Event:
Recently, glass and soda ash prices continue to fall sharply, today's main Taiwan about more than 6% and more than 5% respectively, the main glass contract price has fallen to a new low in more than four years.
Brief comments:
1. Since this year, due to the rigid supply of glass, the continuous high output and the demand is constantly weak by the real estate drag, the imbalance between supply and demand is obvious, the inventory is rising, the industry pessimism is heavy, and the price focus keeps falling. At present, although the profit of part of the glass factory has lost money, but due to the cost and other factors, it is difficult to have a large supply reduction in the short term, the price will continue to be under pressure.
2. In terms of soda ash, the fundamentals also present high supply and weak demand. On the supply side, despite the high concentration, strong elasticity. But in recent years, due to the production profit, the release of new capacity, this year's maintenance season supply reduction is insufficient. At the same time, the downstream demand is weak. Under the loss of float glass and photovoltaic glass, the daily melting volume tends to decline. The glass factory adopts the low inventory strategy, purchasing cautious, and the price keeps falling, falling below part of the production cost.
March and September contracts enter the delivery month in the way of futures falling sharply, which can see the weakness of spot. In general, the imbalance between supply and demand of glass soda ash continues, especially the mismatch between supply and demand of glass is more obvious. Under the weak downstream demand, the glass rebound is weak, negative feedback to soda ash, and the price is mainly under pressure. Risk concerns: glass production line cold repair, factory maintenance and downstream demand, etc.(ITG)
