Glass industry analysis report: demand recovery and slow production resumption bring prices continue to rise
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- Release time:2021-03-29
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[Summary]Flat glass is a cyclical industry. From historical data, it goes through a cycle approximately every 3 years. The industry has a typical "ketchup effect". When the ketchup bottle is continuously tapped, the sauce is often not poured out, and then a large pile is suddenly poured out. This is related to the triple cycle characteristics of the glass industry: real estate cycle,
Glass industry analysis report: demand recovery and slow production resumption bring prices continue to rise
[Summary]Flat glass is a cyclical industry. From historical data, it goes through a cycle approximately every 3 years. The industry has a typical "ketchup effect". When the ketchup bottle is continuously tapped, the sauce is often not poured out, and then a large pile is suddenly poured out. This is related to the triple cycle characteristics of the glass industry: real estate cycle,
- Classification:Industry News
- Author:
- Source:
- Release time:2021-03-29
- Visits:0
Glass cycle characteristics: rigid supply and inventory cycles increase volatility
Flat glass is a cyclical industry. From historical data, it goes through a cycle approximately every 3 years. The industry has a typical "ketchup effect". When the ketchup bottle is continuously tapped, the sauce is often not poured out, and then a large pile is suddenly poured out. This is related to the triple cycle characteristics of the glass industry: real estate cycle, capital expenditure cycle, Inventory cycle. Compared with cement, the cyclical characteristics of glass real estate are more significant, and the rigid supply and inventory cycles of glass further increase its cyclical volatility.
Demand and supply determine the height and time of this rebound
This round of glass upswing cycle started in the second half of 2015. In 2016, Q1 sales declined somewhat under the influence of the low season of Q1 sales. After entering April, it basically showed a unilateral upward trend. As of the end of July, production capacity has increased by 1% year-on-year, prices have increased by 15% year-on-year, and inventories have fallen by 7% year-on-year. The increase in prices and the improvement in costs have resulted in a significant increase in industry profits.
Through the analysis of the historical fluctuations of glass prices, we found that: (1) the inflection point of glass prices is determined by the growth rate of real estate sales; (2) the price increase and duration are affected by the rebound in demand, and are also restricted by new capacity.
Compared with the current situation, we believe that: (1) The growth rate of real estate sales in 2016 has risen and declined. In June, the year-on-year growth rate dropped to 15%. It is highly probable that it will not be able to sustain a growth of more than 20% in the second half of the year; (2) Supply pressure remains At present, the production capacity that can be put into operation at any time accounts for 14% of the total production capacity. The resumption of production is accelerating due to the improvement of industry profitability. However, subject to environmental pressure, the cold repair of production and the introduction of new capacity will not be so fast in the short term.
Demand recovery and slow production resumption have brought prices continue to rise
Based on this, we make the following judgments on this round of price rebound: 1. The price increase is due to the recovery in demand and the depletion of previous production capacity. In addition, the peak season is coming, and the price is in the upward channel of a new cycle, which is similar to the degree and time of the demand recovery in 13 years. It is consistent; 2. Production capacity is put in a slow pace under the pressure of environmental protection. Compared with the pressure released on the supply side in 2013, the pressure on the supply side will be smaller, so that the price increase will last longer; 3. The growth rate of real estate sales demand has fallen, according to the 6-month time The price is expected to reach a high point before the end of the year. In the medium term, demand growth is expected to be low, new capacity will be gradually released, and further price upward momentum is weakening.
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