Source: My coke COKE
Near May, Glass Futures showed a trend of "Red May". The main contract increased by 131 yuan/ton from 1528 yuan/ton at the beginning of the month to 1659 yuan/ton at present. With the rebound of glass futures, the glass basis difference has been significantly repaired, from about 200 yuan/ton in early March to about - 50 yuan at present. The reporter of the Futures Daily learned that the strong support of the current real estate market policy has brought good expectations for glass demand, and the daily financing volume of glass at the supply side has also shrunk to a certain extent, which makes the overall mood optimistic and the main contract shows a strong trend.
In this regard, industry insiders generally believe that the core driver of glass futures has gradually shifted from weak supply and demand caused by poor demand in the early stage to the logic of shrinking supply and good long-term demand.
At present, the core driving force of the glass market is the strong support of policies. On the one hand, the housing guarantee policy in 2024 will continue. On May 17, the real estate policy will be heavily adjusted. The central bank will set up a new structural monetary tool of 300 billion yuan to refinance affordable housing and destock real estate through state-owned assets; On the other hand, the issuance of ultra long term special treasury bonds is highly related to real estate. If the debt pressure in the real estate market eases, it will also boost the future demand for glass.
Before the launch of a series of real estate policies, there was a split between the performance of futures and spot in the domestic float glass market in the first quarter of this year. The glass futures market was pessimistic about the current situation of the real estate industry, and the spot market was more expecting the support policies for the real estate industry chain.
The constraint of real estate on the glass market is mainly the debt problem. After the new real estate policy is issued, new credit will be injected into the land and real estate, or it can promote the recovery of land prices and house prices. After the pressure of market debt is relieved, it will be positive for the recovery of downstream orders, and the pressure of high inventory in the glass industry will also be eased.
Recently, the sentiment of the Chinese real estate market has improved significantly, and the sentiment of the building materials commodity market has gradually improved. The glass applied to the completed end in the later stage will significantly benefit from the guaranteed delivery of real estate, and the update of energy-saving and carbon reducing equipment in the glass industry is expected to accelerate. These market expectations are likely to become variables that affect the glass market.
With the gradual emergence of policy effects, the steady and orderly operation of the real estate market is a reasonable and achievable goal. In the medium and long term, the main application fields of glass are transformed from new housing to home decoration, old residential reconstruction, urban renewal, building energy conservation and carbon reduction, and automobile. The stability of supply and demand and market is expected to be significantly improved.
In addition to favorable policies, the traditional expectation of peak season also supports the demand side of glass.
According to the insiders, in the middle of May, the number of days of glass deep processing orders increased by 0.1 day month on month. In addition to the good home decoration orders this year, the engineering orders have also shown some signs of recovery recently.
From a fundamental point of view, the supply and demand pattern of glass has improved to a certain extent compared with the previous period, the supply side has slightly declined, the daily output has returned to above 170000 tons, the capacity utilization rate has dropped, the average production and sales rate has improved month on month, and the industry's de stocking efforts have also increased compared with the previous period. The sustainability of glass market demand remains to be seen. At this stage, the problem is that shipping and inventory reduction is still the main goal of enterprises, and the competition between regions and enterprises is also unavoidable.
Looking forward to the future, the current glass spot market is expected to be better, the supply and demand situation will remain, and the daily financing volume will decline slightly. "As the production profit is fair and the supply side is expected to shrink further, the market can only hope that the supply and demand will be slowly repaired due to demand fulfillment. Considering that it will take time for a series of policies to transform into physical demand for glass, from the perspective of the contract in September, there is sufficient time for fundamentals to wait and see. The future upward space of glass futures depends on the extent to which the market improves the short-term repair of glass spot.
At present, many glass production lines have been cold repaired, the production capacity of glass chips has dropped from a high level, and Hebei's inventory has dropped significantly to only lower than the level of the same period in 2021, all of which have significantly driven the market to recover. Whether the glass market can develop in depth will also depend on the inventory reduction in low price regions such as South China and Central China.
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