Caixin News Agency, November 29 (Reporter Mengran Liu) Since entering the fourth quarter, photovoltaic glass has continued its previous sluggish trend, with prices mainly running at low levels. The industry expects that the recent supply and demand relationship has slightly improved. Currently, major manufacturers have taken pricing actions, but the upward support is insufficient, and short-term price stability is expected to prevail.

Data released by the institution Infolink shows that as the fourth quarter begins, the prices of 3.2mm and 2.0mm photovoltaic glass have dropped to 19.5 yuan/square meter and 11.5 yuan/square meter respectively.

Caixin News Agency reporters, in their capacity as investors, called Flat Glass Group (601865.SH) and learned that the average selling price of photovoltaic glass in the third quarter of this year had dropped significantly. The main reason was the changes in supply and demand, with a clear mismatch between glass supply and downstream demand, which had a certain impact on the entire industry and put significant pressure on the company's performance.

According to financial reports, in the first three quarters of this year, Flat Glass Group suffered an impairment loss of 0.206 billion yuan. In response, the company stated at the performance briefing, 'The impairment loss is due to impairment of fixed assets and inventory. Whether there will be more impairment at the end of the year will be assessed based on the actual situation. Next, the company will adjust its production line layout reasonably according to market conditions.'

Has there been any change in industry supply and demand since the fourth quarter? Analyst Wang Shuai from Jotun Information told reporters from Caixin News Agency that recently some glass manufacturers have offered discounts to clear inventory, combined with capacity clearance, leading to a slight improvement in the local supply and demand relationship. Coupled with cost support, some manufacturers intend to raise glass quotes for December, but with insufficient upward support, short-term price stability is expected to be the main focus.

In terms of demand, the United States has raised tariffs on photovoltaic modules and solar cell batteries from 25% to 50% under the 'double reverse' investigation. According to the Flat Glass Group's interim report, starting from June 6, 2024, the United States has resumed tariffs on solar products from Cambodia, Malaysia, Thailand, and Vietnam, and requires installation within six months. These trade protection policies have led to a reduction in production capacities and even shutdowns in Southeast Asia, thus affecting the short-term demand for solar installations and consequently affecting the demand for photovoltaic glass.

At the same time, glass is primarily purchased on demand, and the stocking willingness of most dealers and users is not high, leading to a continuous weakening of demand in the near term.

On the supply side, photovoltaic glass is an important auxiliary material for photovoltaic modules. When the production capacity is insufficient, it once became a bottleneck in the industry. In the past few years, benefiting from the high growth in demand for photovoltaic end products and the expansion of module capacity, the production capacity of photovoltaic glass peaked in 2022.

However, thereafter, due to mismatch between supply and demand, the price of photovoltaic glass declined, and the industry's profit margins were severely squeezed. Since the beginning of this year, the industry has begun to enter a phase of capacity clearance. However, destocking will still take some time. It is expected that due to digesting finished product inventory, component manufacturers are expected to reduce production in December. As of now, there are a total of 446 production lines for photovoltaic glass in the country, with a total daily melting capacity of 94,890 tons/day (some units are restricted, actual capacity is lower), some kilns have cold repair plans, and supply is showing a continuous downward trend.

According to Zhuochuang data, from January to November 2024, the total cold repair volume of domestic photovoltaic kilns is approximately 24,780 tons/day, with some units having bottlenecks and significant capacity reductions.

It is reported that the industry's inventory is around 35 days, and the supply is still relatively sufficient. From December to February of the following year, the operating rate of component manufacturers continues to decline, and in the later period, some kilns still have cold repair plans, leading to a continuous decrease in supply.

Analysts believe that some manufacturers are offering discounts to push out inventory, allowing for negotiation space. With the rise in natural gas prices during the heating season, manufacturers are facing varying degrees of losses compared to lower finished product prices, accelerating the clearance of some production capacity.

Flat Glass Group staff mentioned that currently the company's inventory is around 25 days, and there is a continuing downward trend. Each step has been under control this year, with a relatively high number of cold repairs in the industry overall, and some old production lines being addressed. Looking at the industry landscape, the top two leading positions remain stable, and there won't be significant changes in the market structure in the foreseeable future.