Glass is still facing pressure from high inventory levels, and downstream deep-processing order data suggests limited improvement in actual demand. If glass factories resume their inventory accumulation, the market will remain under pressure.

In March, a mini-boom emerged in the real estate market, with continued improvement in new and pre-owned home sales in key cities. Strong market expectations for the real estate market resurfaced, and futures and spot traders drove restocking in the mid- and downstream markets. Glass factories saw robust production and sales, significantly reducing inventory, and the market began to strengthen. However, impacted by overseas macroeconomic risks and mediocre order data from downstream deep-processing companies, the glass market saw a bearish trend on March 16, reversing previous gains. Although the central bank's reserve requirement ratio cut boosted market sentiment in Friday's night session, leading to a rebound, market panic persisted on Monday, putting downward pressure on the glass market.

Orders for deep-processing glass are not commensurate with the booming production and sales.

In early March, glass factory production and sales began to improve. Starting in Shahe, production and sales in major regions such as Hubei and East China gradually reached equilibrium. Glass factories shipped goods quickly, easing inventory pressure to some extent. The improvement in glass factory production and sales is due to two factors. First, glass factories' continued price cuts have essentially reached the price point where mid- and downstream customers are willing to stock up. Futures and spot traders have taken the lead in purchasing goods, leading to a rebound in spot prices and further purchases from downstream customers. Second, high-frequency real estate sales data show continued improvement in the area of commercial housing sold in 30 large and medium-sized cities in February. Strong market expectations for a real estate recovery have resurfaced, boosting market sentiment and stimulating demand from mid- and downstream customers. With continued positive production and sales, glass factory inventories have been significantly reduced for two consecutive weeks. Data from Longzhong Information shows that glass factory inventories have fallen from a high of 82.237 million TTU on March 3 to 72.601 million TTU on March 17, a decrease of nearly 12%.

Although glass production and sales are booming, with significant inventory reduction and market prices rising, actual demand for glass processing orders does not match production and sales data. According to data on order fulfillment days for a sample of deep-processing enterprises nationwide, as of mid-March 2023, the order fulfillment days for these enterprises were 12.9 days, a mere 0.7 day increase from February 28th, a 5.74% month-over-month increase, and far less than the same period last year. This data, to some extent, reflects that glass demand has fallen short of market expectations. The destocking during this period is likely merely a transfer of inventory from upstream to midstream, with little transmission to the end user. Expectations of a glass demand recovery have been temporarily disproven, and high inventories are likely to continue to accumulate, putting downward pressure on market prices.

The domestic economy is stabilizing and recovering, while overseas financial risks are impacting the economy.

On March 15, the National Bureau of Statistics released the latest data for January and February 2023. The added value of industrial enterprises above designated size increased by 2.4% year-on-year; national fixed asset investment (excluding rural households) reached 5.3577 trillion yuan, a year-on-year increase of 5.5%; total retail sales of consumer goods reached 7.7067 trillion yuan, a year-on-year increase of 3.5%; national real estate development investment reached 1.3669 trillion yuan, a year-on-year decrease of 5.7%; funds in place for real estate developers reached 2.1331 trillion yuan, a year-on-year decrease of 15.2%; and commercial housing sales area reached 151.33 million square meters, a year-on-year decrease of 3.6%. While overall domestic macroeconomic data is positive for market sentiment, risks are also emerging in overseas markets. Bank risk events have occurred in the United States and Europe. Although expectations for Federal Reserve interest rate hikes have slowed, the economic recession in Europe and the United States and the increasing uncertainty of overseas demand have accelerated global risk aversion, putting pressure on risky assets and adjusting. Crude oil prices have accelerated their decline, driving a continuous decline in domestic nonferrous metals, chemicals, and ferrous metals sectors, and glass prices have also fallen.

In summary, the upward trend in glass prices has come to an abrupt halt. Poor downstream processing order data reflects demand falling short of market expectations and the impact of risks from overseas markets. Currently, the impact of overseas market shocks on domestic production and demand is minimal, primarily due to sentiment. Once risk aversion gradually subsides, the commodity may experience a technically corrective rebound after its sharp drop.

Glass prices are still facing high inventory pressure, and downstream processing order data suggests limited improvement in actual demand. If glass factories resume their inventory accumulation, the market will remain under pressure.