The glass market has sparked a new wave of price increases! Is it a trick or is there another reason?

A new wave of price increases in the glass market is coming.

On May 28, Hubei Minghong Glass, China Glass Holdings Weihai Base, China Glass Holdings Suqian Base, Hunan Juqiang Glass Factory Sales Department, Wujiang South Glass Company Limited and many other glass production and processing enterprises, released a price increase letter.

A number of enterprises have said on the price increase letter, due to the recent increase in the cost of raw materials, the company decided to increase the price of glass from June 1st.

A glass distributor in charge told reporters that this is the glass enterprise marketing set. "The price increase is implemented from June 1, meaning that from now on to June 1 does not increase the price, you hurry to stock. Whether the price increase is true, depending on the production and sales situation in the days before June 1st. Now the glass factory inventory is very high, the short-term price increase is also tentative, I think after June 15 before there is a significant price increase possible."

Yide futures glass senior researcher Zhang Li told reporters that last week, more than one area feedback glass prices close to the cost line, the enterprise willingness to reduce prices is low, but from the end of last week, due to inventory pressure, more than one area of the price down again. After the first half of this week, glass prices plummeted, Hubei region prices down to 1800 yuan / ton, Shahe region glass prices down to 1750-1770 yuan / ton began to stabilize. Nearly two weeks glass price plunge did not bring production and sales go well, inventory growth is still obvious.

"Starting from this weekend, South China and East China multi-enterprises have released June 1 after the start of the price increase of 40 yuan / ton notice, while yesterday the Shahe area glass prices are still down 20-40 yuan / ton, the north-south price trend divergence." Zhang Li said, the current round of glass enterprises to raise prices more corporate cost pressures, East China and South China natural gas fuel accounted for a large proportion of the two places, and these two natural gas prices are higher, before the price increase, the glass spot price in 1980-2000 yuan / ton, in the current natural gas price of 4 yuan / cubic meter and soda ash 3,000 yuan / ton, the gas system fully cost in the 2,000 yuan / ton nearby, enterprises on the edge of profit and loss.

"Recent industrial natural gas prices have been raised, glass cost line moved up." Founder medium-term futures senior analyst Wei Chaoming analysis, Hebei Handan industrial gas market price, for example, from the beginning of the year 2.99 yuan / cubic meter climbed to the current 4.36 yuan / cubic meter, up 45.8%, not taking into account the price of raw materials, such as heavy alkali and other raw materials to promote the cost of fuel costs alone, pushing up the cost of glass production of about 300 yuan / ton.

Wei Chaoming said that with the improvement of the nationwide epidemic prevention and control situation, and the orderly release of real estate completion demand, the glass high inventory situation is expected to ease, giving the glass enterprises to raise prices to cover the cost of production confidence. "Generally speaking, glass producers raise prices will be forecast in advance, in order to reach the effect of promoting sales and effectively reduce inventories, such as the current round of price increases will land on June 1st. In addition, raise landing situation will also depend on the actual sales situation in the reserved time window."

Zhang Li said, east and south China glass price hike, mainly based on cost pressures, and not supply and demand turn good reason. 6-July is the rainy season, itself is the consumption of off-season, short-term demand is difficult to improve significantly, and the end of April and the end of May of the commissioning line will be introduced one after another board production, the supply pressure is not reduced, but increased, the price suppression is still obvious.

From the futures side, Zhang Li said, 9-1 spread continued to expand, 2301 contract water 2209 contract, reflecting the market expectations for the near-month contract is still poor. "The recent disk has increased significantly, the price has been oscillating around 1750 yuan / ton, the short and long game intensified, from the structural point of view is more conducive to the short side of the move to the month. Long-term view, glass supply and demand weakness is difficult to change, more valuation of the low level, policy favorable sentiment pull, downstream stage of replenishment of good prices brought about by the price rebound, the bottom of the price in the second half of this year or still difficult to appear."

"Affected by many unfavorable factors, since the fourth quarter of last year, the glass accumulation cycle continues to this day, the current inventory is close to the historical high reached in 2020. Under the pressure of high inventory, glass is experiencing a super-expected off-season market. Costs are rising and prices are low, glass production is in a micro-profit or loss-making state." Wei Chaoming said that with the improvement of real estate enterprise capital and glass deep processing orders rebound, the glass market is still worth looking forward to.

Translated with DeepL.com (free version)