Display glass prices is set to rise again in 2H24

Worldwide energy cost inflation

The glass industry is heavy industry with substantial fixed costs, primarily due to the large amounts of electricity needed to melt glass materials irrespective of shipment volume. Electricity costs account for over 50% of the production cost.

The recent surge in global energy costs is impacting display glassmakers’ financial results. Figure 1 illustrates the trend of high-voltage electricity prices in Japan up to March 2024. The price peaked in January 2024 at 2.5 times the 2021 price. Given the long-term price trends in natural gas and coal prices, electricity costs are expected to remain elevated for an extended period.

Electricity cost trends vary by country. In May 2024, the electricity prices for the industry in Taiwan increased by 15–25%. While glassmakers are striving to cut glass production costs, the rise in electricity prices is too significant to offset through cost-cutting alone. As a result, glassmakers need to increase glass prices to maintain profitability in their business.

The depreciation of the Japanese yen

Display glass is traded in Japanese yen, and the currency’s depreciation over recent years is evident: $1 to ¥130 in 2022, $1 to ¥140 in 2023, and $1 to ¥150 in 2024. As the yen weakens against the dollar, panel makers can benefit by saving on costs when paying glassmakers in yen. This allows them accept yen price increases for display glass more easily. However, the Chinese renminbi is also depreciating, making it harder for Chinese panel makers to accept glass price increases.

Glass price increase in 2023

All major glassmakers recorded a deficit in 4Q22 due to declining glass orders and falling prices, with NEG suffering deficits for three consecutive quarters. To cut glass production costs, NEG closed its South Korean factory in May, while AGC halted display glass production at its Takasago factory in Japan . Corning responded by announcing a 20% glass price increase in May 2023. Although individual panel maker’s glass price trends are difficult to track, Omdia reported that the average display glass price rose by more than 10% in 2023. NEG’s display glass business returned to profitability partly due to the closure of its South Korean factory and the glass price increases

Glass price increase in 2024

Five years ago, market share and glass revenue increases were the priorities of major glassmakers which lead to fierce competition between them and continuous glass price reductions.

However, the situation changed in 4Q22 as profitability became the primary focus. Japanese glassmakers aligned glass production capacity more closely to glass shipments. In 2024, display glass became the only component with a tight supply/demand balance compared with other display materials and components, as shown in Figure 2. Any unforeseen accidents quickly lead to a capacity shortage.

TFT LCD glass substrate makers—including Corning, AGC, and NEG, which are dominating the glass substrate market—intend to increase glass substrate prices by 15% in 2H24. This increase is likely to be accepted by TFT LCD panel makers, as most display makers were profitable in 1H24.

However, as LCD TV open cell prices decrease in 3Q24, negotiations over glass substrate prices could become challenging. Meanwhile, major glassmakers continue to grapple continuous electricity cost increases, making further price hikes necessary to support stable glass production.

Due to low profitability, major Japanese glassmakers do not have new investment plans are focusing on old tank conversions. This leaves the industry vulnerable to shortages if accidents occur. From the perspective of glass substrate makers, additional investment in new tanks will be essential, and raising glass prices to ensure the sustainability of the display glass business.

Further analysis covering display market trends and industry forecasts prepared by Omdia’s Display practice can be found here.