owning a car seems to now occupy a central position in the aspirations of the country’s rapidly growing middle class. So do increasing sales indicate that Vietnam is becoming a car producing country? There are few reasons to believe this is the case. Vietnam is at best becoming an assembling country, as the manufacturers located in Vietnam use few locally made parts. The failure to develop local supporting industries has been the biggest disappointment in the Vietnam auto industry saga so far. While the majority of cars sold in Vietnam are assembled within the country, imports of completely built units experienced the fastest increase last year and represented about 30 per cent of total sales. So far this year, though,
Trumped up demands?
A Donald Trump tweet about Toyota Motor's production plans has sent shock waves through corporate Japan and across Asia, potentially opening the door for wholesale revisions of North American business strategies. Toyota intends to open a $1 billion plant in Mexico in 2019. However, in a tweet on Jan. 5, the president-elect said "NO WAY" to the idea of Toyota using the facility to export Corollas to the U.S. He said the company should either build the facility in America or expect to pay a "big border tax." Trump has unleashed plenty of rhetorical ammunition on manufacturers who make products in Mexico for sale across the border. Prior to the Toyota tweet, there was little sign of concern in Japanese business circles. "If high import tariffs are slapped on cars being imported into the U.S. from Mexico," one auto executive said, "then General Motors and Ford Motor will be left in a bind." But after Ford, seemingly bending to the pressure, announced on Jan. 3 that it was scrapping plans to build a factory in Mexico, Trump turned his attention to Japan's top automaker. This is giving many corporate players pause. "Mexico presents a risk" when it comes to new investment, Yoshimitsu Kobayashi, chairman of the Japan Association of Corporate Executives, said on
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imports have slowed down due to a new special consumption tax on imported cars. As a WTO member the government is now using its remaining policy space to favour domestic automobile production and assemblage. But the struggle against imported cars is likely to get tougher. As part of their ASEAN Free Trade Area commitments Vietnam will have to remove all tariffs on imports from ASEAN in 2018. This will open the market for imports from car producing countries such as Thailand, Malaysia and Indonesia. These changes are likely to lead to another boom in car consumption, but it will require some smart manoeuvring by manufacturers and the government to ensure that these cars to be manufactured or even assembled in Vietnam. It is important to keep in mind that — for now at least — Vietnam remains a country of motorbikes. After some years of stagnation the motorbike market experienced growth in 2015, reaching close to 3 million units sold. While many would expect the entrance of cars to lead to motorbikes being disregarded, so far Vietnamese consumers tend to keep both motorbikes and cars. In Hanoi, for example, it is not uncommon for a well-off household to own one or two cars and four or five motorbikes. It is too early to tell whether this trend will continue but, for now at least, the motorbike market by far outcompetes the emerging car market. This is perhaps bad news for the auto industry, but good news for urban mobility in Vietnam. Jan. 6. Yorihiko Kojima, senior corporate adviser at Mitsubishi Corp., was similarly unnerved. "The world will become a different place" after the real estate mogul's inauguration on Jan. 20, he said. Automakers took a beating in the Tokyo stock market on Jan. 6, with Toyota sinking 1.7%. Nissan Motor, which has the largest Mexican production base among Japanese carmakers, fared even worse, skidding 2.2%. Mazda Motor fell 3.2%. Toyota stressed in a statement that "production volume or employment in the U.S. will not decrease as a result of our new plant in Guanajuato, Mexico." Speaking at the North American International Auto Show in Detroit on Jan. 9, Toyota President Akio Toyoda announced that his company will invest $10 billion in the U.S. over five years to produce new models and boost productivity -- an apparent nod to the pressure to create jobs in America. The Mexican facilities of precision motor maker Nidec could redirect their output to South America, Chairman and President Shigenobu Nagamori said on Jan. 6, adding that the company "can also export to the U.S. from China and Europe." Nagamori suggested he will look into expanding parts production in the U.S., too, if more cars wind up being produced in the country.
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SPECIAL REPORT
In focus
THE POLITICS OF SOLAR… With the winds of political change sweeping through all continents, will the new US president result in pressures on the solar glass supply chain for a country currently dependent on China?
