May Wrap-up! Glass Prices Drop Nearly 1 yuan/m² [SMM Analysis]

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SMM News on May 30:

The current glass quotations for May are as follows: 2.0mm single-layer coating quotation (12.8-13.4 yuan/m²); 2.0mm double-layer coating quotation (13.8-14.4 yuan/m²); 3.2mm single-layer coating quotation (21-22 yuan/m²); 3.2mm double-layer coating quotation (22-23 yuan/m²); 2.0mm back glass quotation (11.5-12.5 yuan/m²). As of now, glass prices in the market have been adjusted downward multiple times in May. The mainstream quotation for 2.0mm glass was 13.8 yuan/m² at the beginning of the month, but it has dropped to 13.2 yuan/m² at month-end, indicating a significant decrease. Module enterprises' purchase willingness has been low this month, and overall bargaining has mainly focused on driving down prices. Given the continued downward trend in module scheduled production, it is expected that new order glass prices will continue to decline in June.

Figure: PV Glass Price Trend

Data source: SMM

SMM has learned that there are two main reasons for the loosening of quotations. Firstly, it stems from resistance from the demand side. Recently, with the end of the terminal installation rush, module production schedules have begun to decline significantly, and module prices have fallen rapidly. As glass is the most costly component among auxiliary materials, the suppression of demand has been relatively strong, leading to a strong bargaining atmosphere in May. Secondly, the potential impact of supply-side increases has intensified. Since February, with the improving trend of the domestic glass market, the number of newly commissioned furnaces in China has gradually increased. Recently, there have also been production resumptions after cold repairs and furnace startups. Domestic supply has shown growth, and subsequent production is expected to continue rising. Domestic glass production is expected to reach around 48GW in May and approach 50GW in June. The supply-demand balance of glass has begun to tilt, with a clear trend of supply surplus. These combined factors have led to a deterioration in market conditions. However, there was still a significant factor within May that accelerated the price decline. Given the weakening market trend, glass enterprises still have profits at present. Therefore, some glass enterprises have taken the initiative to reduce their own profits and offer discounts to purchase cargo, significantly enhancing the competitive pricing atmosphere in the market and thus accelerating the decline in glass prices.

Regarding the price forecast for new orders in June, SMM believes that for 2.0mm single-layer coated glass, the mainstream transaction price range is expected to be 12.5-12.8 yuan/m². The continued decline in module production schedules at large factories has led to a collapse in demand support for glass. Meanwhile, the decline in natural gas prices has also weakened the cost support for glass. Under the trend of declining support from both directions, new order glass prices are expected to fall, and the potential risks on the supply side are still increasing. It is expected that glass prices will approach the cost line in the short term.