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Recently, the price of soda ash has shifted upwards and the cost of glass production has risen. As a result, the spot prices of glass markets in various regions have rebounded from the lows of the year, and the price of glass has also rebounded. However, it is currently in the low season of traditional demand. After the market has increased, the downstream needs time to digest, and the glass price continues to rise.
Cost rises, spot low rises
Constrained by environmental protection factors, the actual production capacity of the soda ash market this year is relatively small. The average operating rate of soda ash in January-October 2018 is only 84%, which is 3 percentage points lower than the same period of last year. From January to October, the cumulative production of domestic soda ash was 21.27 million tons, down 4.08% year-on-year, continuing the negative growth trend this year. Due to the low supply, the soda ash market stocks continued to fall since the second half of this year, at a low level during the year. In the past month, the price of soda ash has increased by 200 yuan/ton, which has greatly increased the cost of glass production.
Since the fourth quarter, due to the overall cooling of the real estate market, the procurement of processing trade has been cautious, and the glass storage has been blocked. At the end of October, the price of Shahe glass hit a new low in the year, and the price of Huazhong glass market also fell sharply in the first half of November. The price of the two major glass production areas is lower than the market confidence. However, with the recent increase in soda ash prices, the East China North China Market Conference in early December set off a wave of price increases, and the manufacturers involved have risen. The South China Central China Conference held recently also actively created an atmosphere of price hikes.
Up to now, the price of Shahe glass has risen by 30 yuan/ton from the low level in the year, and the pressure brought by the rising price of soda ash has been basically digested. According to statistics, the current gross profit of Shahe coal-fired glass production is still about 11%. Under the support of relatively good profits, the pressure of rising costs cannot be fully converted to the original film, especially in the current low-season market demand, the downstream market also It takes some time to digest the cost, and the glass spot gain is difficult to sustain.
Demand shrinking inventory is difficult to digest
Since November, although the second line of Guangxi Nanning Float Glass Co., Ltd. and the second line of Anhui Fengyang Glass have resumed production, there are as many as 5 cold repair production lines, so the short-term supply reduction will help the glass price rebound. But it is worth noting that from the whole yearplate glassIn terms of market, glass production capacity is still growing during the year. The data shows that the number of re-production and new construction has reached 23 this year. In addition to the cold repair capacity, there is still an increase of 5,310 tons/day. Since many production lines were put into operation in 2010-2014, the kiln age of these production lines has passed the production period. Once the profit continues to decline, the manufacturers may choose to repair the production by cold repair. However, under the current profit status, manufacturers are not willing to take the initiative to go to capacity.
At present, the inventory of glass manufacturers is 31.47 million weight boxes, an increase of 480,000 weight boxes compared with the same period of last year. With the recent increase in the spot price of glass around the country, traders may have to replenish their demand in the downstream market. However, the weather turned cold, and the construction rate of the northern downstream construction market declined, and it was difficult to effectively digest the glass market inventory.
In summary, near the end of the year, with the decline in the construction rate of downstream buildings, the enthusiasm of traders to purchase is not high, and it is difficult to continue to increase the spot price in the later period. However, as the current near-month contract is still about 5% of the spot price, the late glass price may remain high, but the lack of terminal demand will boost, and the future 1905 contract price is not optimistic.
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