The election of Donald Trump raises a lot of questions for the U.S. solar industry. Trump hasn’t exactly been supportive of solar energy, but he hasn’t made it an explicit target of his ire either. President Trump’s impact on the solar industry could come through trade policy, an area where the president has fairly wide latitude to make rules. If he labels China a currency manipulator, as he has promised, it would give him wide authority to draw up tariffs on Chinese imports, which he has suggested may be as high as 45 percent -- although a 25 percent across-the-board tariff seems to be a more common proposal. Tariffs that high could have a mixed impact on the economy broadly, and could lead to a trade war between the world’s two biggest economies. The booming U.S. solar industry -- heavily reliant on China and other countries in Asia for low-cost supplies -- is caught in the middle of this rhetoric. There are already tariffs on Chinese solar products and materials. And the solar industry has already figured out how to deal with them. Given long-simmering tensions with China over solar, it’s likely that tariffs wouldn’t have a major impact on the solar industry. But it’s worth looking into, assuming Trump decides to provoke China further. When it comes to trade, there’s rarely a simple single-order cause and effect. Trade follows something more like the butterfly effect, with broad impacts on the solar industry that would be both positive and negative. Solar manufacturers would certainly like to see additional tariffs on Chinese imports. SolarWorld led previous trade cases against Chinese solar companies, and it’s easy to see how U.S. manufacturers Mission Solar, SolarCity and Suniva could see a slight advantage if additional tariffs are placed on competitors’ products. The U.S. solar manufacturing industry has been one of the most damaged by low-cost Chinese panels and, in theory, it would see the biggest benefit from tariffs on Chinese imports. But America’s manufacturers must still work hard to be competitive. To put the impact of tariffs into perspective, GTM Research’s PV Pulse Q4 2016 estimates that blended module prices were $0.42 per watt last quarter. A 25 percent import tariff would add about $0.10 per watt to the cost of a solar panel, or $600 to the cost of a 6-kilowatt system, and a 45 percent tariff would add $0.19 per watt, $1,140 for a 6-kilowatt system. (That’s assuming tariffs are 100 percent effective.) Barry Cinnamon, who owns residential installer Cinnamon Solar, said customers would be willing to pay a few hundred dollars more to buy American-made modules. But he
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also said the upside for installers pushing domestically made panels is limited. With that in mind, he said he’s “not supportive of tariffs on solar modules since they jeopardize approximately 180,000 installation jobs at the expense of 20,000 manufacturing jobs.” SolarWorld is the only cell manufacturer in the U.S., so even Mission Solar, SolarCity and Suniva would see higher costs on imported cells if subject to a tariff. If tariffs are put in place on all products from China, there would be a much wider impact to American manufacturing.
Keeping costs low
China is the lowest-cost source of supply for glass and aluminum for module frames, which are some of the biggest costs in module assembly. Then there’s junction boxes, inverters, racking, connectors, and other balanceof-system components that come from China and other countries in Asia. The U.S. can’t simply flip a switch and start manufacturing these products at scale, especially commodity components like glass or extruded aluminum that are needed in massive quantities. Tariffs on imports from a country like China could give a small boost to U.S. manufacturers, but it would also raise raw material costs for every module manufacturer in the U.S. Growing U.S. solar manufacturing jobs isn’t as simple as adding a few tariffs to imports from other countries. The infrastructure to make polysilicon, solar cells, extruded aluminum, junction boxes, glass, and dozens of other components in the U.S. at a cost-effective level simply doesn’t exist today. The feasibility of tariffs helping U.S. manufacturers may also be wishful thinking. If the solar industry learned one thing from the tariffs on solar cells and modules put in place a few years ago, it’s that suppliers can adapt more quickly than tariffs can. First, manufacturers started tolling modules in places like Taiwan and then they began building plants in countries across Southeast Asia. Some of those decisions were even motivated by a drive to find lower costs than China could offer. For example, labor costs in Vietnam are now lower than in China, changing the calculus about where to build manufacturing plants. That’s consistent with manufacturing expansions in Southeast Asian countries other than China. And the newly diverse set of suppliers and countries of manufacturing in the solar industry would likely mute the effects of any trade war, whether you’re looking from the lens of a U.S. solar
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SPECIAL REPORT
manufacturer or an installer. In other words, a trade war with China alone would have a minimal impact on U.S. solar manufacturing given its supply diversity today. To have a real impact on the solar industry, the Trump administration would have to start a trade war with all of Southeast Asia. And if that happened, the crossfire would hit nearly everything Americans buy -- not just solar -- creating very unpredictable and very unintended consequences for the solar industry.
Job losses?
