China Glass: no fears for new austerity measures

Continuing uncertainty for mainland Chinese glassmakers despite a price rebound in the past few months was the message that emerged from the annual general meeting of China Glass Holdings on 29 May 20…

Continuing uncertainty for mainland Chinese glassmakers despite a price rebound in the past few months was the message that emerged from the annual general meeting of China Glass Holdings on 29 May 2006. “From two months ago, the average glass price climbed up from CNY 60 (USD 7.5) per weight case to CNY 80 (USD 10), up 25%”, China Glass Holdings“ chairman Zhao Linghuan said. “That gives a temporary relief to glassmakers”. Glass production slowed in mainland China in 2005, with flat glass output amounting to 175 million tons, up 15% over 2004, the year when it rose by 20%. Demand for glass was weak too, increasing by only 4.8% year-on-year and resulting in a surplus. Glass-makers“ profit margin also fell in 2005 because of rising costs and falling prices that forced a number of smaller players to the verge of bankruptcy, heralding a consolidation of the sector. It was still hard to say if the current rebound would continue, Zhao said, citing uncertainties in oil prices. “It is still hard to say at this stage whether our margin of profit has room for improvement in 2006”, Zhao said. China Glass“ profit margin decreased to 18% in 2005. But Zhao was not worried over the latest government restrictions on certain industries, saying it would not affect the glass sector much. “The new policies mainly target housing”, Zhao said. They will not put a brake on the infrastructure sector and automobile companies that are the big-time glass buyers. On the China Glass acquisition of seven smaller rivals, which was announced in February 2006, Zhao said the deals were on their way, without giving a date for their completion. After the acquisitions, the Hong Kong-listed company“s daily melting capacity would more than triple from 1,500 tons to 4,780 tons. Also, it would operate 14 production lines, up from the present three. China Glass was looking at more acquisitions, though it was not in talks, Zhao said.