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Glass remains weak around the Spring Festival

Post Time:Jan 20,2021Classify:VIP NewsView:766

After the deep V-shaped flip in 2020, glass prices have risen to historical highs. However, around the Spring Festival of 2021 is a period of weakness in the glass market. High supply and low demand will cause glass inventory to accumulate rapidly, and glass prices may fall under pressure.

Downstream production shutdown curbs glass demandAt present, the daily melting volume of float glass is about 160,000 tons, which is about 4.6% higher than the 154,000 tons/day and 155,000 tons/day in 2019 and 2020. Glass production is relatively rigid, which means that the supply of original glass during the Spring Festival this year will be higher than in previous years.

On the other hand, downstream holidays curb demand for glass. On December 19, 2020, the top 30 Guangdong glass deep processing enterprises held a round-table self-discipline and self-improvement meeting in Foshan. The discussion mainly included price increases, linkages, and holidays. Among them, it is planned to have a 45-day holiday starting from January 15. Since then, glass deep processing companies in Hainan, Chongqing, Beijing-Tianjin-Hebei, and Shandong have also issued a joint statement of self-regulation and coordination, stating that they will focus on digesting their own inventory during the difficult period of glass original procurement, and the follow-up will start from January 15. The 45-day holiday is to cope with the high price of original glass.

The key to the suspension of production of glass deep processing enterprises is the increase in the price of the original film, coupled with the low-price competition of the peers, resulting in the suppression of the price of the final product. It is still unclear whether the suspension of production of glass processing enterprises can be transmitted to the original factory, which will cause the price of original glass to fall, but there is no doubt that the demand for original glass will decrease during the shutdown.

Inventory accumulation is faster than in previous yearsAt present, glass manufacturers have just entered the initial stage of seasonal accumulation, and glass factories have very few original stocks. However, from the beginning of each year to the Spring Festival, the demand for glass is gradually weakening, and glass inventory will continue to accumulate. As the daily melting volume is 4%-5% higher than in previous years, combined with the shutdown of deep processing plants on the demand side, and the epidemic in Hebei that affects traders’ early holidays, the accumulation of glass during the Spring Festival this year will be faster than in previous years. At a time when spot prices are weakening and demand has not yet started, it is difficult for glass futures prices to have upward driving support.

In short, when the demand has not yet started, the rapid increase in glass inventory caused by high supply and low demand will become a reality, and the glass market outlook is expected to remain weak.

Source: www.glassinchina.com/sdzlglassAuthor: Shandong TOP Leader glass CO., Ltd

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