SunSirs: Building Material, Analysis of Glass Market in 2019

1  Price Trend

In 2019, the glass market rose. On January 1, the average price was 18.48 RMB/㎡, and on December 27, the average price rose to 17.27 RMB/㎡, with an annual comprehensive increase of 12.12%.

From January to September, the operating revenue of flat glass was 60.5 billion RMB, up 9.3% year on year; the profit was 6.75 billion RMB, down 24.8% year on year; the sales profit margin was 11.2%, 5.1 percentage points lower than the same period last year.

2  Market Analysis

Product quotation

From the perspective of market development in 2019, the first half of the year was basically in a stable transition pattern, and the price fluctuation was not obvious; in the second half of the year, affected by environmental protection factors, the glass production capacity in production was reduced, and the spot market transaction price was rising.

Productivity aspect

In 2019, the economic operation of the glass industry was generally stable, and the production capacity was generally increased. By the end of November, there were 297 float glass production lines and 239 in production. In November, there were three cold repair lines and three production lines without ignition. According to the statistics of the National Bureau of statistics, in November 2019, industrial enterprises above Designated Size nationwide produced 77.01 million weight boxes of flat glass, an increase of 7.3% year on year and a decrease of 2.4% month on month. From January to November, 848.43 million weight boxes of flat glass were produced, up 6.9% year on year. It can be seen that in November, the average daily output of flat glass in China was 2.567 million weight boxes, an increase of 23,000 weight boxes/ day, or 0.9% on a month on month basis.

According to the data of Industry Association, on December 27, 2019, the utilization rate of glass production capacity was 69.30%; it rose by -0.27% on a month on week basis and -0.73% on a year-on-year basis; after eliminating excess capacity, the utilization rate of glass production capacity was 82.35% and -0.32% on a month on week basis and -1.42% on a year-on-year basis. The production capacity of glass in production is 932.7 million weight boxes, an increase of -3.6 million weight boxes on a week basis, and an increase of 4.2 million boxes on a year-on-year basis.

Inventory aspects

On December 27, 2019, the industrial inventory was 38.14 million weight boxes, an increase of -180,000 weight boxes from last week, and an increase of 6.62 million weight boxes from last year. Weekend inventory days were 14.93 days, up -0.01 day on week, up 2.53 day on year.

Industrial chain

According to the data conversion of the Bureau of statistics, the production and sales rate of soda ash in the first three quarters of 2019 decreased by 4 percentage points compared with the same period of last year, and the cumulative inventory increased by 14.2% compared with the beginning of the year. Throughout this year's market, most soda ash enterprises had stable production, and the overall starting load remained at 90% of the annual high level; in terms of inventory, soda ash enterprises had stable production support, and under the influence of high inventory, the supply pressure was small, and enterprises continued to reduce the price and increase the volume. Due to the poor delivery of enterprises, the supply should continue to be dominated by excess supply.

Macro level

According to several institutions affiliated to the Chinese Academy of Social Sciences, in 2019, the growth rate of global economy and trade slowed down significantly, and the growth rate of major economies generally fell. It is estimated that China's economic (GDP) growth will be around 6.1%. In 2020, the global economy is expected to show a moderate recovery, but there are more unstable and uncertain factors, and there are still downside risks. China's economy is expected to grow by about 6.0% and the consumer price index (CPI) will rise by about 3.4% in 2020.

According to the Statistics Bureau, from January to November 2019, the national real estate development investment was 12,126.5 billion RMB, up 10.2% year-on-year; the housing construction area of real estate development enterprises was 8,748.14 million ㎡, up 8.7% year-on-year, down 0.3 percentage points from January to October.

According to the data of the Automobile Association, in November, the automobile production increased year-on-year, and the year-on-year decline in sales continued to narrow. The production and sales respectively completed 2.593 million and 2.457 million vehicles, with an increase of 13% and 7.6% on a month on month basis. The production increased by 3.8% on a year-on-year basis, and the sales decreased by 3.6% on a year-on-year basis. The year-on-year decrease in sales was 0.5 percentage points lower than that of last month.

3  Market Forecast

The first two months of 2020 are off-season. At present, the production and marketing situation of soda ash industry in the upper reaches of glass is not good, the price of soda ash inclines downward obviously, the natural gas market has improved, and the overall production cost of glass has been reduced. In the case of capacity reduction, the downward space of glass is limited, the production enterprises maintain good confidence in the later market, and the price remains stable.

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