Three factors boost the rebound of glass futures
The rebound of this round of glass futures is supported by three major factors: the sharp decline in production capacity, the continued strength of glass spot prices and the discount of futures.
From the perspective of production capacity, in 2014, the glass industry has repaired 38 production lines with a capacity of 131.7 million weight boxes, accounting for 11.1% of the total production capacity. Up to now, the glass industry has been cold repairing 40 production lines, involving a capacity of 135.2 million heavy boxes, accounting for 11.04% of the total production capacity. In more than a year, the glass production capacity has been reduced by 22%, and the current actual production capacity accounts for less than 70% of the total production capacity.
Despite the weak glass demand in the real estate market, the decline in demand is far from the reduction in glass supply. This has caused the glass market to be in short supply.
In the context of drastically reduced production capacity, the spot price of glass in 2015 has been strong. Especially in Shahe, Hebei, prices have continued to rise after the bottom of the month. At present, the price of Shahe 5mm glass has increased by 240 yuan / ton compared with the low in March, an increase of 26.1%. On November 3, Shahe Glass prices rose by RMB 10/ton on a single day.
Glass prices in other regions have also rebounded in different magnitudes. Glass manufacturers in Central China began to supply to Jiangsu and Zhejiang provinces, and glass prices in Central China have rebounded considerably. In October alone, the price of Wuhan Changli rose by RMB 100/ton.
When the spot price of glass went up, the futures price declined. The 1601 contract fell from the high of 917 yuan/ton in mid-August to 808 yuan/ton at the end of September.
Futures and spot sharply deviated after mid-August, with the spot price rising and the futures price falling, which led to the 1601 contract showing a large discount to the spot. At present, the 1601 contract is discounted by Wuhan Changli for 140 yuan/ton, and the discounted sand river is 230 yuan/ton. This has not considered the interest that the warehouse receipt needs to be paid to the manufacturer. The discount rate is 30 yuan / ton, and more than 50 yuan / ton. If you consider the discount of 30 yuan / ton, then the glass futures 1601 contract discounted 19.3% of Wuhan Changli, 29.5% of the discount sand river.
At this stage, we know that Wuhan Changli shut down two production lines in the fourth quarter, and cold repaired one production line, and Shahe continued to raise prices. It may not be realistic to expect to use the drop in spot prices to fix the discount.
The fourth quarter is not the off season of the glass industry
We have always believed that the fourth quarter is the off-season of the glass industry, which is actually wrong. The fourth quarter is just the end of the peak season for consumption, and the real off-season of the glass industry is in the first quarter of each year.
In the past few years, the sharp drop in glass prices in the fourth quarter was more affected by the rapid expansion of production capacity. As long as the capacity is reduced, the performance of glass prices in the fourth quarter is not weak. Market conditions confirm this view. In 2012, it ignited 19 production lines with a total capacity of 80 million weight boxes. At the beginning of November, the glass price peaked. The lowest price in the fourth quarter fell by 192 yuan/ton from the beginning of November. In 2013, the net increase was 130 million weight boxes. Shahe glass price was on National Day. During the period, the bottom of the fourth quarter fell 40 yuan/ton from the beginning of October; in 2014, the production capacity of 12.6 million weight boxes was reduced. The price of Shahe glass peaked during the National Day and rebounded in December. Finally, the price of Shahe glass at the end of December was only earlier than that in early October. It fell 16 yuan / ton; in 2015, it reduced the capacity of 55.47 million weight boxes, and the glass price in 2015 has not yet peaked.
Judging from the current glass futures and spot pattern, the futures price subsidy water market has not ended.
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