This paper mainly analyzes the price difference between soda and glass and the recent changes in the fundamentals of soda. Although float glass is the largest downstream of soda ash, the impact on soda ash is not significant in the past three years, and the price trend of the two deviates from each other from time to time.
Recently, the price of soda ash has fallen continuously, mainly due to the macro negative, weak demand for light alkali and poor downstream profits, but the pattern of tight supply and demand of soda ash has not changed significantly. Considering the summer overhaul and downstream demand changes, it is difficult for soda ash to accumulate substantially before the third quarter, and the SA2305 contract price is more likely to maintain a volatile trend. If the glass goes to the warehouse as scheduled, the main futures contract price will rebound to above 1800 yuan/ton, and the soda ash 05 contract is expected to break through the high of 3069 yuan/ton.
Based on macro and fundamentals, it is suggested that investors focus on oversold rebound opportunities, and try more SA2305 contracts near 2700-2750, with a stop loss of 2600 yuan/ton and a stop profit of 3000 yuan/ton. Later, we need to be alert to the negative impact of the Federal Reserve's sharp interest rate hike, domestic imports exceeding expectations and the early commissioning of the plant. Glass futures
recently bottomed out near 1500 yuan/ton. Since March, FG2305 has recorded a rise for five consecutive trading days, rebounding to a slight drop near 1600 yuan/ton, but the bottom signal has gradually emerged. In February, the price of glass was weak, the inventory continued to accumulate, the glass enterprises had strong resistance to the high price of soda ash, and the price of soda ash was consolidated for nearly a month. Recently, there has been a stabilization signal at the bottom of the glass, but the price of soda ash has fallen for three consecutive days. What is the main disadvantage of the current soda ash market? Can stabilization and rebound of glass drive up the price of soda ash? How to treat the relationship between soda ash and glass correctly?
First, is there really a strong correlation between glass soda ash? As one of the "three acids and two alkalis", soda ash is widely used in float glass, photovoltaic glass, glass packaging containers, sodium silicate, baking soda, lithium carbonate, monosodium glutamate and other industries, among which float glass is the largest demand area for soda ash. By the end of 2022, domestic float glass accounted for about 39% of the total demand for soda ash. In the production cost of float glass, the cost of raw materials and fuel accounts for more than 80%, of which soda ash and fuel account for more than 30%. Based on the latest market price of heavy alkali of 3100 yuan/ton and the consumption of 0.2 per ton, the expenditure of soda ash is 620 yuan per ton of float glass produced, while the current domestic 5.
Different from the upstream and downstream relationship between iron ore and thread, iron ore can only be used to produce steel, so the price trend of the two is more consistent, and the characteristics of the same rise and fall are more significant. However, the demand for soda ash is relatively dispersed, the demand for float glass accounts for less than half of the demand for soda ash, and the demand for float glass is also declining due to the expansion of photovoltaic glass production capacity, so the impact of the fluctuation of soda ash price at the cost side on float glass is declining, and the deviation between the two trends is becoming more and more obvious. More generally, since iron ore can only be used to produce steel, the rising price of iron ore will directly lead to the rising cost of thread. At this time, the supply and demand of thread may not follow the rising price of iron ore. On the contrary, when the price of thread and other steel products enters the boom cycle and rises, the demand for iron ore will rise, and the price of iron ore will rise more likely (similar to the price drop). As for soda ash and glass, the price rise of soda ash may not be smoothly transmitted to float glass, because the fundamentals of float glass may be poor, the price rise is more difficult, such as the price rise of soda ash since 2022, the basic price of float glass continues to fall; Conversely, when float glass enters the boom cycle, the remaining 60% of the downstream demand may perform poorly, and the price of soda ash may not necessarily rise. For example, the COVID-19 epidemic in 2020 has a greater impact on the economy, and the domestic downstream demand for light alkali is poor. Even if the price of float glass rises, soda ash does not rise. It can be seen
from the data that in the past 1 year, 2 years, 3 years, 5 years and 9 years, the correlation coefficient of iron ore and thread is higher than that of soda ash-glass, and the correlation coefficient of iron ore-thread steel is 0.52-0.The correlation coefficient of soda ash-glass is lower, and the correlation coefficient of soda ash and glass in the past 1 year is 0.50. The correlation coefficient of the past two years is -0.08, and the correlation coefficient of the past three years is 0. In the past two years, the price trend of soda ash and glass in China has deviated significantly, mainly due to the downturn of the domestic real estate industry, the rapid development of the photovoltaic industry, and the large expansion of photovoltaic glass production capacity, which has increased the total demand for soda ash, which is good for the price of soda ash. Float glass demand declined and prices declined. It can also be seen
from Chart 3 that the price trend of rebar and glass futures is highly consistent regardless of the dimension of 1 year, 2 years, 3 years or 9 years, and the correlation coefficient between them is 0. Therefore, it can be inferred that compared with the upstream and downstream relationship of the industrial chain, the correlation of commodities belonging to similar industrial chains will be higher. For example, the demand for glass and rebar is closely related to real estate, and the change of terminal demand is relatively close, so the trend of the two is highly consistent. Similarly, the data of rebar and PVC in the past nine years were used for backtesting. The correlation coefficient between the two is 0.
float glass has lasted for a long time, while the profit of soda ash in the upstream is very good, and the resistance of float glass enterprises to high-priced soda ash is strong. In the second half of 2022, there were more production lines for cold repair of float glass, but during the period, the increase in production capacity of photovoltaic glass offset the production capacity of cold repair of float glass. The decline in the price of float glass did not lead to a decline in the price of soda ash, but limited the speed and extent of the increase in soda ash. The game between upstream and downstream is that if the spot price of soda ash rises sharply, the float glass may have centralized cold repair, the demand for soda ash decreases, and the downward pressure on the price is greater; if the spot price of soda ash rises slightly, the cold repair of float glass may be more dispersed, and the drag on the demand for soda ash is not obvious. Therefore, the spot price of soda ash rose moderately in the first half of the year.
