JEDDAH, 4 September 2006 — Flat glass industry is a future growth area in GCC countries due to the recent substantial growth in the construction sector that is expected to continue for the next few years, according to a recent report. The report on Flat Glass Industry in GCC by the Gulf Organization for Industrial Consulting (GOIC) states that the investment size in flat glass production in GCC member states exceeded $564 million in 2005.
Fueled by high oil prices and high population growth, the construction boom in the region is contributing to the growth of several related industries including flat glass. The report estimates the total investment in the construction sector in the GCC countries to be more than $80 billion over the next five years. The report adds that, there are over 75 producers in glass sector in GCC states, most of them, around 35, are in Saudi Arabia, with a capacity of 131,000 tons per year, followed by the UAE with 20 glass producers. The capacity of major glass processing industrial units is around 1.1 million tons per year.
The report indicated that the average global annual growth in flat glass consumption has been 4 percent in comparison to GDP growth of 2.8 percent for the period 1990-2003. It is expected that the same growth rate will be maintained over the next decade. The report also expects that the annual consumption of flat glass in GCC member states will exceed one million ton due to the recent phenomenal growth in the construction sector especially in the UAE, Qatar and Saudi Arabia.
Growth rate in glass products in the last three years in GCC was about 8 percent and expected to increase to 10-12 percent in the coming three years. The prices of imported flat glass range between $450 and $600 per ton or $6-8 per square meter. The GCC flat glass industry is composed of a small group of glass producers and a much larger group of fabricators. The former operate integrated facilities that produce both basic float glass and a wide variety of advanced products; the latter purchase basic float glass and concentrate entirely on higher value-added products. At the international level, the four largest international glass companies — Pilkington, Saint-Gobain, Asahi and Guardian — produce 61 percent of the world’s high quality float glass and 45 percent of all flat glass. Much of the world’s lower quality float and sheet glass production is being replaced by high quality float.
The world production grew on average 4 percent per annum in the period 1990-2003. China, Europe and North America absorb approximately 75 percent of all flat glass produced. Europe is the most mature glass market and has the highest proportion of value-added products. China has increased its demand significantly since the 1990s due to the high growth in its construction sector. China now has 120 float lines as compared to only 50 float lines in Europe and is planning to add more float lines in the near future. Most of the production of flat glass in China is consumed locally with only 10 percent sold abroad. With Saudi Arabia increasing its business and investment opportunities with China, flat glass is a good area to focus on.
The global consumption of flat glass in 2005 is estimated to be about 40 million tons, with the construction sector accounting for approximately 75 percent. Flat glass is widely used in the construction industry since it is available in a variety of forms and types.
The other percentage of around 10 percent is used in glazing products for automotive applications and the rest is used in furniture and other interior applications. Investing in flat glass is picking up for other reasons besides economic growth. Demand growth for glass is also driven by legislation and regulations concerning safety, noise attenuation and the response to the growing need for energy conservation.
Architects and car designers continue to increase the glass content in buildings and vehicles. Demand for value-added products is growing at a faster rate than demand for basic glass, enriching the product mix and boosting the sales line. Value-added products are delivering greater functionality to a vehicle’s glazing and adding a further growth dimension to automotive glazing sales. Furthermore, the main inputs for glass manufacturing are sand, soda ash and limestone, which are available in some of the GCC states. However, investing in flat glass industry would require proper planning. It is capital intensive and needs advanced technology and know-how.