Glass Explosion
As we noted on 12/15/20, a power blackout in Takatsuki, Japan caused damage to glass production melters at Nippon Electric Glass (5214.JP), aka NEG, which limited the availability of glass from this facility. While LG Display (LPL), is NEG’s largest customer, the reduction in glass supply could not have come at a more inopportune time as demand across the display space is high, causing glass supply to be tight even before the NEG issue. That said, it seems that Asahi Glass (5201.JP) faced an explosion at its glass production facility in Paju, South Korea on Friday, which caused damage to equipment and injured workers. According to the local fire department, the explosion was caused by residual gas (likely hydrogen) in a pipeline that workers were repairing as part of a conversion of some of the plant’s capacity from Gen 8.5 glass to Gen 10.5 glass.
While the extent of the damage is not yet known any damage to glass production is serious given how tight the market is currently. As we noted last week, Corning (GLW) stated that they are seeing unusually strong glass pricing, with 1Q contracts seeing little or no price declines and some potential price increases, which has not been the case for years. The overall display glass market is very limited to new players and quite capital intensive, which makes relatively short-term disruptions quite difficult for panel producers who need 24/7 access to glass substrate suppliers. As the production line at Asahi was already down, it should not have an effect on supply as it stood last week, however if other lines were damaged or the explosion caused damage that pushes back the Gen 8.5 to Gen 10.5 conversion, the glass market could tighten further.
While the extent of the damage is not yet known any damage to glass production is serious given how tight the market is currently. As we noted last week, Corning (GLW) stated that they are seeing unusually strong glass pricing, with 1Q contracts seeing little or no price declines and some potential price increases, which has not been the case for years. The overall display glass market is very limited to new players and quite capital intensive, which makes relatively short-term disruptions quite difficult for panel producers who need 24/7 access to glass substrate suppliers. As the production line at Asahi was already down, it should not have an effect on supply as it stood last week, however if other lines were damaged or the explosion caused damage that pushes back the Gen 8.5 to Gen 10.5 conversion, the glass market could tighten further.
RSS Feed