Ceramic Industry

Sales Higher for Flat Glass and Containers; Other Glass Segments Mixed

October 1, 2003
World demand for flat glass is expected to grow 3.9% per year over the next several years. Photo copyrighted by Glaverbel.
According to the U.S. Department of Commerce, 6.4 billion square feet of flat glass were shipped in 2002 at an estimated value of $2.1 billion - up slightly (1% and 0.7%, respectively) from the previous year's levels. Shipments of automotive glass were down by 4% and made up a smaller percentage of the overall total, accounting for 24.6% of shipments (in square footage) in 2002 vs. 25.9% in 2001. Shipments of non-automotive glass increased 2.7% and comprised 75.4% of the total.

A slowdown in the European economy caused unit prices to decline in that region, while sales in Asia were brisk as a result of steady demand for use in buildings. Demand also rose considerably for automotive glass in Asia, particularly in China and Thailand. In Japan, sales of glass for crime prevention grew sharply, while sales were also higher for compact cars and high-value-added products, such as infrared ray cutting glass.

A report from The Freedonia Group projects that world demand for flat glass will grow 3.9% per year to more than 44.1 billion square feet in 2006, slightly outpacing real (i.e., inflation-adjusted) gains in the global economy.1 Production of flat glass is forecast to increase 4.4% per year to 41.7 million metric tons in 2006, of which about 28 million metric tons will be high-quality float glass. The remainder will consist of low-quality float glass, as well as sheet and rolled glass. Assuming an industry-wide utilization rate of 85%, Freedonia estimates that the global industry will require 20-25 new high-quality float lines averaging 500 metric tons per day to meet future demand through the end of 2006.

Freedonia also predicts that the market value of fabricated glass (encompassing basic glass, as well as all value-added products, such as laminated, insulating and mirrored glass) will increase 5.2% per year to $48 billion over the same period. Above-average gains are forecast for architectural glass based on a solid outlook for the global construction industry and a greater use of value-added glazing products, both in new structures and during major renovation and refurbishment activities. Chief among these materials are double-glazed insulating glass units (IGUs), which often incorporate low-emissivity coatings, in place of single glazings.

The motor vehicle market is expected to post gains of 4.2% per year to more than $10 billion in 2006. In addition to a moderately strong outlook for global motor vehicle production, a positive trend for glass suppliers will be the continuing popularity of larger vehicles, such as sport utilities and minivans, which use more glass per unit than conventional sedans.

The emergence of new "smart" glass products, such as self-cleaning glass and light-control products, might also help boost demand for flat glass. Technologies such as the SPD-Smart light control film from Research Frontiers are becoming increasingly popular. The suspended particle device (SPD) technology allows consumers to instantly and precisely control how clear or dark glass is, and electrically adjust light transmission by either turning a knob or having the device automatically adjust itself by means of a photocell or other sensing or control device. A variety of SPD-Smart products are already commercially available, including aircraft, architectural, marine, automotive and appliance window products. In June 2003, Saint-Gobain Glass France SA, a subsidiary of Compagnie de Saint-Gobain was granted a worldwide (except Korea) non-exclusive license by RFI to make various SPD-Smart glass products. Similar technologies, such as electrochromic windows and liquid-crystal glass, are also beginning to come on the market.

The trend in U.S. consumer glassware has been toward less domestic production and increased imports. Photo courtesy of Arc International.

Glass Containers

Total U.S. shipments of container glass were up slightly (0.4%) in 2002. While shipments of glass containers for soft drinks, beer, liquor and ready-to-drink alcoholic coolers and cocktails were all higher (up 6.2% overall), shipments for food, wine and other uses (including chemical, cosmetic, health, household, industrial, medicinal and toiletry products) were lower. In food applications alone, shipments were down 14.3% compared to 2001.

A recent report from The Freedonia Group indicates that glass containers will continue to hold their own in the U.S. beverage sector through 2007, as glass takes an increasing amount of market share from metal cans in the premium beer market and growing "malternatives" subsegment.2 However, they will experience little overall growth, since plastic containers will continue to be the container of choice for most other beverages. Freedonia forecasts that glass beverage containers will grow only 1.1% per year over the next five years, while plastic containers will grow 4.9% per year (see Table 1).

The prospects for growth on the international front, however, appear much better. According to Owens-Illinois Inc., one of the world¿s largest glass container manufacturers, demographic and economic trends in certain developing regions of the world, including parts of South America, Eastern and Central Europe and the Asia Pacific region, will lead to increases in demand for glass containers over time. Key contributors to long-term growth include the rise of branded, pre-packaged foods and beverages, conversions of refillable containers to recyclable one-way glass bottles, and the growth of selected regional wine industries - especially in Australia and Italy.

