Flat Glass Markets Remain Strong; Container Market Dominated By Plastics

According to a recent study from The Freedonia Group, demand for flat glass in the U.S. is forecast to increase 2.5% per year to 6.3 billion square feet in 2003, slightly outpacing gains in the general economy. The flat glass market is composed of three sectors-construction, motor vehicle and specialty-with the first two accounting for the vast majority of demand. Pricing levels will remain favorable due to the continuing introduction of technologically advanced, value-added products such as electrochromatic mirrors and windows, and new generations of solar control glass. The market value of the U.S. flat glass industry is forecast to reach $8.2 billion in 2003.

The strongest gains are predicted for the construction market, with demand projected to reach 3.5 billion square feet in 2003. Advances will stem from an expansion in repair and remodeling expenditures for both residential and nonresidential structures, as well as the continuing trend toward the construction of larger houses with greater window area. The popularity of double- or triple-paned insulating glass units in both new and replacement markets will also benefit glass demand. On the downside, a decline in U.S. housing starts will limit the amount of flat glass used in new construction. Additionally, improved quality of flat glass products will tend to mitigate replacement demand over the long term.

The motor vehicle market for flat glass is expected to reach 1.6 billion square feet in 2003, outpacing motor vehicle production rates. Flat glass demand in this market will benefit from vehicle designs that incorporate more glass per vehicle and the continuing popularity of sport utility vehicles and minivans, which inherently consume more glass than passenger cars due to their larger size. Additionally, flat glass demand will benefit from replacement requirements of the large number of new vehicles that entered service between 1992 and 1998. However, improved glass quality will increase time between replacements, as will improvements in repair technology (driven in part by the insurance industry) that allow more damaged windshields to be repaired rather than replaced.

The specialty market encompasses glass used in mirrors, furniture, non-automotive transportation equipment and appliances. Gains in this market will be promoted by new demand rising from the aerospace industry, as well as furniture and appliance design trends favoring more glass usage, such as the rising popularity of glass-top electric ranges. Consumer demand for both appliances and furniture should remain favorable due to steady gains in income levels, an outgrowth of the strong U.S. economy. Also, furniture and appliances are often purchased during household remodeling activity, which is forecast to accelerate.

Tempered and insulating glass are the largest product segments, together accounting for 60% of total flat glass demand in 1998 (the latest year for which complete data are available). The strongest gains will be achieved by products that are more energy efficient, such as laminated, insulating, low-emissivity and reflective glass. The popularity of these types of flat glass products is based on their ability to lower air conditioning and heating costs by reducing heat transfer and the passage of ultraviolet rays into buildings and houses. In addition, increasing safety concerns derived from damage caused by natural disasters, burglaries and accidents will promote gains in various types of safety glass, including laminated glass.

Figure 1. Projected U.S. demand for beverage containers, 2003.

Container Glass

According to another Freedonia Group study, U.S. demand for beverage containers is projected to advance at an annual pace of 2.2% through 2003 to 217 billion units. Rising personal incomes, favorable demographic trends, new product introductions and the ongoing development of under-utilized distribution channels will buoy beverage consumption, and hence container sales.

Plastic containers will continue to take the lead in the container market, rising over 6% annually through 2003, and metal cans will continue to account for roughly half of the beverage container market in unit terms. However, prospects will improve somewhat for glass bottles, as their replacement in the soft drink and milk markets has been largely completed, and the loss of share to plastics is slowing in applications like bottled water and distilled spirits as well. Prospects will be best in relatively novel niche markets like ready-to-drink coffees and nutraceutical beverages.

In the cosmetic and toiletry containers market, glass containers will remain dominant for perfume and mid-to-upper market lotions and creams, as well as packaging of nail cosmetics. Despite generally higher costs, glass's premium image will shield it from widespread loss of market share to plastics in these sectors. An exception to this is liquid foundations, which are increasingly moving to plastic bottles.

Editor's Note

The above information was compiled from three Freedonia Group studies: Flat Glass to 2003 (July 1999, 198 pages, $3,300); Beverage Containers (July 1999, 214 pages, $3,500); and Cosmetic & Toiletry Containers (June 1999, 216 pages, $3,400). Each study can be obtained from The Freedonia Group, Inc., 767 Beta Drive, Cleveland, OH 44143-2326. For further details, contact Corinne Gangloff at (440) 684-9600, fax (440) 646-0484 or e-mail pr@freedoniagroup.com. Full text is also available online through commercial database companies and the www.freedoniagroup.com website.

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