Sensitivity Analysis Report on the Impact of Soda Ash Price Fluctuations on Flat Glass (601865.SS)'s Gross Profit Margin

Based on the collected data and analysis, we now provide you with the complete

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Flat Glass Group is one of the leading enterprises in China’s photovoltaic glass industry, with its main business being the R&D, production, and sales of photovoltaic glass. Soda ash (sodium carbonate), as a key raw material for photovoltaic glass production, accounts for approximately 16% of production costs and is one of the key factors affecting the company’s gross profit margin [0][1].

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According to industry research data, the cost structure of photovoltaic glass production is as follows [1][2][3]:

Cost Item	Proportion	Sensitivity to Gross Profit Margin
Fuel (Natural Gas/Petcoke)	20.0%	High
Soda Ash (Sodium Carbonate)	16.0%	Medium-High
Antimony-Based Refining Agent	10.0%	Medium-High
Depreciation	12.0%	Low
Quartz Sand	8.0%	Low
Electricity	8.0%	Medium
Labor Costs	8.0%	Low
Other Materials	18.0%	Low

: Soda ash is the raw material with the greatest impact on gross profit margin after fuel, accounting for approximately 16% of production costs.

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Based on model calculations and historical data analysis [0][1]:

Sensitivity Indicator	Value	Description
For every RMB 100/ton change in soda ash price	±0.16 percentage points	Gross profit margin changes in the opposite direction
For every 10% change in soda ash price	±1.6 percentage points	Gross profit margin changes in the opposite direction
Correlation coefficient between soda ash price and gross profit margin	0.93	Strong positive correlation

Soda Ash Price (RMB/ton)	Price Change	Gross Profit Margin	Change in Gross Profit Margin	Gross Profit per Square Meter (RMB)
1200	-25%	20.1%	+3.3pp	2.61
1400	-12%	18.4%	+1.6pp	2.40
1600	0%	16.8%	0pp	2.18
1800	+12%	15.1%	-1.7pp	1.96
2000	+25%	13.4%	-3.4pp	1.75
2200	+38%	11.8%	-5.0pp	1.53
2400	+50%	10.1%	-6.7pp	1.31

: pp = percentage points

Based on historical data backtesting analysis [0][3]:

• 2023Q1 Soda Ash Price
  : Approximately RMB 2,800/ton → Gross Profit Margin: 22.4%
• 2025Q3 Soda Ash Price
  : Approximately RMB 1,600/ton → Gross Profit Margin: 16.8%
• Soda Ash Price Change
  : -42.9%
• Change in Gross Profit Margin
  : -5.6 percentage points
• Actual Sensitivity Coefficient
  : Approximately 0.13 percentage points per 1% price change

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Scenario	Probability	Soda Ash Price (RMB/ton)	Glass Price (RMB/㎡)	Projected Gross Profit Margin	Expected Gross Profit (RMB 100 million)
Extremely Optimistic	10%	1,300	14.5	27.6%	48.1
Optimistic	20%	1,450	14.0	23.9%	40.1
Neutral	40%	1,600	13.0	16.8%	26.2
Pessimistic	20%	1,800	12.0	8.0%	11.6
Extremely Pessimistic	10%	2,000	11.0	-2.3%	-3.0

• Weighted Average Gross Profit Margin
  : 15.6%
• Weighted Average Gross Profit Amount
  : RMB 2.53 billion/year (calculated based on an annual production capacity of 1.2 billion ㎡)

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According to industry research data [3][4]:

1. Supply Side
   : In 2025, domestic new soda ash production capacity will be approximately 5 million tons, including:
   • Lianyungang Debang: 600,000 tons
   • Lianyungang Alkali Industry: 1.3 million tons
   • Yuanxing Energy Phase II: 2.8 million tons (planned to be put into production at the end of the year)
   • Total production capacity may exceed 45 million tons by the end of the year

2. Demand Side
   :
   • Demand for soda ash from flat glass decreased by 4.2% (January-September 2025)
   • Demand for soda ash from photovoltaic glass decreased by 9.5% (August-October 2025)
   • Overall demand is weak

3. Price Forecast
   : Against the backdrop of oversupply, soda ash prices are expected to remain at a low level, possibly ranging from RMB 1,000 to 1,500 per ton

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Strategy Type	Specific Measures	Expected Effect
Price Locking	Sign long-term procurement agreements with suppliers	Lock in cost range
Futures Hedging	Participate in soda ash futures hedging	Hedge against price fluctuation risks
Inventory Management	Optimize raw material inventory cycle	Smooth out procurement costs
Alternative Solutions	Evaluate the feasibility of soda ash substitution technologies	Reduce single-source dependency

1. Marginal Changes in Soda Ash Prices
   : Current prices are at a historical low, with limited room for further decline
2. Linkage Impact of Antimony Prices
   : The rise in antimony prices (which has surpassed soda ash as the largest main material cost) may change the cost structure
3. Overseas Capacity Layout
   : The company’s Vietnam base is operating at full capacity, and the Indonesia project is progressing, which can diversify raw material risks
4. Impact of Industry Production Cuts
   : The top ten photovoltaic glass manufacturers plan to cut production by 30%, which may drive the stabilization of glass prices

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:

1. High Sensitivity
   : For every 10% change in soda ash prices, Flat Glass’s gross profit margin moves in the opposite direction by approximately 1.6 percentage points
2. Current Favorable Situation
   : Soda ash prices have fallen sharply in 2025, supporting the company’s gross profit margin
3. Limited Marginal Improvement
   : Soda ash prices are already near the cost line, with limited room for further decline
4. Comprehensive Impact
   : Gross profit margin is jointly affected by multiple factors such as glass prices and capacity utilization, with soda ash prices being only one of them

: It is recommended to continue monitoring the trend of soda ash prices and the progress of the company’s overseas capacity release, as these will be key variables affecting future profitability.

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[0] Jinling API Data - Financial Analysis and Market Price Data of Flat Glass
[1] Minmetals Securities - In-Depth Research on Antimony Series: Cost Structure Analysis of Photovoltaic Glass (August 2024)
[2] Minsheng Securities - Discussion on the Cyclical Properties of Soda Ash and Glass (November 2023)
[3] Huaxin Futures - Special Report on Soda Ash: Loose Soda Ash Supply, Widespread Losses Among Enterprises (November 2025)
[4] BOCOM International - Flat Glass Company Update Report (October 2025)