Analysis of the National Glass Market Operation in the First Half of the Year

In the first half of this year, the operation of the float glass market was generally stable, and the price increased steadily. At the end of June, the average price of float glass in the country was 1,540.06 yuan per ton, an increase of 25.36% year-on-year, and a slight increase of 1.82% from the end of last year. In terms of supply, in the first half of this year, the production capacity increased steadily or slightly, and at the end of June, it produced 16032 tons per day, an increase of 1.61% from the end of last year and an increase of 6.76% year-on-year. In terms of demand, demand was relatively good in the first half of this year, and real estate residual heat formed better support last year.

I. Analysis of the reasons for the rising price of glass

1. Last year, real estate residual heat supported demand in the first half of the year. The real estate market heats up in 2016, and the higher sales area supported the area of real estate completed in the first half of this year, thus supporting the demand of the glass market. This year, the growth rate of real estate transactions has continued to be high, and historical data have found that the substantial changes in the growth rate of real estate transactions will be reflected in the glass market in 4-6 months.

2. The inventory level is low. In the second half of 2016, the market transactions continued to be hot, so inventory at the end of 2016 was at a low level, which also prompted the inventory level after the Spring Festival 2017 to be relatively normal. With the recovery of demand, inventory fell and inventory levels were well controlled.

3. The cost is relatively strong. In the second half of 2016, soda ash and fuel prices climbed to a high level. Although the price of soda ash declined after the Spring Festival in 2017, the pressure on environmental protection was relatively high, the start-up load was limited, and the glass production capacity increased. The soda ash prices remained high. In addition, the environmental pressure has also led to an increase in the price of other mineral raw materials such as quartz sand.

Second, the impact

The price of glass original film has increased since the second half of last year, and it has been maintained for a long time, which has led to further optimization of the downstream processing plant pattern. In recent years, the number of downstream processing plants has continued to increase, and competition pressures have continued to increase, resulting in very limited profits for downstream processing plants. The price of the original film continued to be higher, and small processing plants had to increase the selling price of processed products to ensure a certain profit. Large-scale processing plants have their advantages due to lower procurement costs, better quality of processed products and relatively complete after-sales services. The difference between large-scale processing plants and small and medium-sized processing plants has narrowed, and orders have gradually flowed into large-scale processing plants. The difficulty of survival of small-scale processing plants has increased. The increase in the number of processing plants since the second half of 2016 has been significantly suppressed.

Third, the market outlook forecast

In the second half of the year, the float glass market is traditionally prosperous. In particular, the market is in the traditional peak season in the third quarter, and the demand is relatively strong. It is expected that the market conditions will increase in the third quarter. However, as real estate policies tighten and supply capacity continues to increase, the rise in peak season will be somewhat restrained. Looking at the market in the fourth quarter, the impact brought by real estate may gradually manifest itself. In addition, the market is expected to be relatively weak when the off-season falls at the end of the year.