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Setc orders overhaul of glass manufacturing industry

The Chinese State Economy and Trade Commission (SETC) recently applied the brakes on the development of the domestic glass industry and has ordered an overhaul of ongoing projects. Overheated investme…

The Chinese State Economy and Trade Commission (SETC) recently applied the brakes on the development of the domestic glass industry and has ordered an overhaul of ongoing projects. Overheated investment in the past two years has triggered an oversupply, resulting in a price plunge for the whole industry, the low-end plate glass sector in particular. In the first 11 months in 2001, the domestic glass stockpile jumped 67%, while prices fell by 25%. The industry“s profits plummeted 52% year-on-year, and profits in the sheet glass sector decreased by RMB 727 million (US$ 88 million). Almost a third of State-owned and -controlled glass manufacturing plants are in red. Since the second half of 1999, 26 production lines have been either been approved or started by local government authorities without coherent central authorization. A market flooded with plate glass resulted, as did structural imbalance in the industry and undersupply of high-end products. All projects under construction or in the preliminary phase are required to halt, and applications for new projects must be submitted to SETC and the State Development Planning Commission (SDPC). The People“s Bank of China, the nation“s central bank, will review related bank loans to these projects.

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