Resisting "cut-throat competition", PV glass producers plan to implement centralized production cuts in July [SMM Analysis]

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SMM June 30 News:

Recently, PV glass enterprises gathered to discuss the current supply-demand imbalance. The damage caused by cut-throat competition in the glass industry is gradually increasing. Against the backdrop of weakening demand, the surplus on the supply side is growing daily. To prevent intensified competition among enterprises from leading to a vicious market cycle,most glass companies plan to implement production cuts starting in July to improve supply-side conditions, with the expected reduction scale reaching 30%.

Figure: PV Glass Production Trend

Data Source: SMM

Supply side, in fact,production cuts began in June. SMM statistics show that in June, domesticcapacity of 3,850 mt/day was either idled or shut down, with an additional 3,020 mt/day capacity sealed off. Recently, another domestic kiln with 650 mt/day capacity reduced production, accelerating the decline in supply. The primary reason for the rapid drop in glass production is weak demand. In recent months, domestic module production has continued to decline, and demand has weakened rapidly. Meanwhile, the supply side has begun to rise due to newly commissioned kilns, leading to a supply-demand mismatch. Glass enterprise inventories have started to increase, with some approaching 45 days, nearing storage capacity limits.Under inventory pressure, glass prices have begun to fall, continuously dropping below cost lines, which isthe initial reason for this round of production cuts.

Recently, some glass enterprises met to discuss future trends.The originally planned production cut scale was only around 10%, but this would not resolve the supply-demand imbalance. Therefore, top-tier enterprises plan to increase the reduction scale,expected to reach 30%.Some glass enterprises have already begun planning subsequent idling schedules. Although production days will increase in July, the expanded production cuts will lead to the first decline in glass production since the Chinese New Year.Estimated July glass supply will decrease to around 45GW.