Economy, Business And Markets

Glass Industry Hit by Sluggish Demand, Uncontrolled Imports

The domestic glass industry’s production capacity currently stands at 2.4 million tons per year.
The domestic glass industry’s production capacity currently stands at 2.4 million tons per year.

Iran’s glassworkers are currently operating at 85% of their production capacity while their output exceeds domestic demand by more than 30%.

Faced with lack of domestic demand, the surplus production is mostly exported. However, the industry’s production and export viability is being threatened by imports.

The industry’s output capacity currently stands at 2.4 million tons per year,” Hossein Zojaji, the head of Iran Glass Association, was quoted as saying by SMT Daily.

“The glass industry mostly operates at its highest rate at all times. Producers are currently churning out 2 million tons per year, but demand is limited.”

Glass production is different from other industrial activities in that the machinery is turned off in other factories when there is no production, but glass furnaces are always burning.

During the 18 to 20 years, which is the lifespan of an industrial furnace, it is never turned off, because the melted material inside will become as hard as stone and the device cannot be used again. This is why glass production is an ongoing activity and any supply-demand imbalance becomes problematic.

According to the official, glass products are exported to Afghanistan, Iraq, Turkey and India, among other destinations.

Zojaji called on the government to increase support by providing producers with export incentives and curbing imports.

There are about 160-200 glasswork plants in Iran, nearly all of which belong to the private sector.

The domestic industry is nearly self-sufficient. More than 95% of demand for the primary glassmaking material, Silica, are met locally.

Silica is used in the production of windowpanes, drinking glasses, beverage bottles and many other articles.

A large component of optical fibers are also made of silica—the primary raw material for earthenware, stoneware, and porcelain.

Like most other industries, domestic demand for glass products such as food container glass and construction glass is highly subdued.

Zojaji said the only product with sustainable demand is car glass. He expects 1.5 million tons of car glass to be sold in Iran by the end of the current fiscal year (March 2017-18).

Demand for car glass might increase further, as automakers are boosting production. Automakers’ lack of liquidity, however, could be a potential issue down the road, as it would delay much-needed payments for the glass industry.

In the previous fiscal year (March 2016-17), Iranian carmakers produced 1.3 million vehicles, recording a 40.7% growth year-on-year, according to the Ministry of Industries, Mining and Trade. The country’s leading auto manufacturer, Iran Khodro Group, accounted for 634,481 units, up 31% YOY. SAIPA, the second largest manufacturer produced 319,850 units, up 43% while Pars Khodro made 197,989 units, up 74%.

The growth in numbers was particularly significant for the last month of the year (Feb. 19-March 20). IKCO produced 57,433 vehicles, marking a 16.2% rise. SAIPA posted a 46.6% growth with 47,135 units.

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