With the peak demand season approaching, why is the glass futures market adjusting downwards?

Published Time:

2021-09-07

On August 19, the glass futures market entered a deep correction, falling 2.62%.

Currently, it is the traditional peak season for glass demand. He Hangying, a metal analyst at Nanhua Futures, said that due to the recent escalation of epidemic prevention and control, transportation has been restricted in many places, and the operating rate of downstream companies has also been affected, resulting in a significant slowdown in glass manufacturers' delivery.

Wei Chaoming, a glass researcher at Founder Futures, believes that in recent years, downstream glass consumption has encountered various unfavorable factors, such as high-priced electricity, heavy rains in many parts of the country, and the epidemic, which have created temporary obstacles to glass circulation, transportation, and end-consumer consumption.

Relevant data shows that as of this week, the inventory of glass production enterprises has been rising for three consecutive weeks.

Although the overall inventory of glass manufacturers is still at a historically low level, the quotations of glass manufacturers remain basically stable. However, we have found that manufacturers in North China and Central China have introduced large-scale preferential policies to stimulate shipments, and manufacturers in East China and Southwest China have followed suit, indicating that actual spot prices have eased. If the current rebound in the epidemic can be effectively controlled, it is expected that in late August, downstream traders and processing enterprises will usher in a new round of concentrated replenishment, and spot prices are expected to rise again, but the increase is expected to be significantly limited compared to the previous period.

Downstream demand for flat glass mainly comes from the real estate sector. In July this year, the Chinese real estate market showed high transaction volume, high construction, and low operating rates. Although glass demand is still guaranteed in the early stage under the pressure of housing delivery, with the decline in the area of new construction starts, future glass demand expectations are also affected to some extent.

Wei Chaoming, a glass researcher at Founder Futures, believes that although the overall weakening of real estate data has had an overall impact on bulk commodities of black building materials, the strong real estate completion demand driven by high sales growth in the early stage is expected to continue in the second half of the year, and the glass market is expected to operate strongly.

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Glass futures contracts for distant months have risen sharply.

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