Hot Spot: Glass: Policy & Sentiment-Driven Roller Coaster Opportunities

In the past two months, glass futures have staged a thrilling one The "roller coaster" market fully demonstrates the violent fluctuations of the current market. On July 1, the main contract fell 3%, closing at 988 yuan / ton, the next day (July 2), the market unexpectedly staged a single-day over-rise 6% reversal market, closed at 1052 yuan / ton, as of today's close of 1083, a single-day rise of 5.25%, the bottom rebound of 9.06%, the market sentiment in the extreme pessimism and cautious optimism between the violent switch, reflecting the fierce game of long and short power at the current price.

The trigger for this sharp fluctuation came from two key factors: first, the policy signal released at the sixth meeting of the Central Financial and Economic Commission on July 1. The meeting clearly put forward the "governance of disorderly competition, promote the orderly exit of backward production capacity, and guide cadres to establish and practice the correct view of political performance", which was interpreted by the market as a positive signal for the industry's supply-side reform, triggering a general rise in the commodity market, and a strong rebound in low-valued glass futures. Second, the news of the production reduction of the photovoltaic glass industry has boosted, and the domestic head photovoltaic glass companies plan to collectively reduce production by 30%, and some companies have implemented kiln plugging. This sends a signal of supply-side reform for the entire glass industry chain.

The main body of the report

1. The continuous game between high supply and weak demand
(1) Supply side: production capacity remains high, and the process of decentralization is slow

As of July 4, the daily melting capacity of float glass in China reached 157,800 tons, which was basically the same as the level at the beginning of the year. As the early ignition production line continues to release output this month, and there are still production line ignition plans in the follow-up (such as the resumption of 600 tons/day production capacity of Shandong Jinjing Technology), the supply pressure may further increase. It is worth noting that float glass production lines have extremely rigid characteristics, and once ignited, they need to continue production for several years, and the output cannot be flexibly adjusted according to market demand, which makes supply adjustment often lag behind demand changes.

(2) Demand side: real estate is weak and suppressed, and policies are expected to improve

As a typical real estate post-cycle commodity, the demand for glass is highly bound to real estate completions, and the current real estate data continues to be weak. In 2025, the area of real estate completions is expected to decline by 7%-13% year-on-year, which will directly drag down float glass demand by 2.5%-11%. Terminal demand indicators show that as of the end of June, there was no significant improvement in deep processing orders across the country, and most of the orders of enterprises were concentrated at a very low level of 3-7 days, and only some engineering orders could be arranged to 15-30 days. Relatively uncertain is the policy force in the second half of the year, and whether the market generally expects the RRR cut or the stimulus measures for real estate can be implemented, will become the key variable affecting demand expectations. If the favorable policy is realized, it may trigger the upstream and downstream of the industry to actively replenish the warehouse to form positive feedback, which in turn will promote the price increase.

(3) Inventory: manufacturers have high inventory and low inventory in the middle and low reaches

As of July 3, the total inventory of float glass sample enterprises in China reached 69.085 million heavy boxes, which was at a historically high level, equivalent to 30.5 days of inventory days, an increase of 12.4% year-on-year. This high inventory pattern is mainly due to the pessimistic market expectations in the early stage, the middle and lower reaches are mainly based on demand, and the speculative atmosphere is not strong, resulting in the inventory being mostly concentrated in the manufacturer. In stark contrast to the high inventory of manufacturers, the inventory of the middle and lower reaches is on the low side, especially the inventory of the futures and cash merchants is obviously insufficient. This inventory structure lays potential variables for the market – if market sentiment changes in the second half of the year, speculative replenishment in the middle and lower reaches may lead to a wave of phased upward movements. However, the start of the replenishment market requires the cooperation of macro or fundamental factors, such as the introduction of substantive policies or the improvement of demand beyond expectations.

2. Cost and profit: the differentiation pattern of the industry as a whole under pressure
At present, the price of glass has approached the cost red line, and the profit of the industry has shown a clear differentiation trend. According to the latest production cost calculation model:

On the whole, the price of float glass has been in the low valuation range, and the price downside is limited when the cost is no longer lower. In particular, natural gas glass-making continues to be in a state of deep loss (-188.68 yuan/ton), which is difficult to maintain for a long time and may force the supply side to adjust.

From the analysis of cost structure, the cost of coal-to-glass is about 1,100 yuan/ton, while the cost of natural gas is as high as 1,400 yuan/ton, and the cost difference between different production processes reaches 300 yuan/ton. The average profit of the industry is only about 30 yuan/ton, and if the price falls further and falls below the cost line, it will trigger a negative feedback mechanism for the accelerated release of cold repair capacity. In 2025, the potential cold repair scale will reach 21,400 tons/day, and this supply-side adjustment has begun to appear.

3. Strategic opportunities

Based on the current supply and demand pattern and market environment, the future market of glass futures may present a three-stage development path.
(1) Swing operation strategy: call back to below 1,000 yuan to establish long positions in batches, and set strict stop loss at 950 yuan; If you break through 1050 yuan, you can consider adding positions, with a target price of 1100-1200 yuan. This strategy is suitable for trend traders with a strong risk tolerance, and the core logic is cost support and policy expectations.

(2) Hedging arbitrage strategy: adopt a combination of "long glass futures (FG2509) + short soda ash futures (SA2509)" to capture the profit transfer opportunity at the cost end. The core idea of this strategy is that if the profits of the glass industry are restored, the raw material soda ash may transfer part of the profits, while avoiding systemic risks.

(3) Event-driven strategy: Pay close attention to the policy window period, especially the implementation of real estate stimulus policies and "anti-involution" measures in the industry. The introduction of policies often triggers impulsive markets, which are suitable for short-term trading.

Risk warning: liquidity risk, crude oil geopolitical emergencies