Crazy Glass: Price Skyrocketing, Profits Doubling, Association Being Investigated

The regulator has launched an anti-monopoly investigation into the glass industry, setting a tone for the craziness of the domestic glass industry in the past year.

On the evening of January 22, the antimonopoly Bureau of the State Administration of market supervision and Administration issued an announcement, according to the report, filed an investigation on the suspected act of China construction glass and Industrial Glass Association (hereinafter referred to as the Glass Association) for organizing some glass enterprises to reach a monopoly agreement. The 21st century economic reporter learned that in December last year, a letter about price monopoly in the spot glass market and manipulation in the futures market was circulated on the Internet, causing concern. "Every time the glass association meets, the template of the price increase letter is the same."

In 2020, the price of domestic glass industry will be out of control. The high spot price and the fanaticism of futures market make the glass industry fall into dispute. "The glass industry is an industry with overcapacity. The rapid price rise does not exclude the implementation of monopoly agreements between enterprises or the implementation of monopoly agreements by industry associations." Liu Xu, a special researcher at the National Institute of strategic studies of Tsinghua University, told the 21st century economic report that the downstream glass deep processing enterprises had held many meetings to discuss the countermeasures, but it was not until the end of the year that the voice of the report appeared. Moreover, the antimonopoly Bureau of the State Administration of market supervision and administration made a response recently, and the response cycle was relatively long.

On January 25, the 21st century economic news reporter interviewed people from the glass association and learned that the antimonopoly Bureau of the State Administration of market supervision and administration had completed the on-site evidence collection last week in connection with the association's anti-monopoly investigation. "As a supporting agency of industry services, we also actively cooperate with the work after being reported and investigated. At present, the on-site investigation has been completed, and we are also waiting for the relevant results. " The Secretary of the Glass Association told the 21st century economic reporter.

At present, the glass industry into the off-season, spot market due to weak downstream demand, prices have been reduced. However, the performance of glass futures deviated from the spot market, and the price continued to rise in the near future.

Whether the "Crazy" of glass will continue this year is still unknown.

Anti monopoly filing failed to cool down the market

Affected by the investigation by the Anti Monopoly Bureau of the State Administration of market supervision and administration, the main glass futures dived on January 25. But near noon, the main glass price stabilized and then quickly rebounded. By the end of the day, the main price of glass was 1805 yuan / ton, an increase of 1.98%, which was realized for six consecutive trading days.

In the view of some industry insiders, they thought that the news of the anti-monopoly investigation on Friday might cool the glass futures market, but after two days of digestion over the weekend, the negative impact of the bad news quickly dissipated, reflecting that the market still maintains strong expectations for the glass industry.

In the past year, the domestic glass industry has created a price history.

In 2020, the price trend of domestic glass spot presents a significant "V" shape. Affected by the epidemic situation in the first quarter of the country, the demand for float glass in major regions of the country almost stagnated, logistics and transportation were suspended, the production and supply of superimposed glass factories were released normally, the relationship between supply and demand was loose, and the glass price went down all the way, and hit a low point in the middle and late April. According to data provided by wind, the price of domestic spot glass (4.8/5mm, the same below) hit a new low since the fourth quarter of 2016, with an offer of about 1340 yuan / ton.

In the second quarter, with the full opening of enterprises nationwide to resume work and production, the inventory of glass production enterprises decreased rapidly and the spot price rose. As of December 31, 2020, the domestic spot price of glass was 2327.30 yuan / ton, up 30.97% compared with the beginning of the year and 73.68% higher than the lowest point in April.

A salesman of a glass company told the 21st century economic report that compared with previous years, the company's inventory last year was much smaller, almost all maintained at the inventory scale of four or five days of production, and even reached the output of that day for a period of time, and the price was also one price a day. "Due to the restrictions of industrial policies, since 2017, the domestic glass production capacity has been strictly controlled, and the industry supply has entered the stock stage as a whole." An institutional analyst told the 21st century economic report that under the condition of limited new production capacity, specific glass demand from the photovoltaic industry and other industries led to the conversion of some float glass. On the whole, the periodicity of glass production capacity weakened.

"The glass industry is a long-term surplus industry. At present, the state has also issued policies to reform from the supply side, so as to improve the quality and efficiency of the industry." In an interview with the 21st century economic reporter, the Secretariat of the Glass Association said that in 2020, after the domestic glass industry was affected by the epidemic, the photovoltaic industry as the representative industry realized a rapid recovery, and the backlog of photovoltaic glass demand was released rapidly in a short time, making the supply-demand relationship very tense.

