China Soda Ash Glass Market Weekly Report 20240512

Soda ash’s view: hold short positions before the holidays at 2300-2250, and hold short orders if it breaks through 2400, stop loss, and take profit 1850-1900; 

Logic: Soda ash has been looking at the main range of 1650-2050 throughout the year, and the range of the upper and lower space for breakthroughs is not high for the time being;

The surface demand of light alkali has declined for two consecutive weeks; the driving force of this round of surge has weakened; the downstream of heavy alkali maintains speculative replenishment, and the inventory of raw materials is not low; the inventory rises and falls during the maintenance season, the overall fluctuation is small, and seasonal destocking It is difficult to cash in the profits, and not removing the treasury will be interpreted as driving the negative; the market price rose from 1850 to 2300, a large increase, the valuation is not low, the downstream acceptance is slightly low, and there will be a stalemate on replenishment in the mid-term;

Maintaining the pre-holiday view and testing short positions in position management (the water indicator will not be speculated for the time being under high prices), we will still see soda ash returning to the shock position of 1850 in the later period.

Glass View: Fundamentals are bearish, short-term shocks are strong, focus on short selling at high levels

Strategy: Pre-holiday view 09: Reduce short positions or take profit and leave the market near 1550-1600. Maintain the view of reducing positions this week. The upper side will temporarily look at the pressure level of 1650-1700.

Logic: The view before the holiday is short-term maintenance of fundamentals. On the market, short sellers are also continuing to reduce their positions, and industrial products have generally risen. The glass market has rebounded, and futures dealers have also intervened, leading to a slight improvement in production and sales in North China. After the holiday, as the cold repairs are realized, and the market is still strong, spot prices are strong, downstream stocks have not been replenished for a month, and there is also a short-term demand for replenishment. Production and sales in various regions have basically returned to above balance, and the fundamental margin has improved slightly;

However, the current profit of glass is still acceptable, and the motivation for cold repairs is not strong. Cold repairs are also planned, and the weak view still exists. The estimated strength of this round of downstream replenishment is weak, and facing the rainy season, glass is affected by commodity sentiment. The upward pressure is still strong (black high callback). In addition, the position has dropped from the highest 1.03 million to around 790,000. There is still bargaining chip to increase the position. In the medium term, we still focus on short selling.

The cost of coal production is 1330, and the production profit is acceptable; the inventory accumulation trend will continue after late April, and the inventory in the third quarter may level off from a high level.

Risk points: Speculative replenishment brought about by short-term funding relief.

Glass data: Table demand has improved slightly this week; the current bad news is that rigid demand is still weak, and the trend of inventory accumulation remains unchanged; in the medium term, rigid demand remains stable, speculation is small, and it is still difficult to effectively destock; based on the performance of demand, in 2024 the output in the first half of the year was higher than the same period last year, and the demand was slightly higher than the same period last year. Inventory pressure was prominent in the first half of the year, and there was no trend of destocking;

In terms of price, Shahe prices rose, 1550-1590; Hubei 1520; April social financing data has different interpretations, the impact on glass may be slightly positive, and the demand bottom rises.

Looking at real estate new construction starts and completions, completions will be high in 2023, and completions in 2024 will be weaker year-on-year. Glass demand is actually ahead of completion data. The high point of glass demand may have already occurred, while glass supply is at a high level.（FIRST FUTURES）