Zhongjin: Profit differentiation in the photovoltaic glass industry is increasing, and the profit margin of leading enterprises is expected to rise.

CICC released a research report stating that next year, the profit margin of top photovoltaic glass companies is expected to increase, while there is a risk of further decline in profits for second-tier and below companies. Domestically, next year, leading glass companies are expected to see improved domestic profits compared to this year; at the same time, second-tier and below glass companies find it difficult to increase glass sales by selling at prices lower than the industry average, making profit conversion difficult. Overseas, due to the continuous increase in demand from foreign component manufacturers, it is expected that net profits will remain above 3 yuan/square meter. Top companies can increase comprehensive profit margins by increasing the proportion of overseas shipments. However, most domestic second-tier and below companies do not have a base of overseas customers, making it difficult for them to improve their survival status by exporting products for higher profits. In terms of supply and demand, the polarization of capacity utilization rate will deepen by 2026. If supply and demand reach a balance, domestic photovoltaic glass capacity is expected to reduce by 5000-20000 tons compared to this year. Due to the weakened domestic component demand next year, corresponding demand for photovoltaic glass is expected to decrease by about 23-36%; overseas component demand is expected to increase by about 60GW compared to this year, with total demand expected to reach 150GW. CICC estimates that domestic adjustment of 8800 tons of capacity is still needed to sell glass directly overseas. In this situation, CICC believes that photovoltaic glass companies with overseas customer bases can still maintain relatively good utilization rates, while companies with limited export capabilities will ultimately see increasing inventory that cannot be converted into income, leading to increased operational pressures and eventually cash flow disruption, forcing them to passively clear their capacity. In terms of prices and costs, next year is expected to stabilize compared to this year. This year, the average price of 2.0mm photovoltaic glass including taxes was 12.59 yuan/square meter, a decrease of 15.83% year-on-year. CICC believes that next year, the average price is expected to remain at 13-13.5 yuan/square meter throughout the year, in line with the guidance of not selling below cost price. In terms of costs, there is a slight downward pressure next year overall, mainly due to an oversupply of soda ash and ultra-clear quartz sand, which provides some room for a slight price reduction, with stable natural gas prices and a gradual decrease in antimony usage in clarifiers.