The low inventory at the end of 2023 will provide a good start for the glass market in 2024, and the center of glass prices will further move up in 2024. Under the situation of stable supply and demand, the high profit of the glass industry is supported by the downstream rigid demand, which is the result of the profit distribution of the high-quality development of the glass manufacturing-deep processing industry chain. The overall low inventory of original film companies has not been seen for many years, and the glass spring market in 2024 is very worth looking forward to. In 2024, the annual price range of the glass market is predicted to be 1600-2600 yuan/ton.
Supply is at a low level in the past three years.
On the supply side: Since the end of the second quarter of 2022, under the pressure of continuous losses, the glass industry has experienced a spontaneous process of capacity clearance, and the daily melting volume of float glass has dropped from a high of 176825 tons in mid-last year to a low of 159,030 tons in mid-February, a decrease of 10.06%. In the following three quarters, the fluctuation of glass production capacity rebounded. As of mid-December, there were 308 float glass production lines in China, 253 in production, and a total daily melting capacity of 172,650 tons. The daily melting volume of glass in production increased by 11,010 tons year-on-year, of which the supply rebounded faster in the second and third quarters.
From the perspective of output: supply is still at a low level in the past three years. According to the latest data from the National Bureau of Statistics, the cumulative output of flat glass from January to October 2023 was 796 million weight boxes, a year-on-year decrease of 7.6%, and the decline was 0.2 percentage points larger than that from January to September, of which the monthly output in October was 82.56 million weight boxes, a year-on-year decrease of 1.0% and a month-on-month increase of 1.84%. November and December production will record positive month-on-month and month-on-month growth, but it is certain that flat glass production will decline by more than 5% for the whole of 2023.
The profit level of glass production enterprises is an important indicator of glass supply and demand, when the demand exceeds supply, the price rises, the profit rises, and when the supply exceeds demand, the price falls, and the profit level of glass production enterprises will also react to the supply and demand of glass. From 2020 to 2021, the profit of glass production is good and at a historical high, and the daily melting volume of glass has climbed from below 160,000 tons to more than 170,000 tons. In 2022, the profit of glass production fell significantly, and the loss situation lasted for three quarters from June 2022, and the loss range of the production line fueled by coal or natural gas once exceeded 300 yuan/ton. In April, the spot price of glass rose rapidly, the domestic glass industry turned losses into profits in mid-April, and the gross profit of production was further expanded to more than 300 yuan/ton at the end of April, and the gross profit of production rose and fell in May, and the overall operation was above 600 yuan/ton. The decline in the spot price of glass in June drove the gross profit of glass production to fall below 500 yuan/ton. After the rainy season, the demand for replenishment drove the profit of glass prices to rise in stages, but the increase in glass prices was limited, and then the profits were eroded by the rise in raw fuel prices.
As the world's largest producer and consumer of glass, China has historically changed from a net exporter of glass to a net importer from 2020 to 2021 due to high real estate demand. Domestic demand weakened in 2022, with glass exports once again outpacing imports. From January to October 2023, the export volume of float glass was 11,690,600 weight boxes, and the import volume was 3,307,500 weight boxes, and the trend of exports exceeding imports was maintained. In the case of accelerated destocking of domestic inventories, exports remain high, indicating that domestic glass prices have some room for improvement.
Flat glass is mainly used in the construction field, automotive industry, industrial glass, photovoltaic electronics industry, etc. In addition to being used in the pre-completion process of new houses, architectural glass also includes decorations for residential, office and commercial places. At the beginning of 2023, almost no one was eagerly looking forward to the demand for glass, but the final result was that the demand for decorative glass exploded, carrying the banner of glass demand. The demand for home improvement bulk orders is the highlight of glass demand in 2023, and there is a particularity of concentrated release of home improvement demand after the epidemic, and the demonstration effect will make the intensity of home improvement demand in 2024 remain stable in stages. The demand for real estate completions is still being released steadily, and urban renewal will take over the baton of demand.