In recent analyses by Maike Futures and Guantong Futures, the glass industry in China is encountering significant challenges both on the supply and demand fronts, signaling a potentially turbulent period ahead.
Supply Side Challenges:
Maike Futures has highlighted that profitability in the glass sector remains subdued, with several production lines ceasing operations. Particularly, float glass production using natural gas is operating at a loss, while methods reliant on coal-to-gas and petroleum coke have also witnessed sharp declines in profitability. The prospect of diminished profits is expected to further curtail glass production in the near future. As of the latest report, the weekly output of float glass recorded 1.1923 million tons, indicating stability but no growth.
Demand Side Concerns:
Guantong Futures attributes sluggish demand to persistent rainy weather, dampening enthusiasm among downstream industries in the middle and lower reaches of the market. The focus remains primarily on rigid demand, with major construction projects such as Baojiao Building progressing slowly. Delays in these projects, coupled with their substantial completion challenges, are likely to suppress glass demand in the foreseeable future.
Inventory Build-Up:
Data as of July 25, 2024, reveals a notable increase in national float glass inventories, reaching 67.091 million weight boxes. This marks a monthly rise of 1.955 million weight boxes, reflecting a 3.0% increase from the previous month and a substantial 44.39% surge compared to the same period last year.
Market Outlook:
Looking ahead, Guangzhou Futures anticipates a persistently weak market sentiment, exacerbated by manufacturers resorting to selling below cost to sustain operations. Insufficient downstream demand continues to contribute to inventory accumulation. Short-term glass prices are expected to fluctuate marginally above 1350, prompting a cautious “wait-and-see” approach among market participants.
In summary, the glass industry in China is navigating through a challenging landscape characterized by profitability pressures, subdued demand dynamics, and escalating inventory levels. Stakeholders are advised to monitor developments closely amid expectations of continued market volatility in the near term.
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