It is not uncommon for the price increase during the Spring Festival to boost the post holiday market atmosphere in the glass market,but it is rare for glass factories to queue up for goods immediately after the Spring Festival.

On February 18,the first day of the the Year of the Loong of Jiachen,in Shahe,Hebei Province,many glass enterprises lined up goods pulling vehicles on both sides of the road outside the factory area."Good luck for the start of construction"-a lucky picture.After the year,traders actively replenished the goods and became a beautiful scenery in the glass market.

During the holiday,the Futures Daily reporter also found that since February 15th,domestic float glass production enterprises have successively issued notices of price increases of 1-2 yuan/weight box.As of yesterday,glass enterprises have issued five consecutive price increase letters.Not only that,the queue at the entrance of Shahe Glass Factory to pull goods has reappeared,and various signs indicate that the performance of the glass spot market this Spring Festival is extraordinary.

A good start to the new year,glass manufacturers are promoting with price increases

Compared to previous years,this year's Spring Festival period saw a significant increase in the price function issued by the domestic glass market,but the actual increase was not significant.

According to third-party statistical data,from February 8th to 18th,the spot market price of the 5mm large board in North China increased by 10 yuan/ton to 1890 yuan/ton,the spot price in Central China increased by 10 yuan/ton to 1990 yuan/ton,the spot price in East China increased by 20 yuan/ton to 2120 yuan/ton,and the spot price in South China increased by 20 yuan/ton to 2260 yuan/ton.

Regarding the frequent price increases by glass manufacturers during holidays,Ding Cheng,a glass analyst at Zhuochuang Information,believes that the overall market expectations are met,and such price increases are generally accompanied by the market during the Spring Festival in previous years.

"Although float glass production enterprises have accumulated inventory due to the impact of midstream and downstream shutdowns and holidays during the Spring Festival,the post holiday market price increase behavior is mainly to boost market atmosphere and encourage processing plants to replenish and stock up in advance,promoting post holiday market warming and achieving inventory control goals,"Ding Cheng said.

"Starting from the fourth day of the first lunar month,glass factories and traders have resumed production and work,with frequent price increase letters from glass factories,which is within expectations."Guangfa Futures analyst Jiang Shiyu told Futures Daily reporters that during the Spring Festival,there is a vacuum period for glass demand verification,and downstream deep processing has not yet resumed production and work.Glass manufacturers usually use"price increase promotions"to boost market sentiment.

According to Ding Cheng,this round of price increases is mainly concentrated in the end of the holiday period,and there has not been a substantial improvement in market demand,which can to some extent promote the increase in production and sales ratio.However,the overall increase is relatively limited,indicating that enterprises have a cautious attitude towards price adjustments.

In the view of Hu Peng,a senior analyst at CITIC Securities Futures,glass companies usually issue price increase letters after the holiday,with the main purpose of"raising prices to reduce inventory".There is a clear"buying up but not buying down"behavior in the spot market,and the increased inventory during the Spring Festival needs to be transferred downstream after the holiday,so"price increase"is a necessary behavior.

In fact,whether the downstream pays for price increases depends on many factors.For example,the payment situation of deep processing enterprises,the original inventory held by terminals,and the demand for post holiday real estate completion.Generally speaking,the demand for"Golden Three Silver Four"glass is still good,and downstream companies usually increase their original inventory after the Spring Festival.

"At the beginning of the year,manufacturers usually choose to increase sales to boost the market atmosphere and give a good start to the new year,which is not an unusual move.This measure is mainly based on good inventory status."Huo Dongkai,the head of the futures department of Hebei Wangmei Group,said that currently,manufacturers'inventory is relatively low and there is a foundation for price increases.

The glass industry is currently in a pattern of high supply and high profit,and a large accumulation of inventory is formed during the Spring Festival period.

According to Longzhong Information,as of February 18,2024,the total inventory of float glass sample enterprises in China was 52.14 million boxes,an increase of 14.625 million boxes compared to the previous month,an increase of 38.99%compared to the previous month,and a decrease of 35.3%compared to the previous year.

"The magnitude of accumulated inventory is relatively large compared to the previous period,which is related to the current high daily melting capacity."Jiang Shiyu said that the current daily melting capacity of float glass is 174600 tons,while the daily melting level during the same period last year was only about 160000 tons.The increase in daily melting volume has led to a significant accumulation of inventory during this year's Spring Festival.However,the current inventory situation has decreased by 35.3%compared to the same period last year.Although the slope of accumulated inventory is relatively large,the inventory level is relatively low compared to the same period last year and is basically the same as in 2022.

Huo Dongkai also explained that due to the small inventory base and slightly exaggerated month on month accumulation,the overall inventory situation of the manufacturer is controllable and still maintains a good inventory status.In his opinion,compared to previous years,manufacturers have maintained good production and sales before the holiday this year,and the overall accumulation of inventory is not significant.

"After the year,due to low inventory in both upstream and downstream markets,some downstream traders began to replenish their inventory after the start of construction.Manufacturers had the power to increase prices in a low inventory state,leading to a state of price increase and stock grabbing at the beginning of the year,which also reflects the good inventory status of the entire glass industry chain."Huo Dongkai said.

