Glass market dynamics: Ample supply, Weakened demand

February 2, 2024

3 mins read

Glass bottle availability in the UK and EU has improved significantly since spring 2023, with market players reporting a return to steady supply. One EU-based buyer noted that availability was “much better” and that “normality had returned” to the market. Additionally, market sources commented that there remains free capacity in Europe due to weakened demand. While other sources agreed that availability had improved, they were unconvinced that the market had balanced; “availability is ok,” said another EU buyer, “provided the volumes are not huge. It has improved compared to last quarter.”

Some market players also observed weaker demand in January y-o-y. One source noted that demand had declined “mainly because of inflation. People are generally spending less.” Indeed, persistently high interest rates have restricted buyers’ purchasing power, limiting demand. Another issue is the military escalation in the Middle East, which has caused supply disruption; one manufacturer in China commented that prices for container glass bound for Europe had doubled over January. Mintec is closely watching developments in the Red Sea to provide updates on how this is impacting the supply of goods.

The launch of Mintec’s five new MBP UK container glass indices will add transparency to the UK glass market. Container glass, known for its widespread use and sustainability, takes center stage, and our new assessments aim to bring clarity to this traditionally opaque market for better informed decision making.

Energy

In recent months, the crude oil price has declined, with a knock-on downward impact on natural gas prices, a major production cost for glass manufacturing. Players in the energy markets commented that uncertainty in the Middle East, and the prospect of a wider conflict, could be a bullish driver for oil and gas prices in the coming months. One market source opined that energy surcharges would disappear in 2024, with a consequent reduction in glass prices. Another player said, “some companies have their own hedging strategy, whereas others want to stay on the spot market.” Others stated that suppliers were refusing to lower prices, citing higher wages and transport costs.

Raw Materials

The monthly average price of silica sand exw China [
Mintec Code: TT51] for December (latest available data) was $57.87/MT, representing a 0.4% m-o-m increase. Despite the monthly price rise, Chinese silica sand production has reportedly improved in recent months, with an abundance of supply in the country. Furthermore, domestic demand remains sluggish. However, silica sand manufacturers in the Middle East commented that the ability to ship product has been negatively impacted by the military tensions in the region, namely Houthi attacks on commercial shipping. One source noted that shipments were still moving, but at a much-reduced rate, and believed that this would support silica sand prices with the potential for a slightly bullish impact on glass prices.

The worsening economic environment in China has pushed prices down in the soda ash market. Furthermore, recent oversupply in many markets, especially India, has resulted in producers lowering prices to incentivize purchases. For reference, the price of soda ash fob Kenya [Mintec Code: WY31] averaged $297.50/MT in January, down 2.5% m-o-m. However, increased demand from the construction and automotive sectors in the US and the EU, and weather-related supply disruptions in the US (hurricanes) and China (typhoons) temporarily capped supply, thus limiting downward price moves.

Trend

The overwhelming sentiment within the container glass market is currently bearish. As buyers are once again able to pick and choose suppliers, and the cost of energy continues to decline, many market players are now reporting decreasing container glass prices. This trend is compounded by falling raw materials prices.

With Mintec’s new MBP UK glass container indices, this not only enhances transparency but also establishes reliable reference prices for the manufacturing cost of glass containers to elevate your market insight and enhance your procurement strategy. Book a demo today to unlock the actionable intelligence you need to stay ahead of the curve with Mintec Analytics.

Andrew Woods
Andrew Woods

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