Yaohua to benefit from glass price rises
Sino-British joint venture Shanghai Yaohua Pilkington Glass Co says it will benefit from moves by a cartel of Chinese state-owned glass-makers to raise prices, even though it is not part of the alliance.
'Chinese glass-makers do not operate in a vacuum, but as a sector. Any changes in the market will undoubtedly affect all the parties involved,' company secretary Gui Xintian said.
From the beginning of this month, Chinese state-owned glass-makers agreed to raise their prices for white glass to 21 to 23 yuan a square metre (about HK$19.54 to $21.40).
'Our products are usually three yuan more than the state-owned products, so when their product prices are kept above a minimum, so are ours,' Mr Gui said.
The state-owned glass-makers sell to the mass market while Yaohua aims for the upper end of the market.
Analysts said any attempts to halt falling prices could be a short-term solution for manufacturers, as sluggish demand, over-expansion and fierce competition remained in the sector.
Sliding prices had seen profits in the sector squeezed.
H-share Luoyang Glass Co is leading the alliance with 21 other glass-makers that together account for about 80 per cent of China's float glass production. The move follows a 30 per cent slide in prices in the first half.
Yaohua's product prices fell 20 per cent over the period, contributing to a 24.1 per cent fall in first-half profits to 189.76 million yuan.
Analysts said increasing competition in the high-quality float-glass sector in China had contributed to falling product prices.