According to him,manufacturers in the Shahe region have approximately two weeks of inventory after the holiday.Some manufacturers only have 30%of their inventory compared to last year,while downstream traders have a moderate level of inventory.There are more goods stored in short-term commercial sets,and most terminals have not yet started production,resulting in low terminal inventory.

Doubts about the sustainability of traders taking goods during the vacuum period of demand verification

The reporter learned that glass companies are raising prices,on the one hand to"reduce inventory by raising prices",and on the other hand,they may also be optimistic about future performance.

For example,in 2023,the completed area of domestic real estate increased significantly,and after the Spring Festival in 2023,the spot price of glass rose,and the price center continued to shift upwards in the later period."At that time,the main reason for the price increase of glass enterprises was the transfer of inventory,but under the influence of the'guaranteed delivery'policy,the upstream and downstream were also more hopeful about the future performance.The later rise in glass prices was also a confirmation of market expectations."Hu Peng introduced.

However,the demand for this year is not yet clear,and it is expected that the remaining portion of the"guaranteed delivery building"will have limited demand for glass.We still need to pay attention to the order situation after the resumption of deep processing on the 15th day of the first lunar month.

"We are currently in a vacuum period of glass demand,which cannot be verified in the short term.Based on the analysis of the completion cycle,the weakening expectation transmitted from the start end is expected to be realized on the completion end in 2024.The market is generally pessimistic about the completion expectation of real estate this year."Jiang Shiyu said.

In Jiang Shiyu's view,under high supply and high profits,the performance of demand is crucial."If demand cannot withstand the current high supply pressure,the inventory pressure in the glass industry may gradually become more prominent this year,"she said.

During the interview,the reporter learned that at present,most glass processing plants have not resumed work and production,and the market mainly relies on a small amount of specification replenishment.The production and sales of float glass plants are still in a slow recovery process.

"Usually after March,the market will experience seasonal destocking after resuming production and work.After March last year,with the release of demand for'guaranteed delivery buildings',the pressure on glass inventory quickly eased.In the past two days,with the increase in glass factories,market procurement has been active,market production and sales rates have been good,and inventory has been transferred to traders."Jiang Shiyu said.

According to market insiders,yesterday,the futures trader quoted FG2405+20,which is about 100 yuan/ton lower than the manufacturer's quote.The shipment situation is good,and traders have appropriately replenished their inventory.

Cui Zhang,the relevant person in charge of the Glass Futures Department of Hebei Zhengda,introduced that the current main purpose is for traders to hoard goods.Considering the low inventory of downstream deep processing,the glass factory also had low inventory before the new year.After the start of the year,some specifications of glass will be replenished,and with signs of price increase from last year,another batch will be purchased.

In Jiang Shiyu's view,replenishment belongs to the routine replenishment of industries and is not an optimistic expectation for future demand.Especially,we are currently in a vacuum period of demand verification,and the duration of goods acquisition in the trade process is questionable.We still need to observe the market situation in the following days.

Regarding this,Huo Dongkai also stated that in the near future,the main reason is the strong atmosphere of midstream traders replenishing inventory,and the downstream processing end is still insufficient in production.The actual demand situation can only be evaluated after downstream production starts.In his view,the early post holiday market is still dominated by off-season characteristics.

At present,inventory has been transferred from upstream to midstream and has not been actually digested.

Hu Peng believes that there will definitely be a wave of depletion of glass inventory after the holiday,but the pace needs to be cautious."Before the holiday,the upstream inventory of glass continued to decline,mainly due to traders restocking,and the enthusiasm for terminal restocking was average."Hu Peng said that the real estate industry is still exploring the bottom,and the payment situation of glass deep processing enterprises is not optimistic.The intensity of deep processing restocking after the holiday is difficult to exceed expectations.

In his view,the production and sales rate in certain regions has significantly increased after the holiday,and there may even be a phenomenon of hoarding,but it is expected to be difficult to maintain."The market is relatively pessimistic about the mid-term demand for glass,and after a brief restocking,it may mainly focus on on-demand procurement.Manufacturers with price advantages may benefit,but high priced sources may face greater pressure,"said Hu Peng.At present,glass supply is at a high level,and demand has decreased year-on-year and month on month.Whether demand can follow up in the future mainly depends on the implementation of policies.

“从加工厂订单以及复工计划来看，节后整体需求并不乐观，部分区域可能伴随延迟复工复产。”丁成说，从近期市场启动情况看，企业产销尚处于缓慢修复阶段，库存增速较春节假期期间略有放缓，预期库存持续上升。

在丁成看来，整体库存拐点预计将出现在正月十五后，主要受需求端中下游复工复产支撑。

“月内点火产能预期高于冷修产能，且企业库存高位，整体供应处于高位运行状态。从需求方面来看，2024年春节后整体开工启动偏晚，中下游提货积极性一般，浮法厂出货整体偏于一般，不及去年同期。”丁成认为，节前中下游多有一定备货，节后以规格性补货为主，产销率强度或受一定限制，玻璃现货价格继续上涨空间预期受限，涨后趋稳可能性较大。