The phased inventory replenishment in the glass market since July has cooled down recently. The reporter of Futures Daily learned that after the continuous destocking in the early stage, the glass market as a whole has been running smoothly in the past week, and the spot price has remained stable to rise, but the production and sales rate has shown a slight decline. Among them, the production and sales ratios in Shahe and Hubei fell more. According to feedback from market participants, in just one week, the sales-to-production ratio in Shahe fell from 112% to 105%, and that in Hubei dropped from 105% to 69%. The sales-to-production ratios in other regions did not change much, with most remaining above 100%.
"Compared with the beginning of the month, the production and sales ratios in Shahe and Hubei have dropped significantly recently. In early July, the production and sales ratios in Shahe and Hubei were as high as 150%. Recently, the wait-and-see sentiment has increased after replenishment in the middle and lower reaches, and the production and sales ratios have declined." China Securities Construction Investment Futures energy analyst Hu Peng said.
In this regard, Wei Chaoming, an analyst at Founder Mid-Term Futures, also said that in the past week, glass manufacturers have taken the initiative to raise prices, and the pace of inventory replenishment on the downstream demand side has slowed down significantly. Among them, the weakening of production and sales in Central China is more obvious. In his view, this change is also a manifestation of the game between supply and demand before entering the peak season.
"The recent destocking of glass is mainly due to the mid-stream and downstream replenishment driven by optimistic expectations. Both supply and demand have increased slightly, and the enthusiasm for downstream procurement has led to a decline in inventory." Hu Peng said that the inventory of domestic glass manufacturers decreased last week and last week respectively. 180,000 tons and 240,000 tons. As of July 20, the inventory of domestic float glass enterprises was 2.375 million tons, a decrease of 40% compared with the same period last year. Among them, the inventory in North China was 348,000 tons, and the inventory in Central China was 162,000 tons. at a relatively low level.
However, after inventory replenishment since July, the inventory of original glass films in the middle and lower reaches has increased. "At present, the number of days of original film storage in downstream processing plants is 20.3 days, an increase of 2.6 days from the previous period. Last Friday, production and sales began to weaken month-on-month, and some manufacturers' prices fell. The pattern of weak production and sales continued last weekend, and the willingness of downstream replenishment has declined." Zhou Xiaoyan, an analyst at Tou Anxin Futures, said.
The reporter also learned that because the spot prices in Shahe and Hubei were lower than those in other regions, the destocking in Shahe and Hubei was the most obvious in the first two weeks. As companies raise prices and the wait-and-see mood increases after replenishing warehouses in the middle and lower reaches, it is also reasonable for the temporary decline in production and sales ratios in Shahe and Hubei.
Although there is a certain wait-and-see attitude in the current glass market, in the eyes of market participants, the booming supply and demand situation of the glass market has not changed.
"Currently glass still has a certain production profit. Among them, the profit of float glass fueled by natural gas is about 270 yuan/ton, the profit of coal gas is about 390 yuan/ton, and the profit of petroleum coke is about 530 yuan/ton. Ignition." Zhou Xiaoyan said that the ignition speed of the glass production line has been accelerated recently, and the total production capacity of the three ignition production lines is 2,150 tons, with a net increase of 4.9% in production capacity this year.
With the recent acceleration of the resumption of production and ignition of glass production lines, there has been a certain increase in glass supply. The price consolidation in the early stage also shows to a certain extent that the market is worried about the increase in supply. "Stimulated by the current profit of nearly 400 yuan/ton, some production lines that were cold repaired last year are expected to resume production and ignite. It is a high probability event that the daily melting volume of float glass will rise to 170,000T/D within this year. The supply side will support the price in the later stage. Continue to weaken." Hu Peng said.
From a fundamental point of view, the demand for glass has increased slightly recently. As of mid-July, according to Longzhong Information, the orders of glass deep-processing enterprises were 16.4 days, an increase of 1.3 days from the end of June, and close to the level of the same period last year. Since the beginning of the week, macroeconomic expectations have been boosted. The demand for glass in the real estate and automotive sectors has a certain positive expectation. The short-to-medium term demand for glass at the completion end is expected to benefit from relevant policies.
In Wei Chaoming's view, the peak season of "Golden September and Silver October" is approaching. Driven by the downstream demand for stocking up, the current decline in production and sales data is likely to be short-term and phased. "With the improvement of macro expectations, the performance of the glass market in the second half of the year is worth looking forward to." Wei Chaoming said that short-term glass deep-processing enterprises should seize the rare callback buying opportunity and actively buy hedging at the current basis of about 200 yuan to lay the groundwork for the future. Half a year of stable operation has laid the foundation.
Similarly, Hu Peng also believes that the short-term glass replenishment market may come to an end temporarily, but the market is not over yet. The "Golden September Silver October" peak season is superimposed with the expected improvement of the real estate industry. In the next two to three months, there is still room for improvement in glass demand, the probability of stock removal is high, and the valuation may still rise. "In the short and medium term, downstream companies can pay attention to low-level buying and hedging opportunities." He said that in the long run, the weakness of the real estate industry in the past two years will drag down the completion data in 2024. In 2024, the demand for glass may drop significantly, and the long-term glass valuation will drop significantly. Shift, the price downside risk is greater.
"Looking forward to the glass market outlook, the market still needs to pay attention to the actual increase in processing orders, the implementation of real estate policies, and the recovery of real estate sales." Zhou Xiaoyan said that if processing orders increase, the market for glass replenishment is expected to continue again.