There’s one area of the solar market that will see a negative impact in any trade war: Solar installations. Installers who are buying components on the open market will undoubtedly face higher costs. However, the scale of the impact may be different depending on where you sit in the solar industry. For residential systems, the impact of tariffs would be minimal because most costs are very local in nature. According to GTM Research’s Solar Market Insight Q4 2016 report, the average cost of a residential solar system was $2.98 per watt in Q3 2016 -- so the impact of a 25 percent tariff on solar modules alone would be fairly small at just 3 percent of the total installation cost. Tariffs on other components like inverters or mounting brackets may raise costs further, however. The impact of tariffs would be more meaningful in the utility-scale sector. A $0.10 per watt increase in a fixedtilt utility project that costs an average of $1.09 per watt would result in a 9 percent increase in costs. And that’s not including any impact from tariffs on inverters, mounting structures, or any other balance-of-system components. This could have a material impact on
“China is the lowes’t-cost source of supply for glass and aluminum for module frames”
installers in a lowmargin environment. Some solar projects may not pencil out if costs increase by that much. Tariffs would raise costs for companies installing solar at every scale, from residential rooftops to large utility projects, although the scale of the impact would depend on the scope of tariffs. Rising costs could mean less demand for solar energy at every level, which would also mean less work for installers themselves. The Solar Foundation’s National Solar Jobs Census for 2015 estimated that 119,931 workers held jobs installing solar, 57 percent of the 208,859 U.S. solar jobs documented by the organization that year. A reduction in solar energy’s competitiveness could put those jobs at risk. It’s impossible to predict the exact impact of tariffs, given how fast costs change in the solar industry. Solar panel prices fell more than $0.10 per watt in the third quarter of 2016 alone -- so a tariff would likely have to be over 25 percent to make installers really worried. The solar industry of 2017 is diverse enough to handle one-off tariffs without too much adjustment. And if additional tariffs do come (which is still just speculation), the industry has adapted to bigger disruptions before.
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EXHIBITION PREVIEW
EXHIBITION PREVIEW
EXHIBITION PREVIEW
EXHIBITION PREVIEW
CHINA GLASS 2017: a steady journey The 28th China International Glass Industry Technical Exhibition (CHINA GLASS 2017) will take place in China International Exhibition Center on May 24-27, 2017. As the biggest event of global glass industry in 2017, the exhibition will attracts over 900 glass enterprises from over 30 countries in the world and more than 40,000 visitors from over 60 countries. Since the inception at booth sales, the organizer is steadily promoting its preparation and organization work based on concepts of professionalization, internationalization and scale-up development and in cooperation with the governments of Germany and Italy, as well as related trades and organizations at home and abroad. Up to December, 2016, 823 exhibitors confirmed their booths, including 608 domestic companies and 215 from overseas. Booth distribution of the exhibition has been completed at present in the main. CHINA GLASS 2017 in Transformation and Upgrading Owing to influence of many factors, such as the supply side structure reform, overcapacity cutting and demand increasing, China’s glass industry faces some turns for better, especially better performance of the flat glass sector. CHINA GLASS 2017 attracts tremendous attention from the global glass community as a weather vane of the glass industry. This grand glass fair provides not only a communication platform of new technologies and new products in the atmosphere of transformation and upgrading of domestic glass industry, but also a purchase platform for global cooperation on production capacity and business communication.
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Big Brands gathering in CHINA GLASS 2017 As with the previous events of CHINA GLASS, a great number of exhibitors have already applied for booth reservation upon the preparation work of this exhibition started. This fully demonstrates the attraction and influence of this event on the global glass industry. CHINA GLASS 2017 has an exhibition area over 100,000m2 in 8 halls at China International Exhibition Center. More than 900 exhibitors will take part in this event, including 3 pavilions organized by trade promotion organizations and departments of Germany, Italy and America. Many Chinese companies will take performance at
Baiyun Chemical, Beijing Hanjiang Automatic, Shandong Fangding, Jinan Weili, Zhijiang Silicone, Chengdu Guibao, Shandong Sanjin Glass, Weifang Sanjiang, Tengzhou Huayang, Guilin Champion Union, Zhengzhou Yuandong, Hengfa Aluminum, and Huafu(Chengde)Glass. International glass enterprises are upbeat towards this upcoming glass exhibition and many of them will show up at CHINA GLASS 2017, including Corning, SCHOTT, Glasston, Bystronic Glass, Dip-Tech, Kuraray, Von•Ardenne, Bohle, Grenzebach Machinery, Beijing SEPR, AGC, LiSEC, OMCO, Vesuvius, Bottero, Intermac, SGS, etc.
