SunSirs: Glass Futures Prices Rise Against the Trend Despite Seasonal Slowdown

As the Spring Festival holiday approaches, the glass industry enters its seasonal slowdown. Downstream enterprises are gradually shutting down for the holidays, and terminal demand continues to weaken. However, glass futures surged by 3.36% yesterday, hitting a high of 1,120 yuan per ton, with trading volume exceeding 2 million lots.

Notably, market rumors circulated on Tuesday suggesting potential cold repairs and production cuts at some glass plants. Amidst low valuations, increased supply-side disruptions could trigger temporary price volatility. The market is currently trading on expectations of supply contraction rather than fundamental improvement. Future price movements will still depend on supply and demand dynamics. If prices continue to rise, offering substantial profits on the futures market, expectations for production resumption will increase, thereby exerting downward pressure on prices again. The current glass market faces dual weakness in supply and demand: although the daily float glass melting volume has decreased, weak demand limits the upside potential for prices.

Operating pressures in the glass industry continue to mount, with most production lines operating at a loss. Industry capacity continues to be reduced, with the national daily float glass melting volume now down to 151,000 tons, a 14% decrease from the 2024 peak. Should future capacity fall below 150,000 tons, the industry may enter a state of weak supply-demand equilibrium.

Additionally, energy conversion efforts at some Hubei production lines have drawn market attention. This year, flat glass lines in Hubei must transition from petroleum coke to natural gas and electrification. Concentrated conversion activities could trigger short-term shutdowns, reducing supply and potentially lifting glass prices.

Regarding winter stockpiling, this year's pre-Spring Festival market behavior differs from previous years. Zhou Xiaoyan noted that while downstream players typically showed strong stockpiling intent before the holiday in past years, this year's overall activity has been relatively stable with low downstream hoarding willingness. In the core production area of Shahe, social inventories remain elevated, and downstream enterprises generally avoid blind stockpiling due to insufficient orders.

Export performance, however, has been relatively strong. Influenced by export tax rebate policies, glass export orders showed favorable growth in January.

Looking ahead, market dynamics will shift around the Spring Festival holiday. Before the holiday, attention should focus on changes in mid-to-downstream stockpiling intentions. Should winter stockpiling demand exceed expectations, it could further support glass price increases. After the holiday, the key focus will be on the recovery of downstream demand, particularly in the real estate sector. Should real estate demand show no significant improvement, the upside potential for glass futures prices will be constrained.

Supply dynamics warrant attention before the holiday: Four coal-to-gas production lines in the Shahe region await upgrades, while several new lines prepare for ignition, suggesting future increases in daily melting capacity. Hubei anticipates cold repairs before the holiday, and with dwindling delivery-grade inventory, its spot prices have already surpassed those in Shahe.

Post-holiday, demand and inventory dynamics will be critical. Persistently high midstream inventories will continue to suppress glass prices, making sustained upward momentum unlikely. However, overall production costs in the glass industry are likely to rise. Currently, natural gas-fired lines remain unprofitable, while petroleum coke and coal-based gas lines show only marginal profits or operate near breakeven. This suggests a low probability of significant price declines.

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