Asahi Glass Raises Forecast
As we noted on 3/30/21, Corning (GLW) raised glass substrate prices ‘moderately’ in 2Q, a result of increased raw material, energy, and logistics costs, which Corning had been absorbing until the price change. As noted, typically glass prices decline each quarter so this was a seminal event, but given the commonality between display glass suppliers, of whom there are few, it is logical to expect that others would follow. Last night in Japan, AGC (5201.JP) announced a revision to its forecast for 1H results that indicated a 6.6% increase in sales from the previous forecast, an 88.8% increase in operating profit, all of which would result in sales growth of 22.2% y/y instead of the previously expected 14.6% and a 313% y/y increase in operating profit. AGC also raised full year 2021 sales expectations by 7.8% and operating profit expectations by 60.0%, indicating a slight increase in sales expectations for 2H with an accompanying increase in operating profit, albeit at a lesser arte than in the 1st half.
AGC and NEG (5214.JP) both experienced issues at glass facilities recently, with AGC’s Gumi glass plant experiencing an explosion in late January and NEG suffered a power outage last December, both of which put additional pressure on an already tight substrate glass market. However the loss of capacity was not enough to offset the increase in glass prices at all three major glass substrate suppliers, with NEG raising guidance earlier this month. While certainly a positive for glass producers, with the glass substrate is usually among the highest single cost component of displays, particularly large panel displays, these component price increases continue the push toward higher consumer CE prices, with panel producers now passing on such increases as lower cost component stock is diminished. Made worse by shortages of silicon (foundry) components, such end user price increases will become increasingly more commonplace going forward, and unless the world sees an unprecedented financial boom, eventually such price increases will curtail demand.
AGC and NEG (5214.JP) both experienced issues at glass facilities recently, with AGC’s Gumi glass plant experiencing an explosion in late January and NEG suffered a power outage last December, both of which put additional pressure on an already tight substrate glass market. However the loss of capacity was not enough to offset the increase in glass prices at all three major glass substrate suppliers, with NEG raising guidance earlier this month. While certainly a positive for glass producers, with the glass substrate is usually among the highest single cost component of displays, particularly large panel displays, these component price increases continue the push toward higher consumer CE prices, with panel producers now passing on such increases as lower cost component stock is diminished. Made worse by shortages of silicon (foundry) components, such end user price increases will become increasingly more commonplace going forward, and unless the world sees an unprecedented financial boom, eventually such price increases will curtail demand.
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