Glass prices were raised during the New Year's Day holiday and in late December, with strong performance in the off-season. The main reason is that since the downstream replenishment
of glass declined in September 2021, there have been several "short frequency and fast" price rebounds, respectively, in November 2021, February 2022 and August 2022. The characteristics are summarized as "stock before off-season" and "stock before peak season" (the main body of stock is different). Glass supply is rigid, so we pay more attention to price and cost. If the inventory is low, the price rebound is still effective. Unlike cement, the original factory, traders and deep processing are three links with inventory, especially the first two. We propose that looking at traders'inventory on the eve of off-season and deep processing inventory on the eve of peak season can help to judge the trend of glass prices.
However, the glass industry chain is extremely dispersed, so we can only observe the leading indicators of Shahe River in Hebei Province, such as capacity changes, local industry chain inventory, manufacturer's insurance policy, etc. (Shahe River accounts for 10-15% of the national capacity), despite the requirements of current game and production restriction (Beijing holds important events or conferences, environmental protection control). The guiding significance of Shahe to the whole country is becoming more and more limited, but the short-term reference value is still irreplaceable. For example, in this "warehouse transfer", the inventory of manufacturers in Shahe at the end of December was about 6.02 million heavy boxes (8.12 million heavy boxes at the beginning of the month), most of which entered the inventory of traders. In February of the next year, the replenishment of deep processing is expected to drive the first wave of price increase, and then enter the "demand verification period". If the demand is good, the deep processing will continue to pick up the goods, the traders will pick up the goods, and digest the stock of the original film factory. If the demand is weak, the traders will sell the pre-stock, the price will fall, and the original film will accumulate.
Looking at the inventory performance of other regions, the inventory of production enterprises in key monitoring provinces at the end of December was 54.34 million heavy boxes, down 6.3 million heavy boxes from the end of November, a decrease of 10.4%. The falling inventory of Shahe accounts for 33% (210/630) of the total, indicating that the destocking of Shahe is more vigorous. At the same time, the cold repair of two local production lines (4 cold repairs nationwide in December, including 2 Shahe, the total daily melting volume of Great Wall Line II and Safety Line II is 950t/d) also has a slight impact. Compared with the inventory in December and November, Hebei, Hubei, Guangdong and Sichuan decreased significantly, corresponding to 120, 158, 117 and 1.01 million heavy boxes respectively. Among the provinces with large inventory, Shandong only decreased by 200,000 heavy boxes, and Jiangsu and Anhui only decreased by 400,000-600,000 heavy boxes. Of the 41 cold repair lines in 2022, 12 in Guangdong are the most prominent, followed by 6 in Hebei + Tianjin, 6 in East China, 4 in Central China, and only 2 in Shandong. On the one hand, the less the inventory decline in East China, the lighter the inventory of deep processing may be. East China lacks glass gathering places. Hebei, Shandong and Hubei can supply East China. At the same time, the social inventory space is small, the deep processing faces the downstream directly, and there is no willingness to stock up in the off-season. Therefore, the decline in East China is lower than average. On the other hand, if demand falls short of expectations, the two major supply provinces, Hebei and Hubei, will be under great pressure. Hebei, Hubei and Guangdong can represent the three provinces of North China, Central China and South China, among which Guangdong's rapid removal of reservoirs is related to weather, epidemic situation and cold repair, while Hebei and Hubei's removal of reservoirs is more related to "moving reservoirs", and the downstream is very scattered.
Glass prices are expected to rise in February strong: deep processing of the replenishment, East China for the number of
policies to protect the building, the completion of the beginning of the year is expected to be very strong, while the Spring Festival early, early start. Referring to the first week after the spring of 2022 (February 17), the inventory of production enterprises in key monitoring provinces was 38.1 million heavy boxes, which was 5.32 million heavy boxes lower than that on February 10. The average price of float glass on February 17 was 2399 yuan/ton, which was 228 yuan/ton higher than that on February 10. Similarly, glass prices are expected to rise in February after the spring of this year. The deep processing inventory in East China may be low, and the price is more sensitive to demand.
Glass March-April is the real test period: the verification of the fundamental
data is presented after the start of construction in spring, and the high-frequency verification of the volume and price in March-May 2023 is very important, basically facing the price. Focus on two aspects: ① how much completion demand recovery, ② how much production line cold repair production. 2022 is the big year of cold repair, 41 production lines, total 25570 T/D, 15 production lines for cold repair, total 11100T/D, annual dimension calculation, 26 production lines for net cold repair, total 14470T/D, corresponding to about 9.8% of the number of production lines, corresponding to about 8.3% of the daily melt volume. Among them, 34 production lines of cold repair since June 23 have only resumed production of 2 (Benxi Yujing Line 2 + Zhangzhou Qibin Line 6, some production lines are expected to be short of funds and unable to complete cold repair), and the glass cold repair cycle is generally 4-6 months. The cold repair production line before October
2022 can be ignited and resumed production before March, corresponding to about 21 lines.
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