At present, the average spot price of glass is 1680 yuan/ton, the average price of heavy soda ash is 3100 yuan/ton, and the downstream resistance to high-priced soda ash is strong. If the price of float glass rises to get rid of losses, the acceptance of soda ash will also increase. On the premise that other conditions remain unchanged, if the current price of glass rises synchronously by 100 yuan/ton in the near future and the main contract of glass rises to around 1700 yuan/ton, the willingness of glass cold repair will decrease significantly. If the price of glass rises by 200 yuan/ton, the acceptance of the spot price of soda ash will also move up. It is linearly estimated that if the price of glass 2305 rises above 1800 yuan/ton, the contract high of soda ash 2305 will be around 3200 yuan/ton.
Three, soda ash falls, where is the bad news? Since the Spring Festival holiday, the price of soda ash futures has fallen, SA2305 contract runs in the range of 2850-3000 yuan/ton, and SA2309 contract runs in the range of 2400-2600 yuan/ton. From March 6 to 8, the main contract of soda ash recorded three consecutive overcasts, and the futures price approached the lower edge of the shock range. Short-term strong reality of soda ash out of the weak trend, or with the macro bad and some of the fundamentals of the bad.
From the macro level, Tuesday's Federal Reserve Chairman's public speech released a hawkish signal, the probability of raising interest rates by 50 BP in March increased greatly, the world's major risk assets fell, and soda ash with high valuation was also affected by the negative impact. From a fundamental point of view, under the stimulation of high profits, the operating rate and weekly output of soda ash rose to the highest level in history. Last week, the weekly output reached 623,600 tons, an increase of 1. Although the weekly output increased by more than 10,000 tons will not change the pattern of tight balance between supply and demand of soda ash, under the stimulation of high profits, the probability of early production of yuanxing Energy and Henan Jinshan, which are planned to be put into operation in the year, still exists. In terms of demand, from January to February in 2023, the export of soda ash in China declined from a high level, the import volume is expected to increase from March to April, and the import volume may increase slightly and the export volume may decrease partially throughout the year. Although the float glass futures price rebounded and the probability of destocking increased, the spot weakness and loss pattern remained unchanged, which still dragged down the soda ash; Recently, the spot price of PV glass was lowered again, and most PV glass enterprises only maintained a small profit, with cold repair of individual production lines, and no new production line was launched in February; the demand for light alkali was weak, and the operating rate of sodium silicate, monosodium glutamate and baking soda was still low. Overall, the downstream demand for soda ash has remained stable at a high level in the near future, but the drag of weak demand for light alkali and a slight decline in exports is still there, and the resistance of float and photovoltaic glass to high-priced soda ash is also increasing. Under the influence of many factors, the price of soda ash has fallen in the short term.
Looking forward to the future market, the short-term game point of soda ash market lies in the progress of new production capacity, the speed of export decline, the quantity of imported cargoes and the strength of float glass rebound, while the medium-term game point lies in the strength of new production capacity and the change of daily melting volume of photovoltaic glass. We still maintain the view that the supply and demand of soda ash 05 contract is tight, and the probability of accumulation in the second and third quarters is not high. However, the current futures price near 2900 yuan/ton is of little value to participate in, and investors can participate in the overfall rebound after the soda ash futures price falls sharply due to the macro negative.Combined with the operation law of soda ash futures price in the past two years, the futures price discount near 10% of spot often has short-term and medium-term multi-matching value, so investors can wait for the SA2305 contract to fall to 2700-2750 yuan/ton to try more, stop loss can refer to 2600 yuan/ton.
Recently, the price of soda ash has fallen continuously, mainly due to the macro negative, weak demand for light alkali and poor downstream profits, but the pattern of tight supply and demand of soda ash has not changed significantly. Considering the overhaul and demand changes of soda ash in summer, it is difficult for soda ash to accumulate substantially before the third quarter, and the SA2305 contract price is more likely to maintain a volatile trend. If the glass goes to the warehouse as scheduled, the main futures contract price will rebound to above 1800 yuan/ton, and the soda ash 05 contract is expected to break through the high of 3069 yuan/ton. Based on macro and fundamentals, it is suggested that investors focus on oversold rebound opportunities, and try more SA2305 contracts near 2700-2750, with a stop loss of 2600 yuan/ton and a stop profit of 3000 yuan/ton. Later, we need to be alert to the negative impact of the Fed's sharp interest rate hike, imports exceeding expectations and the early commissioning of the plant.
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