SunSirs: The Glass Market is on the Rise in 2023, or It will Continue to Improve in 2024?

The year 2023 has come to a successful end. Looking at the development of the glass market this year, according to monitoring by SunSirs, the glass market has risen in 2023. On January 1st, the average price in the monitored area was 18.68 RMB/square meter, and on December 31st, the average price was 22.2 RMB/square meter, with a comprehensive annual increase of 18.84%.

Looking at the development of the market in 2023, stocking up before the Spring Festival in January resulted in an increase in glass prices. The resumption of real estate work and production in February fell short of expectations, and glass prices fell. Downstream stage replenishment from March to April, with rapid market growth. Replenishment from May to June came to an end, market confidence weakened, and prices fell. Confidence in the terminal real estate market improved from July to August, with increased demand and an increase in glass prices. From September to November, production capacity increased and market prices fell. In December, the south was strong and the north was weak, and processing enterprises in the middle and lower reaches of the southern region urgently needed to replenish goods, leading to an increase in market prices.

In terms of production capacity

According to industry statistics, as of the end of December 2023, there were a total of 308 float glass production lines in China, with 254 in production.

According to statistics from the National Bureau of Statistics, the national production of flat glass from January to November 2023 was 87.7539 million weight boxes, a cumulative decrease of 6%.

In terms of inventory

Industry statistics show that as of December 28th, the total inventory of float glass sample enterprises in China was 32.062 million boxes, a month on month decrease of 291,000 boxes or 0.9%, a year-on-year decrease of 51%, and a decrease of 0.1 to 13.2 days in inventory days compared to the previous period. The market prices remain stable, and the overall inventory of enterprises is at a relatively low level. The confidence of on-site operators is inconsistent, and most of them have a good mentality, but still need to operate with more caution.

Import and export data

Customs statistics: From January to November 2023, the cumulative export volume of Chinese glass was 637,000 tons, an increase of 3.1% compared to the same period last year, and the export volume increased by about 19,000 tons. The cumulative import volume of glass in China from January to November 2023 was 180,000 tons, a year-on-year decrease of 16.21%, and the import volume decreased by about 34,700 tons.

In terms of upstream raw materials

From January to December, the trend of pure alkali increased, with prices rising by 5.36%. The domestic liquefied natural gas market fell by 10.78% from January to December. The price of petroleum coke decreased by 36.04% from January to December. The decrease in costs supports profitability.

As of December 29, 2023, the profit of petroleum coke glass production was 567 RMB/ton, and the cost was 1,413 RMB/ton; The profit from natural gas to glass production is 229 RMB/ton, with a cost of 1,890 RMB/ton. The profit from coal to glass production is 209 RMB/ton, with a cost of 1,557 RMB/ton.

In terms of downstream real estate

From January to November, the national real estate development investment was 10,404.5 billion RMB, a year-on-year decrease of 9.4%, including residential investment of 7,885.2 billion RMB, a decrease of 9.0%.

Overall, the investment confidence of real estate companies is still weak this year, and the industry's available funds have not improved. As the central bank frequently voiced support for the reasonable financing needs of real estate enterprises at the end of November. In late December, Beijing and Shanghai will respectively reduce the down payment ratio for home purchases and adjust the standard for ordinary housing. The future market expectation may improve, and the cash flow of real estate companies will improve, providing room for easing the industry's financial pressure. The growth rate of development investment will reverse and expand the decline.

In terms of downstream automotive industry

According to data from the China Association of Automobile Manufacturers (CAAM), from January to November 2023, China's automobile production and sales reached 27.111 million and 26.938 million, respectively, with a year-on-year increase of 10% and 10.8%. It was previously estimated that the total sales of automobiles in China would be around 30 million in 2023.

From January to November 2023, the production and sales of new energy vehicles reached 8.426 million and 8.34 million respectively, with a year-on-year increase of 34.5% and 36.7%, and a market share of 30.8%.

From January to November 2023, the export of automobiles reached 4.412 million units, a year-on-year increase of 58.4%. By vehicle type, passenger car exports reached 3.72 million units, a year-on-year increase of 65.1%; The export of commercial vehicles reached 692,000 units, a year-on-year increase of 29.8%.

It is worth mentioning that after surpassing Germany in 2022, China's automobile exports surpassed Japan for the first time in the first quarter of 2023, and then surpassed Japan again in the first half of 2023, firmly ranking first in the world. Therefore, in the medium to long term, there is still relatively stable development space for the automotive glass industry, which is in line with the development of the automotive industry

Future Market Forecast

From a macro perspective, the Central Economic Work Conference emphasized that in 2024, economic work will adhere to the principle of "seeking progress while maintaining stability, promoting stability through progress, and breaking through before establishing". Fiscal policies will be moderately strengthened, while monetary policies will be "flexible, moderate, precise, and effective".

In terms of upstream raw materials: liquefied natural gas and petroleum coke, prices have fallen, and the decrease in costs has supported profits. In the situation of stable supply and demand, the high profit of the glass industry is supported by downstream demand, which is conducive to the high-quality development of the glass manufacturing and deep processing industry chain.

In terms of supply: As of the end of December, there were a total of 308 float glass production lines in China, with 254 in production. The national production of flat glass from January to November 2023 was 877.539 million weight boxes, a cumulative decrease of 6%. The low inventory at the end of 2023 will provide a good start for the glass market in 2024. The confidence of the market players is mixed, and most of them have a good mentality, but still need to operate cautiously.

In terms of import and export: From January to November 2023, the cumulative export volume of Chinese glass was 637,000 tons, an increase of 3.1% compared to the same period last year, and the export volume increased by about 19,000 tons. The cumulative import volume of glass in China from January to November 2023 was 180,000 tons, a year-on-year decrease of 16.21%, and the import volume decreased by about 34,700 tons. The trend of exports exceeding imports has been maintained. With the acceleration of domestic inventory depletion, exports remain at a high level, indicating that there is some room for improvement in domestic glass prices.

In terms of demand, the new housing sales market will still face significant pressure in 2024. If the expectations of the future real estate market improve, the cash flow of real estate companies will improve, coupled with the timely promotion of urban village renovation, it will bring certain favorable factors to the glass market. In addition to the incremental demand for renovation of old residential areas, urban renewal, and urban decoration, the demand for glass in agricultural modernization cannot be underestimated. Among them, "agricultural factories" refer to more modern and intelligent glass greenhouses, which have further increased the demand for glass.

Overall, the future market should maintain confidence in the demand outlook for glass, and the focus of glass prices may further shift upwards in 2024.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.