The company is also experiencing growth in the U.S. through its partnerships with beer producers. In February 2003, Owens-Illinois announced plans to construct a new state-of-the-art plant to be the primary supplier to the Anheuser-Busch brewery in Fort Collins, Colo. The plant will be located in Northeast Colorado or Southeast Wyoming, at a site to be determined, and is expected to be operational in 2005.

Table 1
Total U.S. factory shipments of consumer, scientific, technical and industrial glassware in 2002 amounted to $4.6 billion, a decrease of 11.2% from the $5.2 billion reported in 2001. Consumer glassware (table, kitchen, art and novelty) saw an 11.1% decrease in value from 2001 to $1.6 billion and accounted for 35.7% of shipments. Lighting and electronic glassware decreased 8.6% from 2001 to $1.1 billion and accounted for 24.6% of the total; while all other glassware decreased 12.9% to $1.8 billion and accounted for 39.6%. Total unit shipments for these categories could not be obtained.

Figure 1. U.S. stemware shipments.
In the consumer glassware segment, shipments of stemware decreased by 6.4% to 13,444 dozen valued at $148.5 million (see Figure 1), while shipments of glass tumblers dropped 4.7% to 37.9 million dozen (see Figure 2). However, shipments of glass tableware increased 2.1% to 193 million pieces valued at $264.2 million (see Figure 3). Figures for other consumer glass products could not be obtained. Overall, the trend in this category has been toward less domestic production and increased imports; in 1998, imports comprised 41.6% of apparent consumption, while in 2002 they comprised 46.3% (see Figure 4).

These trends are having a negative impact on U.S. jobs in this sector. In the end of 2002 and beginning of 2003, Lancaster Colony consolidated its glass manufacturing operations at the Indiana Glass Co. plant in Dunkirk, Ind., into its Sapulpa, Okla., facility, resulting in a loss of 240 jobs. The company said that the move was necessary to save costs in an increasingly challenging consumer glassware market. The lower demand for electronic glassware forced fiber-optics maker Corning Inc. to announce in early 2003 that it would shut down a plant in State College, Pa., at a loss of 1000 jobs. The plant, operated jointly by Corning Asahi Video Products and the U.S. subsidiary of Japan¿s Asahi Glass Co., makes cathode ray tube (CRT) glass used in conventional televisions in North America.

Figure 2. U.S. glass tumbler shipments.

Other Glass

According to a recent report from Business Communications Co. (BCC), flat panel displays (FPDs) will continue to overtake CRTs in applications such as portable computers, handheld electronic devices, desktop computers and televisions.3 Flat panel displays accounted for 54.6% of the total display materials in 2002 and are projected to account for 57.2% of materials in 2003. Their value is projected to grow at an average annual growth rate (AAGR) of 16.5% and account for 73.2% of all display materials by 2008.

Figure 3. U.S. glass tableware shipments.
The value of CRT glass represented over 88% of all CRT materials used, or $1 billion, in 2003, and will rise at an AAGR of just 1% to reach $5.3 billion by 2008. The value of flat panel glass shipments will increase at an AAGR of 16.4% and grow from $1.9 billion in 2003 to $4.2 billion in 2008. Worldwide shipments of color filters for flat panel displays will also increase strongly, at an AAGR of 18.4%.

Figure 4. U.S. imports of other consumer glass products.
Sales of liquid crystal displays (LCDs) have also been higher in recent years, and that trend is expected to continue in the near future.

Editor's note:

The foregoing information (except where noted) was compiled from publicly available information in annual reports and news releases from companies listed in the 2003 Glass Giants (see http://www.ceramicindustry.com/FILES/HTML/CI_2003_CI_Giants/0,1067,,00.html).

References:

1. "World Flat Glass," November 2002, 381 pp. The full report is available for $4700 from The Freedonia Group, Inc., 767 Beta Dr., Cleveland, OH 44143-2326; (440) 684-9600; fax (440) 646-0484; e-mail pr@freedoniagroup.com; or www.freedoniagroup.com. 2. "Beverage Containers," August 2003, 320 pp. The full report is available for $3900 from The Freedonia Group, Inc., Cleveland, OH. 3. "RGB-203N Major Display Materials: Markets, Technologies," August 2003. The full report is available for $3850 from Business Communications Co., Inc., 25 Van Zant St., Norwalk, CT 06855; (203) 853-4266, ext. 309; e-mail publisher@bccresearch.com; or www.bccresearch.com.