The price market slowly returns to the tempered glass market

This year's building materials industry is not peaceful. After suffering the painful decline in the past two months, the price of flat glass has stabilized and stabilized. On July 1, the glass companies in East China District raised the price by 2 yuan/box.

According to industry sources, the price increase is the result of a seminar on glass held in East China on June 30 in Anhui. The long-term decline in the market price of glass has seriously undermined the profit margin of glass companies, while the high energy and soda ash prices in the upper reaches have also greatly increased costs. At present, as demand has picked up, glass companies have not waited for the price protection battle.

For the sustainability of this price war, industry experts also expressed concern. After all, the monthly production of flat glass has reached the highest monthly level in the calendar year. The heavy production pressure has seriously affected the balance of supply and demand in the glass market.

The price stabilized and stabilized

On July 1, with the exception of the upward adjustment of prices in East China, the North China market responded relatively positively with a decrease in inventories. However, the overall situation in the southwest and northwest was relatively flat, the price was stable, and shipments in southern China were not satisfactory due to weather, and were partially reduced by 4 to 5 yuan. Heavy box.

The “China Glass Composite Index” published on June 30 was 1227.237 points, which was a decrease of 52.636 points year-on-year but 0.278 points higher than the previous month. The "China Glass Price Index" was 1,250.47 points, a year-on-year decrease of 107.858 points, and an increase of 0.349 points month on month. Experts said that during the current period of changes in various indices, prices in other regions began to rise, but prices in southern China were affected by the weather.

In fact, by early June, the drop in glass prices in most regions has slowed. The early Qinhuangdao region experienced more price declines and the recent decline has slowed down, while most manufacturers in North China and Beijing have canceled preferential policies. The confidence in the central China market has risen and demand has increased slightly. Enterprises in East China have taken a cautious approach to price changes. Individual companies raised their prices by 1 yuan/weight or canceled preferential treatment. The demand and prices in the southwestern market are basically stable.

In the middle and late June, the glass market in South China has also come out of a small increase in prices. The manufacturers increased the price by 2 yuan/heavy box, and the price in the surrounding area also increased by 1 yuan/heavy box. The price of first-class goods in the region was low. 80~84 yuan/heavy box, the high price is around 90~92 yuan/heavy box.

The glass market has seen a slight rebound for two weeks. Experts in the industry believe that there is a slight rebound in demand. In June and July, there are more real estate projects entering the renovation phase. The manufacturers take the opportunity to increase prices to boost market confidence.

Capacity pressure

The reason for the long-term weakness of the glass market is that production lines were too concentrated last year and this year. The release of production capacity is self-evident. The monthly output of flat glass has reached the highest level of monthly output in the past years. At present, the production pressure in the glass market in China is still heavy.

According to the latest analysis data of plate glass, from January to May, the output of flat glass in China was 300 million weight boxes, which was a year-on-year increase of 12.3%. The growth rate was 1.5 percentage points higher than that of l~4 months. In May, the output of flat glass reached 64.26 million weight cases, a year-on-year increase of 14.3%, which is the highest monthly output in the calendar year. The monthly output of flat glass has reached the monthly maximum output for three consecutive months.

According to the major flat glass production areas in the first five months, flat glass production in Hebei, Shandong, Jiangsu, Guangdong, Hubei, and Sichuan exceeded 20 million weight boxes, of which, plate glass production in Hebei reached 57.13 million weight boxes, and Shandong and Jiangsu also accounted for 3,000. Million weight boxes above.

From the sales situation, the sales rate of flat glass products in the first five months of this year is still at a relatively low level, and the pressure of excessive production growth is still quite prominent. From January to May, the sales rate of flat glass products nationwide was only 93.7%, down 2.6 percentage points year-on-year, and flat glass product sales rates in Hebei, Shandong, Jiangsu, Guangdong, Hubei, and Sichuan all declined. Among them, the sales rate of flat glass products in Guangdong and Hebei fell sharply, falling by 6.1 and 3.2 percentage points year-on-year respectively.

Due to the impact of the earthquake in Japan, demand-side production of parts and components was tight, which resulted in restrictions on vehicle production. As a result, factors such as the year-on-year decline in vehicle sales in April affected the decline in the demand for raw materials for deep processing of automobiles. At the same time, construction glass companies were constrained by construction work. Demand dropped.

The demand side shrank slightly while the supply side continued to expand. By the end of April, 10 float glass lines had been put into operation this year. By the end of May, there were 252 float glass production lines across the country, with a daily capacity of 134,000 tons, a year-on-year increase of 18.88%. Excluding the release of the production line, the actual daily capacity was 121,000 tons, a year-on-year increase of 25.06%.

According to incomplete statistics, in the 2nd to 4th quarter of this year, 22 production lines are planned to be put into production, and the elimination of backward production capacity of 26 million heavy boxes will be considered. In the 11th year, the total capacity increase still has 94 million heavy boxes. Most companies still build ordinary float glass production lines under the name of ultra-thin, ultra-white glass and so on, causing huge pressure on the supply of glass production capacity.

Market is hard to change

Whether the glass market can get out of this downturn is the industry’s biggest concern. However, experts believe that from the short-term perspective, the trend of float glass is still not optimistic.

The uninterrupted real estate control policy has made manufacturers more pessimistic about the demand in the market and the short-to-medium-term demand side has hardly expanded. On the supply side, according to internal survey data from relevant departments, 11 production lines have been put into production since the beginning of the year, and 10 are expected to be put into production in the second half of the year. However, it is not ruled out that some manufacturers will start production of new lines due to rapid decline in profitability in the industry. Time delay until next year. However, at present, the pace of production is still very fast.

At the end of June, although there was a slight increase in the price of glass in some areas, the inventory of float glass in the country has increased significantly compared to the past, reaching 18.37 million weight boxes.

Analysts at CITIC Securities believe that the market outlook for mid- and short-term float glass is still not optimistic. Heavy rains prevail in South China in East China and the demand for glass will be affected. At the same time, the high-pressure policy of real estate regulation will continue to have an impact on real estate development investment, start-up and completion area, and this negative impact will begin to manifest in the second half of this year. The decline in the demand growth rate of float glass may be gradually increasing.

At present, the concentration of glass industry is still relatively low, and the synergy effect of enterprises is weak. When the supply surface changes, the price fluctuation will be more severe than other industries. Moreover, the continued rise in energy and soda ash prices will further squeeze the profitability of glass companies.

Analysts at Xiangcai Securities also said that the future demand for architectural glass is still not high, and the cost increase will continue to squeeze corporate profit margins. The regional sector’s industry boom has improved but the overall pattern has not improved.