Well-known brands of global glass industry have confirmed their participation. the stage of CHINA GLASS 2017, such as China Building Materials Academy, Triumph International, North Glass, Luoyang Float Glass Group, China Yaohua, China Glass Holdings, TAIWANGLASS, Xinyi Glass, Land Glass, Mountain Glass, Jinjing Group, CSG Holding, Shanghai SYP Glass, Shahe Glass Group, HIHO Glass, Sinoma Advanced Materials, SHANXI LIHU, Ruitai Materials Technology, Lewei Science & Technology, Liaoning North Glass Machine, Guangdong Fushan Glass, EI Automation Equipment, GOLIVE, South Glass Technology, Tenon(Beijing), Beijing MGM Glass, Hebei Yinxin, Anhui Yinrui, Hangzhou Jinggong, Yuntong Glass, Beijing BOZA,
New Products and Technologies Highlighted The State Council of China has encouraged the glass industry to develop high-end glass products according to The Guidance of Promoting Steady Growth, Adjusting Structure and Enhancing Efficiency in The Building Materials Industry. The China Glass Exhibition has ever since been an authority platform for releasing updated glass products and technologies. At the glass show this year, China Triumph will display its newly developed 0.15mm thick and mass produced 0.22mm thick ultra-thin float glass; North Glass will showcase its product series in regard to automation glass, cutting, silk screen printing, glass chip system, which could meet market
demands of intelligence, efficiency, high precision and low energy; Land will bring to usfull toughened glass equipment with independent intellectual property rights and its leading V-Glass series product; LiSEC’s exhibits include a new intelligent insulating glass line, which combined traditional sealing robot with production lines; Corning is going to present its solution to laser cutting and drilling of glass and special materials; Von Ardenne’s new solution for flexible glass coating will be very attracting and an eye-catching technology of Bystronic Glassis the latest compact type car windshield production line of cutting, glassedging and drilling processing. In addition, we will see more new products and solutions in such sectors as industrial robot, intelligent photovoltaic glass and new energy efficiency glass displayed on the stage of CHINA GLASS 2017. Making Efforts to Raise Service Level and Build More Influential Brand of China Glass The organizer is putting its strength on successfully hosting CHINA GLASS 2017 and enhancing the level of management and service by taking effective measures such as service resource integration, advocating service providers to improve service process and solving problems collected from the exhibitor survey of last event. The organizer is trying to invite as many as professional visitors from the world over by increasing media promotion investment and using internetbased tools, and meanwhile the organizer is constructing a better communication platform for exhibitors and visitors. We together with friends of the world glass circle will witness the pomp of CHINA GLASS 2017 and the development of global glass industry on May 24, 2017!
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Anaylsis
Refractory Zone Fused magnesia exports hit record high China Exports of fused magnesia out of China rose to a two-year high in November last year in volume terms, while declining unit prices have kept overall value down. Chinese exports of fused magnesia (FM) rose 33% in November 2016 against the same month of the previous year, setting a new record in 2016 to date as the monthly trade generated a 23% growth in value year-on-year (y-o-y). FM volumes shipped out of China in November totalled over 42,400 tonnes, at a value of $20.7m, according to the latest China Customs data. The volume mark a new high in 2016 to date (pending the December data), and are also higher than every month of 2015, both in volume and in value terms. Volumes shipped were last higher in December 2014, when 47,000 tonnes were exported at a value of $26.9m. The volume traded in November more than doubled (+104%) on the previous month, when
20,760 tonnes FM were shipped. In value terms, October posted and export worth of $10.3m, or 102% below the following month. Historical trade data shows that FM exports tend to peak once during the summer, and a second time towards the end of the year or in the immediate start of the following year, between November and January. A previous 2016 peak was registered in June, with 37,934 tonnes exported. The monthly peak was registered just as the Chinese government failed to set a 2017 export quota for magnesia products. The January-November period of 2016 showed an overall rise in exports of the mineral against the previous year, at least in volume terms. Total exports in 2016 to end-November stand at 294,878 tonnes, against 267,508 tonnes in the same period of 2015 – a growth of 10%. The value of the fused magnesia exported has posted a decrease in 2016, totalling $148.6m in
the 11-month period, compared with $150.1m in 2015 (-1%). This follows a notable downtrend in unit price for the commodity, which moved below the $500/tonne-mark in July. The average unit price for Chinese FM (which China Customs calculates by looking at all grades of fused magnesia that are produced in the country and exported) remained in the high $500s in H1 2015, to then decrease gradually in the second half of the year. The downtrend continued in 2016, to a November average unit price of $488/tonne. The average price for the commodity at export has declined 14% between November 2014 ($568/tonne) and November 2016. The downtrend has been seen in most grades IM covers, including 96% MgO lump and 97% Mgo lump, on an FOB China basis. Fused magnesia is mainly used in refractory and electrical insulating applications, as well as in ceramics and steel coatings.
