Glass futures far-month contracts rose sharply

On August 23, the glass futures far-month contract rose sharply. The main contract rose by 4.37% to 2772 yuan/ton, and the 2109 contract rose slightly recently.

It is understood that in late July, many places were affected by the new crown pneumonia epidemic, transportation was once again restricted, downstream operating rates fell, manufacturers’ inventory accumulation accelerated, market confidence weakened, and glass futures prices were under pressure.

Zhang Xi, an analyst at the Huishang Futures Research Institute, said that at present, the glass spot price is still strong. Although the market is still cautious about spot purchases of high-priced glass, the downstream is mainly based on demand, but with the gradual control of the epidemic and the gradual realization of peak season demand, it is expected that there will be centralized replenishment in the downstream.

In terms of supply, glass original glass companies have outstanding profits, and manufacturers are actively resuming work and production, replacing production lines, and glass output is still expected to increase slightly. In terms of demand, the high construction, high completion, and low operating rate of the real estate industry in July indicate that mid- to long-term demand still exists.

In terms of inventory, Zhang Xi said that although inventory continues to rise, it has remained at a low level for many years. The stock accumulation rate has slowed down compared with the previous week, mainly because the epidemic situation in some regions is gradually controlled, demand in peak season is expected to support, and spot prices remain firm. With the digestion of downstream and traders’ own inventories, the wait-and-see sentiment of the market weakened. In terms of profit, the average profit of the float glass industry was 1403.79 yuan/ton, a slight decrease of 14.76 yuan/ton from the previous month, but the current profit is still at a relatively high level.

In general, if the country strictly controls the implementation of the new glass production capacity plan, there will be no significant increase on the supply side. The second half of the year will be the peak period for the completion of real estate, which will increase the demand for glass. It is expected that the industry supply and demand may continue to maintain a tight balance, and the glass market may remain high. At the same time, we must also pay attention to the possible upside risks that the country’s strict control of new glass production capacity may bring, as well as the downside risks that may be caused by the release of real estate terminal demand less than expected.