The Tubular Glass Supply Shortage: Analysis and Future Outlook
The global capacity for tubular glass products has not kept pace with demand growth in the sector. Furthermore, the year 2018 witnessed an overall shrinkage of capacity owing to multiple plant shutdowns due to M&A activity and plant upgrades by key players in the industry. As a result, downstream markets have witnessed a significant supply shortage of tubular glass products, with a number of suppliers rationing their capacity. The effect of this rationing would be significantly worse for smaller buyers, who may not have enough leverage with suppliers. Top tubular glass suppliers have invested heavily in expanding their capacity over the next 2.5 years. Most large-capacity expansions are to be established in the Asia-Pacific region to cater to the fastest growing tubular glass market. However, the tubular glass supply base is already highly consolidated, and further expansion and acquisitions by top players could further consolidate the market. This article explores the key reasons for the supply tightness and the measures taken by stakeholders to alleviate the condition.
The global tubular glass industry is witnessing a supply shortage in 2018–19, with a number of buyers facing disruptions in their sourcing. With demand for tubular glass products witnessing growth of about 3.5–4 percent annually, the ongoing drop in supply is expected to significantly affect fast-growing downstream sectors such as biologics and vaccines. These sectors mainly require Type I tubular glass products, the supply base of which is dominated by market leaders. With these suppliers rationing their supply based on pre-existing contracts with large, high-volume buyers, smaller buyers such as small- to medium-sized biopharma firms may be more significantly affected by the ongoing crisis.
Tubular Glass Market
The pharma glass tubing market is forecast to grow at about 3–4 percent CAGR by volume over the 2018–28 period, as a result of growth in key segments such as biopharma, vaccines, and insulin. Demand for parenteral packaging components such as PFS, syringes,and vials is expected to showcase strong growth and higher barrier properties offered by glass and newer materials that offer improved delamination and breakage resistance. This drives the preference for glass parenterals over plastic/polymer-based containers. Type I tubular glass products account for about 50–55 percent of overall demand by volume and dominate the demand in key sectors such as biopharma and vaccines. The demand for Type I glass is expected to pick up further, as the industry is witnessing a gradual shift more in favor of Type I glass over Type II glass tubes. Europe is the largest market for Type I glass and also the largest supply base, owing to the presence of many large glass tubing suppliers such as SCHOTT and Nipro Glass. Demand from the APAC region has also been increasing significantly over the last two years, as a result of regulations in many markets that mandate use of higher quality packaging for pharma products.
Related Insights:View All
Get more stories like this
Subscirbe for more news,updates and insights from Beroe