2023, the inventory of float glass has peaked and fallen, and the inventory of production enterprises has declined for six consecutive weeks. Driven by the improvement of market sentiment and destocking, the price of glass futures has risen in the near future, with the contract rising by more than 300 yuan/ton in recent months. So, what are the recent changes in glass fundamentals? How long will this round of rising prices last? What are the key signs of price weakness?
First, the soaring price, the long-lost rise
from March 1 to April 18, the price of glass futures rose sharply, especially in many commodities. By comparison, it is found that the recent futures contract FG2305 has the strongest trend, followed by the spot price in Central China, the spot price in East China and North China, and the futures contract FG2309 has the smallest increase. In just over a month, the glass contract FG2305 rose by more than 20% in recent months, changing the previous weak trend.
Glass inventory dropped sharply, but the increase in feedback orders from glass deep processing enterprises was relatively limited, and this round of rising market was more expected to be driven by the replenishment market. So where does the optimistic expectation of the market come from? Affected
by the decline in demand caused by the downward pressure of the economy and the "uncompleted residential flats" incident, the domestic real estate industry declined significantly in 2022. In 2022, the housing construction area of domestic real estate development enterprises decreased by 7.3% and the new construction area decreased by 39.4% year on year; In order to reduce the drag of the downturn of the real estate industry on the economy, since 2022, China has issued a series of policies of "stabilizing real estate" and "guaranteeing delivery of buildings", including but not limited to relaxing purchase restrictions, restricting sales, provident fund loans, providing housing subsidies and other measures, among which the biggest impact on the market is the "real estate" issued in November 2022. Provide financial support for high-quality housing enterprises. As the domestic economy bottomed out and rebounded, the policy effect has gradually emerged. In January-February 2023, the domestic real estate bottomed out, and the completed area took the lead in restoring positive growth. In January-February, the completed area of domestic real estate development enterprises increased by 8.0% year-on-year, the construction area decreased by 4.4% year-on-year, and the new construction area decreased by 9.1% year-on-year. Spot market sentiment has improved, and some institutions and traders are actively purchasing spot goods; High-frequency data in March showed a further recovery of domestic real estate. In March, the transaction data of new and second-hand houses in sample cities increased significantly year-on-year and month-on-month, which further enhanced the confidence of the spot market. Traders and deep processing enterprises actively entered the market to hoard the original pieces, which accelerated the pace of glass inventory and price rise. In fact, the logic of
this round of replenishment in the middle and lower reaches is not complicated. The replenishment in March is more based on the logic that the spot price is in a low range, and the replenishment in April is more based on the logic of optimistic expectations, buying up and not buying down. Data from the National Bureau of Statistics on April 18 showed that the domestic completed area in March increased by 32.0% year-on-year, and the completed area in January-March increased by 14. The data is expected to exceed market expectations and is expected to form a strong support for short-term glass prices.
, the glass industry will have a significant accumulation. Considering the seasonal characteristics of demand and the game between upstream and downstream, the time node of glass upstream accumulation is around June. From the perspective of the whole year, the growth rate of demand will exceed that of supply, and there is still room for inventory to decline in the second half of the year. </p><p style=)
At the operational level, we still hold an optimistic view on glass, and callback is still the main idea in the short and medium term. Glass deep processing enterprises can focus on buying hedging opportunities after FG2309 contract callback. The FG2309 contract focuses on support near 1650-1700. During the year, the main game point of glass lies in the speed of supply recovery and the improvement of demand. We believe that the recovery of glass supply is mainly concentrated in the second half of the year, with a potential supply increment of about 7-8%. Benefiting from the policies such as guaranteed delivery, the growth rate of domestic completed housing area is expected to exceed 10% in 2023, which will boost the demand for glass, and the total domestic inventory may accelerate to decline in the second half of the year. However, considering that prices have risen too fast in the short term and prices have partly reflected optimistic expectations for the future, investors should not be overly optimistic. Later, we need to be alert to the risk of price decline caused by factors such as glass supply recovery faster than expected and completion data growth less than expected.
浙公网安备33010802003254号