[China Glass Network] The overcapacity of the glass industry is not only a matter of periodicity, phase and structural excess, but a comprehensive surplus. The solution is to reduce the production capacity. The author predicts that the large-scale reshuffle of the glass industry (cold line repair and production stoppage) will come in the second and third quarters of next year. Before that, the situation of the glass industry will still be very severe, and the possibility of continued price decline is still very large.
In terms of downstream demand, the property market downturn will become the norm, and China's property market will gradually change from “extraordinary†to “normalâ€. From the perspective of the big cycle, the price of the central city of the four cities in the north, Guangzhou and Shenzhen has increased by at least 10 times in 2013 compared with 2003. In the second-tier cities, the urban housing prices in 2013 were generally 6-10 times higher than in 2003. From the perspective of money supply, the balance of broad money supply at the end of 2013 was 110.7 trillion yuan, compared with 22.12 trillion yuan at the end of 2003, only a five-fold increase. The increase in house prices in first- and second-tier cities clearly exceeded the expansion of the currency. At the end of 2009, Hangzhou house prices even nearly doubled from the beginning of the year. Such a large increase can only be expressed by "extraordinary".
Affected by the sluggish demand for downstream real estate, as of September 12 this year, flat glass inventories have reached 31.56 million weight boxes, which is at a historical high. Although the spot price of glass in September was slightly adjusted and the inventory showed a staged decline, the domestic real estate situation was poor in 2014, and the upstream supply remained loose. It is expected that the inventory will still recover significantly after winter. Glass inventories in the fourth quarter of 2014 and the first quarter of 2015 will exceed the previous highs.
The profits of glass companies have also fallen to freezing point. From January to July this year, the glass industry realized a profit of 6.99 billion yuan, of which the total profit of flat glass was 1.47 billion yuan, and the processing glass was 2.78 billion yuan. The profit of flat glass in the second quarter was only 140 million yuan, down 90% from the first quarter. The profit of the entire industry of 140 million yuan is not even as good as the profit of a former glass enterprise. Due to the increase in natural gas prices, the glass companies in the industry have suffered serious losses. The third quarter should theoretically be a good time of the year, but the profits obtained are only half of the same period last year. After a big drop, the market's mentality became fragile, and every price adjustment caused panic.
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