In the first half of 2022, the float glass market declined weakly, and the industry gradually fell into losses. Under the severe contradiction between supply and demand in the industry and high inventory pressure, the traditional peak season won’t comes as expected in the next few months.
Table of Contents
Jan- June 2022: prices continued to decline, and a wide range of losses
In the first half of 2022, the contradiction between supply and demand in the float glass market was severe, and the market keeps weak. In addition to the price rebound around the Spring Festival due to mid-stream and downstream stocking reasons, prices have fallen into a stage of continuous decline since late February, the industry has gradually entered a loss since May, and the loss has intensified in June. By the end of June, the average price was 1771.58 yuan/ton, a decrease of 27.86%, and a decrease of 43.76% from the high of 3150 yuan/ton in early September 2021. At present, the selling prices of most companies in North China, Central China, East China and South China have fallen below the cost.
There are two main reasons for the continued decline in prices:
- The rigid demand continues to be weak, and the problem of insufficient orders from processing plants is prominent;
- The supply continues to increase year-on-year, causing high inventory.
China float glass price in 2022-Jan-June
Supply side: production capacity has increased at a high level, and cold repair is limited
By the end of June, there were 302 float glass production lines in China, 263 of which were in production, with a total daily melting volume of 175,725 tons, The average daily melting volume from January to June was 173,783 tons. In the first half of 2022, a total of 8 production lines will be cold repaired, with a total production capacity of 4,450 tons.8 new lines or repaired lines back to production with a total production capacity of 6,050 tons.
Daily output of China float glass lines
Demand side: Real estate funds are limited, and the demand for float glass is sluggish
Monthly consumption of China float glass industry in 2022
Float glass is mainly used for real estate, and since the second half of 2021, the shortage of real estate funds will continue. Under the continued weakness of real estate sales, the shortage of funds for terminal projects in the first half of 2022 continued to be unresolved, the processing plants had difficulty in collecting payments, the processing plants were short of funds, and orders were shrinking. In addition, the production capacity of processing equipment increased in 2020-2021, and the survival of processing plants became more difficult.
In the first half of 2022, the start-up of downstream processing plants of float glass continued to be at a low level. Since the Spring Festival, downstream processing plants have gradually added new orders in March, but the orders have been sluggish. From April to June, the orders of processing plants have not improved, and the orders have decreased by about 30% year-on-year. Under the high level of finished product inventory, some regional processing plants were forced to reduce the operating load from May to June. At present, the mainstream operating load of domestic processing plants is 50%-70%.
Inventory: The inventory of manufacturing enterprises continued to accumulate, hitting a record high for the same period
Float glass inventory in China keep increasing since 2022
In the context of insufficient rigid demand, the intention of processing plants to stock up in the first half of the year was sluggish. In addition to the centralized stocking around the Spring Festival, the sales in April-June are mainly based on just-needed transactions. The average production and sales rate in the industry is about 92%, and the oversupply rate is 8%.
On the whole, social inventories are high, and inventories in the first half of the year are concentrated in production enterprises. By the end of June, the national inventory was 110.46 million weight boxes, a significant increase of 100.4% compared with the end of last year. The main 13 provinces have a stock of 71.29 million weight boxes, a year-on-year increase of 246.57%, an increase of 43.04% over the same period in 2020, and the inventory days are 43.2 days (daily melting volume calculation). In terms of sub-regions, the inventory pressure in the north is greater than that in the south. The average inventory days in the north of Shandong are 45.1 days, and the southern region is 31.4 days.
Cost side: The cost is running at a high level, and the industry is gradually falling into losses
In the first half of 2022, the cost of float glass will increase from a high level, and the cost of raw material soda ash and fuel will be relatively high. The price of superimposed float glass has declined, and industry profits have gradually shrunk. In the first half of the year, the national comprehensive profit was 158.76 yuan/ton. It has gradually entered a loss since May, and lost 168.4 yuan / ton in June. A larger portion has fallen below costs.
It’s expected that float glass price will increase since Sep,2022 and reach highest point by Nov,when the price would be 30% higher than in July.