As an important auxiliary material for module production, the price of domestic photovoltaic glass has continued to rise since August last year. According to the data provided by PV InfoLink, as of December 31, 2020, the average price of 3.2mm photovoltaic glass coating was 43 yuan / m2, up 48.27% from the beginning of the year. This makes the downstream photovoltaic module enterprises complain incessantly.

It is undeniable that under the rise of quantity and price, the performance of glass enterprises is quite amazing.

On January 22, fulette, a leading photovoltaic glass enterprise, announced a large contract: the company signed a photovoltaic glass supply agreement with Dongfang Risheng, which agreed to sell a total of 34gw (about 234 million square meters) of photovoltaic calendered glass for modules from January 1, 2021 to December 31, 2023, with an estimated tax amount of 8.908 billion yuan.

This is another big order obtained by fulette after signing a 14 billion yuan photovoltaic glass supply agreement with Jingke energy at the end of last year. With strong market demand and rising prices, the company's performance is expected to double in 2020. According to the performance forecast released by fulette, it is estimated that the net profit attributable to shareholders of listed companies will be 1.500 billion yuan to 1.660 billion yuan last year, with a year-on-year increase of 109.20% to 131.52%.

The net profit of Jinjing technology, another photovoltaic glass enterprise, also increased greatly. The company's performance forecast released on January 16 showed that its net profit attributable to shareholders of listed companies increased by 292 million yuan or 296.66% compared with the same period of last year.

At the level of capital market, some glass enterprises are writing the myth of market value. On January 25, Fuyao Glass A shares and H shares both reached a record high. Among them, the total market value of Fuyao Glass A shares reached 160 billion yuan.

Tension between supply and demand or continued prosperity

Even at the stage of filing a case and investigating the price trend of glass industry this year, the Secretariat of the glass association failed to give a clear prediction when interviewed by the 21st century economic reporter.

"The price of glass this year is not clear." According to the Secretary of the glass association, the association will help stabilize the price of the industry from the perspective of ensuring supply and ensuring the safety of the industrial chain, "but the final effect is still subject to the actual situation."

Because of the suspected organization of some glass enterprises to reach a monopoly agreement, the glass association has become the object of investigation. But whether can take this "shock" the current high view bearing glass market, the effect may not be big.

In addition to the glass futures market on January 25, after the impact of anti-monopoly investigation, the price of glass of main specifications has stopped falling and stabilized in the spot market.

According to the data provided by wind, as of January 25, the price of 5mm float glass in major cities in China is 2149.40 yuan / ton in Jinan, 1996 yuan / ton in Beijing, 2192 yuan / ton in Shanghai, 2350.80 yuan / ton in Guangzhou, 2191.60 yuan / ton in Chengdu, 1765.60 yuan / ton in Shenyang, 1834.40 yuan / ton in Xi'an and 1932.25 yuan / ton in Qinhuangdao. Among them, the prices in most cities were the same as last week. Although in the off-season, but the inventory of glass enterprises seems to be in the market expectations. Even though the inventory of the whole glass industry increased for three consecutive weeks last week, the price was firmer due to the decrease compared with the same period last year.

In fact, the "Craziness" of the glass industry has caused complaints from downstream enterprises and caused some "confrontation" actions. Since December last year, glass deep processing enterprises in some provinces have successively issued statements that they will have a 45 day holiday during the Spring Festival, with a view to guiding glass price stability by reducing the demand for upstream glass procurement.

And from the price trend of the first half of this month, the spot price of glass across the country is generally callback. However, industry insiders said that this price drop is closely related to the cyclical nature of the industry. As the inventory of glass manufacturers is at a low level in the same period of previous years, the gap between supply and demand still exists, and the range of price decline is limited.

The reporter of 21st century economic report noted that in early January this year, Guangdong Glass Association monitored the daily sales, inventory and price of float glass market in South China from December 20 to December 26, 2020. After analysis, it was estimated that with the end of the Spring Festival holiday at the end of February and the beginning of March, the downstream deep processing would resume production, and the float market in South China would usher in a "little spring after the festival" and the prices of medium and high-end products It will remain above 2500 yuan / ton.

"From the perspective of both supply and demand, an era of tight balance between supply and demand, significant slowing down of periodic fluctuations and long-term price stability of float films has come." The association said.

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