Glassmaking decline to weigh on metals demand

Glass production in Europe has fallen from a record high reached in the second half of 2022 as the global industry faces tightening supply owing to high energy costs and supply chain disruptions.

Demand for glass from industries as diverse as food packaging, ceramics and solar panels continues to rise, but supply has become constrained, which has implications for the range of metals used in glass colouring, decolourisation and coatings.

Oxides of chromium, cobalt, manganese, titanium and vanadium are used in glass production, as well as selenium, cerium, copper, nickel and iron. Sulphurous compounds of lead, copper, cadmium and iron are used in the production of coloured glass. Platinum, platinum-rhodium alloys and iridium are used in production equipment and corrosion-resistant coatings. Lower glass production translates into lower demand for metals from manufacturers.

The energy crisis has had a substantial effect on glass production as an energy-intensive process. Gas and electricity supply accounts for around 24pc of output costs, according to the European Container Glass Federation.

The EU is the world's largest glass supplier, accounting for around a third of global production. Approximately 80pc of the glass manufactured is traded within the EU. Container glass accounts for around 60pc of EU glass output in terms of volume and around 54pc in terms of value, flat glass accounts for around 30pc by volume and value, and domestic glass, special glass, and reinforcement glass fibres account for the remainder. There are 162 container glass factories across 23 countries in Europe.

The largest producers in the region, such as Germany and Italy, are among the countries that depend on Russian gas imports.

Glass production in Germany has declined from a record high in April 2022, with the monthly production index for the manufacture of glass and glass products dropping from 110.4, according to Eurostat data. While the index ticked up to 107.5 in August from 105.6 in July and moved up to 103.4 in January from 102.5 in December, the value dropped to 97.8 in March, its lowest level since November 2021.

The index for Italy fell to 116.3 in March from a peak of 129.6 in August and 119.5 a year earlier. The production index for France fell to 103 in March from a high of 114.8 a year earlier.

Glass furnaces heat sand to 1,500-2,000°C and must run continuously to keep the glass in a liquid state, as switching off the furnace cools and solidifies the glass, damaging the ceramic equipment. Furnaces primarily use gas as their source of energy and cannot easily switch to electricity or renewable fuels such as biomass.

There are electric furnaces in operation for small production runs and over the long term the industry is looking to replace natural gas supply with renewable electricity, according to the European Container Glass Federation. The process will take time as glass manufacturing involves high start-up costs and the capital-intensive production facilities require long investment cycles.

The industry is calling for support measures at the EU and national levels to help it manage higher energy costs. While European natural gas prices have dropped from their record highs, they remain at wide premiums to their pre-crisis levels.

Two glass manufacturers in France — Arc International and Duralex — restarted their furnaces in April, after eight month and five-month shutdowns, respectively, in response to high gas prices. Both plants received support from the French government to resume operations, with Arc receiving a €10mn loan from the industry ministry. Duralex had an electricity hedging contract in place that allowed it to restart at more favourable prices during the second quarter. AGC Glass France closed the B2 unit of its Boussois plant in February after 21 years in operation. The B1 unit closed in 2020 owing to the Covid-19 pandemic but uses an oxy-combustion process that could allow it to potentially restart to "contribute to AGC's production process decarbonisation objectives by 2030", depending on market conditions, the company said.

AGC said in February that it has developed a technology with Saint-Gobain to convert flat glass production lines from using gas to low-carbon electricity. AGC plans to use the design to refurbish a patterned glass line in the Czech Republic to run on 50pc electricity and 50pc oxygen and gas by the second half of 2024.

Chinese glass production has been ramping up to meet the immediate global demand, but some manufacturers have also faced factory closures owing to energy supply problems and high shipping costs. Delays at US ports have further contributed to the supply crunch.

One sector of the glass industry where production is increasing is solar glass, as photovoltaic (PV) panel manufacturers have been able to pass on higher input costs to customers, given ongoing strong demand for solar PV installations around the world.

India-based Borosil Renewables said last week that it has increased the solar glass production capacity of its German unit, GMB Glasmanufaktur Brandenburg, to 350 t/d from 300 t/d, with a modification that will also reduce its energy consumption. Several Indian glassmakers have announced plans to move into the solar glass production sector.

There are plans for new facilities in Turkey and Canada, as well as the US, where Vitro Architectural Glass is investing $93.6mn to rebuild and modernise a production line at its plant in Pennsylvania. The company has an agreement to supply US solar equipment manufacturer First Solar with glass for its thin-film PV solar panels.