On the first trading day after the Spring Festival holiday,glass and soda ash futures plummeted.

Yesterday,after the opening of the main contracts for glass and soda ash,both opened low and then continued to decline.As of the close of noon,the main glass contract fell 4.66%to 1740 yuan/ton;The main contract for soda ash fell 6.31%to 1841 yuan/ton.

The latest data shows that glass and soda ash have significantly accumulated inventory during the Spring Festival,with relatively loose supply and demand.

According to Longzhong Information,as of February 18th,the total inventory of float glass sample enterprises in China was 52.14 million heavy boxes,a month on month increase of 38.99%and a year-on-year decrease of 35.3%.The discount inventory period is 21.7 days,an increase of 6 days compared to the previous period.

The image shows glass inventory data source:Longzhong Information

"The decline in glass futures is mainly driven by market expectations,"said Wang Haozheng,a commodity strategy researcher at Changjiang Futures.During the holiday period,the accumulated inventory of glass factories was higher than in previous years.However,the overall inventory of glass factories is not high,and sales pressure is limited.In fact,some manufacturers plan to increase prices for shipments after the holiday.Recently,with the gradual resumption of work in the industry,there has been an increase in restocking by distributors,driving manufacturers to improve their sales.Downstream deep processing is still in the resumption stage,with limited actual production and average procurement enthusiasm.The current construction in the real estate industry has not yet begun,and deep processing is mainly focused on producing last year's surplus orders.The actual consumption of glass is relatively weak.Overall,the glass industry is currently in the early start-up stage,with inventory mainly shifting from upstream to midstream.At present,the overall inventory is not high,consumption has not yet substantially recovered,and industrial contradictions are not prominent for the time being.

"The market's concerns about the demand side have been confirmed by news."Wei Chaoming,a senior researcher at Fangzheng Mid term Futures Research Institute,believes that during the Spring Festival,market news shows that the deep processing and payment collection situation in a certain sample area is average:40%-50%before last year's Spring Festival,and 30%-40%before this year's Spring Festival.In terms of spot goods,the domestic float glass market prices remained stable during the holiday period,and market transactions were lackluster.In the first two working days after the holiday,manufacturers generally saw a slight increase in prices,boosting market confidence.Driven by real estate related news before the holiday,the market's expectations for guaranteed delivery buildings have increased.Glass,as a necessary material for door and window installation before completion,has received financial attention.If market expectations are too high before the holiday,the accumulation of inventory during the Spring Festival often leads to price adjustments in the market,which has a certain regularity.Compared to the decline on the first trading day after the Spring Festival in 2023,the market performance on the first trading day after the Spring Festival this year is relatively cautious.

When it comes to the future market of glass,Wang Haozheng said that after a significant decline in the market,futures traders are expected to temporarily suppress spot prices in their shipments,and the later stage will test whether downstream can digest a large amount of supply.Although the current glass production capacity is at a historical high level,based on the consumption performance in the second half of last year,if the consumption intensity can be maintained,the supply pressure may be relatively limited.The demand for glass driven by the"three major projects"and the guaranteed delivery of buildings this year still needs to be observed,and consumer changes need to be tracked in the future.

Wei Chaoming believed that from a fundamental perspective,the supply of glass has rebounded to a historical high,and downstream demand is waiting to be released after winter storage.Glass is in a seasonal off-season,and there is still a possibility of further accumulation of inventory in glass enterprises.Currently,it is the off-season for demand,but spot and spot profits are in a historically high range.The market is under significant pressure,and there is still a possibility of testing marginal costs in short-term market and spot prices.It is recommended to pay attention to buying hedging opportunities near 1600 yuan/ton for glass main contracts.

In terms of caustic soda,the accumulation amplitude is more significant.According to Longzhong Information,as of February 18th,the total inventory of domestic soda ash manufacturers this week was 688300 tons,an increase of 258000 tons month on month,or 59.96%.Among them,there are 362500 tons of light inventory and 325800 tons of heavy inventory.

"The main reason for the decline in the soda ash market is that the production increased to a high level during the Spring Festival period,and the spot prices fell after the holiday.According to Wang Haozheng,the first production line of Yuanxing Third Line was reached during the Spring Festival holiday,and the operation of other facilities remained generally stable.The industry supply rose to a high level of over 700000 tons per week.".At present,maintenance plans are scarce,and it is expected that production will also be maintained after the holiday.In terms of demand,the production capacity of float glass and photovoltaic glass remained stable during the holiday period,and some downstream light alkali production was suspended during the holiday,resulting in a decrease in demand.Affected by the decrease in automobile transportation,the inventory of alkali plants accumulated 262400 tons during the Spring Festival,which is higher than in previous years.In February,imported alkali gradually arrived at the port,and it is reported that one ship each arrived on the 13th,17th,and 25th.In the early stage,a large glass factory revealed that the cost of importing to the site can be as low as 2000 yuan/ton or less.Compared to domestic spot prices,it is expected that imports will remain high and exports will remain low in the first quarter,which will accelerate the accumulation of domestic inventory.Overall,there is a consensus in the market on the accumulation of inventory,and the expectation of accumulation is expected to gradually materialize after the supply rises to a high level.

"Last year,multiple units such as Yuanxing Energy were put into operation in the second half of the year,defining the overall supply and demand pattern of soda ash."Wei Chaoming said that the rainy and snowy weather before the Spring Festival drove float glass enterprises,photovoltaic glass enterprises and other soda ash demanders to concentrate on stocking,and the price of light alkali followed the rise,driving downstream related enterprises to replenish their inventory.The inventory of soda ash enterprises briefly declined.During the Spring Festival,the inventory accumulation of soda ash enterprises meets market expectations.Due to sufficient downstream stocking and a significant trend of soda ash inventory accumulation,it is difficult for downstream enterprises to make centralized replenishment actions after the Spring Festival.Therefore,the inventory accumulation trend of soda ash enterprises is expected to continue.From experience,in a more pessimistic situation,the accumulation of inventory in soda ash enterprises may continue until the start of summer maintenance.

"On Monday,a large production group lowered the prices of light and heavy alkali by 100-200 yuan/ton respectively,indicating that spot prices have returned to a downward trend."Wang Haozheng believes that currently,the market lacks upward driving force,and with the increase of pure alkali inventory in alkali factories and glass factories,even if there is an unexpected event on the supply side,the upward trend of spot prices is expected to shrink compared to the previous period.Compared to import prices,the market price is still somewhat overestimated,and it is expected to operate weakly in the later stage.

Wei Chaoming also believed that soda ash was weak and difficult to improve."Under the pressure of rapid inventory accumulation,the resonance between futures and spot prices is weak.On Monday morning,Yuanxing Energy's soda ash quotation was lowered.Soda production enterprises still have considerable profits,and the supply and demand logic is driving prices closer to the industry's marginal cost or even forcing a new supply-demand balance.Short term soda ash should be treated as a bearish trend."