Over 80 polluting factories closed China Environmental efforts on the part of local authorities have led to the closure of 85 highlypolluting factories in the city, as the industry is pushed to transition to cleaner energy sources. The municipal government in Xinmi city, located in China’s Henan province, has announced the achievement of clean energy targets for 2016, following the shut down of 85 refractory factories throughout the year. Refractories production is a major contributor to Xinmi’s industrial economy and its output accounts for one-sixth of China’s total refractory output. Over the past two years, the number of
refractory companies active in Xinmi fell from over 500 to 390 and to 305 today. A total of 2,300 high-energy consuming, highly-polluting coal down-draft kilns were dismantled. The environmental efforts of the authorities are transforming the local industry. To date, 212 new energy-saving tunnel kilns have been built, as well as 188 shuttle kilns and 36 electric melting furnaces; 126 companies are now equipped with automatic batching systems. Xinmi has also supported Towngas Co. and Zhongyu Gas Holdings to foster clean refractory production by investing Chinese renminbi (Rmb) 520m ($74.79m) into the building of a 475km
gas pipe network, covering all key towns and villages where facilities are located. The Xinmi authorities additionally awarded a total Rmb 18m to 305 local refractory companies for the dismantling of 354 coal generator furnaces. Though Henan remains one of the most polluted provinces in China, such changes are slowly bringing about some improvement. Refractory production in Xinmi totals 13m tpa and consumes around 8m m3 gas per month. The drive towards clean energy has reduced coal consumption by 2m tonnes, smoke and dust by 10,750 tonnes, sulfur dioxide by 16,640 tonnes and nitrogen oxide by 21,395 tonnes.
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ss Editori
A wealth of excit
ASEAN glass fibre expansi ■ Where ons next for Asian ■ Coating s and façades IGU? ■ Flat glass ■ Flat glass ■ SE Asian prices: China prices: China packaging in the Middle East ■ Borosilic ■ Borosilic review: part ate and glass in a vacuum SEE US AT: GlassBu ate and glass in a vacuum 1 ■ After ■ After ild America Manufacturers, AFTA: effects tube market focus AFTA: effects tube market focus ; ASEAN Federati ■ Sri Lanka: ■ Sri Lanka: Glasstech on containe on containe on of Glass Asia Smart building Smart building r glass r glass ■ SPECIAL ■ SPECIAL s, s, FOCUS: COATING smarter builders FOCUS: COATING smarter builders SEE US AT: SEE US AT: S & CHEMICA S & CHEMICA ■ The ultrathin GPD; Mir GPD; Mir LS LS Stekla; Glassma Stekla; Glassma America; America; revolution ■ SE Asian Intersolar Intersolar n n Europe; Europe; Glass Europe Europe packaging Glass South ■ Lighting South review: part glass in India 2 ■ ASEAN solar glass demand ■ Egypt: ■ Egypt: ■ SPECIAL a flat and a flat and FOCUS: GLASS processed processed ■ Maghre ■ Maghre FREIGHT AND centre SEE US AT: ZAK centre b: an innovat b: an innovat Glasstech, ■ Househo ■ Househo ion ion LOGISTICS FREE WITH Baku Glass ld and containe centre? ld and containe centre? THIS ISSUE 2017 ■ South ■ South Asia: - THE 2017 r glass product r glass product Asia: containe INSIDE container YEARPLFREE ion ion r glass ANNER! glass ■ SPECIAL ■ SPECIAL FOCUS: CONTAI pressures FOCUS: CONTAI pressures The AG Yearplan ner! SEE US AT: SEE US AT: NER GLASS ■ Float-en NER GLASS AFGM; Gulf AFGM; omics: China INSPECTION Gulf Glass; Lanka Glass Lanka Glass Glass; Glassbui ■INSPECT ION under pressure Cosmeti Glassbuild 2017 2017 ld America c glass markets America; ■ Asian ; Unitecr; Unitecr; and makers automotive glass demand ■ India: a PET battlegr ■ SPECIAL ound ■ Iranian ■ Iranian FOCUS: SOLAR processed processed SEE US AT: glass markets glass markets ■ Cullet: ■ Cullet: GLASS Glasspex; an Asian an Asian Glassman recycling recycling EURASIA ■ Build ■ Build South America survey survey Glass 2017; it big: facades it big: facades Windoorex ; ■ China: ■ China: and coatings and coatings Oman Beverage Beverage for Indones for Indones bottle bottle ■ SPECIAL ■ SPECIAL FOCUS: FLAT markets and makers ia FOCUS: FLAT markets and makers ia SEE US AT: SEE US AT: IGU markets ZAK Glasstec GLASS INSPECT■ION ZAK Glasstec GLASS INSPECTION and issues h; Vitrum; h; Vitrum; ■ Iranian for India Glasstec Glasstech h Asiacontainer glass Asia ■ Pakistan : an industry markets ■ Temper in focus ■ Investin ■ Investin ed and toughen g in Cambod g in Cambod ■ Drinking ■ Drinking ia ia ed: China ■ SPECIAL in the sun: in the sun: in focus FOCUS: GLASS ■ China ■ China US AT: China RAW MATERIA light: ultrathinNE Asia beveragSEE light: ultrathinNE Asia beverage e markets markets Glass; SNEC ■ Thailand ■ Thailand LS 2017; Interpac : a country glass prospects : a country glass prospects ■ SPECIAL ■ SPECIAL in in k 2017 FOCUS: GLASSfocus FOCUS: GLASSfocus SEE US AT: SEE US AT: ZAK Glasstec FREIGHT AND LOGISTIC ZAK Glasstec FREIGHT AND LOGISTIC FREE WITH FREE WITH S S THIS ISSUE h, Baku Glass 2017 THIS ISSUE h, Baku Glass 2017 - THE 2018 - THE 2018 YEARPL YEARPL INSIDE INSIDE FREEANNER! FREEANNER!
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glass SPECIAL FOCUS: demand GLASS FREIGH SEE US AT: ZAK T AND
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✷ ON-PA GE: full and half displa ✷ DIGITA y advertising L: full and half displa ✷ DUMM y advertising Y COVERS: …and more! the ultima ✷ BELLY-WRA te, high impac PS: high profile t creative…
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■ The ultrathin revolution ■ SE Asian packaging ■ Lighting review: glass in India ■ ASEAN
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Asian Gla ution Sch
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Ma xi mise you Ma xi mise you ner! r expo su re, ma r expo su re, ma find out how by contac xi mise you r xi mise you r ting: Paul Russel bu dgetEmail: bu dget… … prussel, Tel: +44 (0) 208 638
find out how by contac ting: Paul Russel l, Tel: +44 (0) 208 638 Email: prusse 0619 ll@asianglass .com Valerie Adam Email: vadam son, Tel: + 44 (0) 208 133 5273 son@asiangla ss.com
www.asian
glasss.com
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70
asianglass AG 17-1
The AG Yearplan ner!
The AG Yearplan
0619 ll@asianglass .com Valerie Adam Email: vadam son, Tel: + 44 (0) 208 133 5273 son@asiangla ss.com
www.asian
glasss.com
www.asian
glass.com
www.asian
glass.com
www.asianglass.com
ADVERTISER ADVERTISERFEATURE FEATURE
Mark Ziegler, Marketing Manager, Heye International GmbH, Lohplatz 1, 31683 Obernkirchen, Germany. Telephone: +49 (0)5724 26-0. Fax: +49 (0)5724 26-539. Email: marketing@heye-international.com Web: www.heye-international.com
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AG 17-1 asianglass
71
In the next issue... AG17-2 Features include
• IGU markets and issues for India • Iranian container glass markets • Pakistan: an industry in focus • Tempered and toughened in China ss.com w.asiangla nline at ww o e b ri sc b su own copy? Is this your
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Defects no longer know where to hide
Intelligent engraving inspection The Evolution 12 engraving identification and inspection module is a software innovation that allows the machine to identify engravings in a container’s body or base. Because it is very difficult to predict how an engraving will look, this module dramatically improves inspection in these areas. By calculating the position of the engraving, the machine identifies the pixels related to the engraving, as well as those that relate to a defect. This algorithm has been improved and tested over recent months on several production lines, including those devoted to beers, carbonated beverages, wine and high value spirits.
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