Glass futures market continues to decline, the lowest in the past 1 month
Recently, the price of glass futures has continued its downward trend. After the main force shifts to the January contract, the weakness is difficult to change. Yesterday, the main glass contract fell 3.18% again to 2681 yuan/ton, approaching a one-month low during the session, and holdings also declined. The recent contract is supported by low inventories, and the decline is relatively limited.
In terms of spot prices, there is still resistance to the downward transmission of prices, the upward trend of glass has slowed down slightly, and the epidemic is also variable. The national market average price is 3057 yuan/ton, and the mainstream prices in North China, Central China, and South China remain above 3000 yuan/ton; the price of original films is higher, and the downstream stocking enthusiasm in some areas is better than the previous period, but the overall shortage of funds is still limited. In addition, due to the recent epidemic control in many regions, shipments have slowed down and manufacturers’ inventories have increased slightly.
In addition, the trading margin standards for glass futures contracts 2110, 2111, 2112, 2201, 2202, 2203, 2204, and 2205 have been raised to 12%. After that, starting from the settlement on August 9, 2021, the trading margin standard for the above-mentioned contracts will be adjusted to 15%. Zhang Chi predicts that after the glass 01 contract is secured on the 9th of this month, the market price will stabilize, and the later glass 2109 contract will begin to subsidize the water market.
In mid-to-late July, the “Reply” letter of the Ministry of Industry and Information Technology’s glass price operation report began to circulate. Superimposing the Politburo meeting, and then ensuring supply and stabilizing prices, cooled the sentiment of the commodity bulls.
On August 3, the Raw Material Industry Department of the Ministry of Industry and Information Technology held a video conference on the flat glass price symposium to analyze the operation of the glass industry in the first half of the year. Since the beginning of this year, the price of flat glass has risen too fast and the increase is too large, which has a greater impact on downstream enterprises in the industrial chain. If left unchecked, it will not only cause great harm to the glass deep processing industry, but also endanger the results of the supply-side structural reform of the flat glass industry in recent years. In the next step, we must strive to increase the supply of flat glass and stabilize market prices. Among them, those who take the lead in driving up prices should be investigated and dealt with in accordance with the law if the circumstances are minor.
Guotai Junan Futures Zhang Chi believes that the meeting of the Ministry of Industry and Information Technology has limited impact on the market, and the contradiction in the glass market is the structural contradiction caused by the limited recovery of production capacity and the continuous expansion of demand in the past five years. In the context of restricting real estate leverage, the glass market will gradually move towards a market trend of slower growth. The short-term glass market is suppressed by the epidemic, the transaction level is suppressed by various transaction policies, and the market is weak.
Fangzheng Interim Futures Wei Chaoming said that considering the construction cycle of the glass production line, it is unlikely that the glass supply end will be put into production quickly in the short term, and it is difficult to quickly reverse the strong spot operation. The 2109 contract will continue to be stronger than the 2201 contract, and the spread will continue to widen.
Future outlook
For far-month contracts, the market will still digest policy contradictions and should not be overly bearish. On the one hand, increasing the supply of flat glass runs counter to the goals of “carbon neutrality” and “carbon peaking”. The current capacity utilization rate and operating rate are already at a relatively high level, and the capacity planned to resume production in the second half of the year is limited, and it is difficult to substantially increase supply. On the other hand, although the Ministry of Industry and Information Technology pointed out that the price increase of flat glass deviates from the fundamentals of the industry, the inventory data has indeed fallen to an absolute low for many years, and the completed area has increased significantly since this year. From the perspective of supply and demand, price increases are imperative, but excessive price increases have aroused regulatory concern, so glass futures prices may only withdraw part of the price increase.
For near-month contracts, the epidemic will be the main factor affecting the original peak season expectations. If the epidemic develops beyond expectations or will affect the peak season, the support in recent months will also weaken, so beware of this risk.