At present, there are many old float production lines, and the theoretical storage and supply are mismatched. Float glass is expected to usher in a price rebound after the Spring Festival. By the fourth quarter of 2021, there were 307 float glass production lines in China, including 265 production lines in progress, with an average kiln age of 4.9 years, of which the production lines over 8 years and 10 years accounted for 24.2% and 10.2% respectively. Compared with 2017, the average kiln age of the national industry increased by 1 year, and the proportion of production lines with an annual output of more than 8 years and 10 years increased by 13.1pct and 6.2pct respectively. The kiln age level of the whole industry will increase next year. Referring to the relationship between cold repair and resumption of production line over the years and kiln age, we judge that the in-process capacity of the whole industry will be reduced by 5% in 2022, which is the first reduction in in in-process capacity in recent years, which will be adjusted according to the market situation. Referring to the price difference of glass raw materials, the supply-demand gap and the actual cold repair production line since 2017, it is expected that the significant reduction of supply side production lines in 2022 will bring a more obvious supply-demand gap to the industry and drive the glass industry to lead a wave of supply side market. As long as there is no sharp decline in glass demand in 2022 (a decline of more than 8%), the price difference of float glass raw materials can be maintained at a high level (it is estimated that when the demand is the same as that in 2021, the annual average price difference of raw materials can reach 46.8 yuan / heavy container, slightly lower than 65 yuan / heavy container in 2021). At present, the price difference of glass raw materials is only 34.8 yuan / heavy container, Float glass has fallen to around 105 yuan / heavy box, and the market is pessimistic about the glass sector. We believe that the low demand for glass before and after the Spring Festival will become a window period for manufacturers to focus on cold repair, form an obvious gap between supply and demand, drive the recovery of glass prices and the profitability of incumbent enterprises.
This week’s market review: this week (2022 / 01 / 10-2022 / 01 / 14), the building materials sector (CITIC) index increased by – 6.7%, compared with the excess return of CSI 300 was – 4.8%. Year to date, the yield of the building materials sector is – 5.0%, compared with the excess yield of CSI 300 is – 0.7%. Last week, the yield of the preferred portfolio was – 4.0%, compared with the excess yield of the building materials index was – 1.0%, and the cumulative yield / excess yield was – 6.2% / – 0.6%.
Overview of weekly data of building materials: the average price of float glass in China this week was 105.37 yuan / weight box, a month on month decrease of 1.2% and a year-on-year decrease of 5.7%. The inventory was 38.3 million weight boxes, up 1.7% month on month. Considering that the glass manufacturing cost is still high under the influence of the current high price of soda ash, the relaxation of coal to gas and power price fluctuation, it is expected that the price of float glass will gradually approach the bottom. This week, the average price of mainstream winding direct yarn in China was 6200 yuan / ton, down 1.2% month on month; The average price of electronic yarn was 12250 yuan / ton, down 15.5% month on month. Glass fiber still maintains a tight balance between supply and demand, and the high price is expected to be maintained. The average transaction price in the national cement market this week was 519 yuan / ton. The cement delivery rate decreased by 3.4pct to 43.8% month on month, and the storage capacity decreased by 0.5pct to 61.3% month on month. At the end of the year, the project construction came to an end, the demand for cement decreased, and the price entered the downward channel. At present, the cement price base is still high. It is suggested to pay attention to the adjustment of clinker along the river after the beginning of spring.
Investment proposal and investment object
From the perspective of security, it is recommended that Zhuzhou Kibing Group Co.Ltd(601636) (601636, buy), Csg Holding Co.Ltd(000012) (000012, buy), China Jushi Co.Ltd(600176) (600176, buy). From an offensive point of view, recommend Jiangsu Pacific Quartz Co.Ltd(603688) (603688, buy). In addition, it is recommended to pay attention to Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) (002271, buy) and China Liansu (02128, buy).
Preferred combination of Dongfang Building Materials next week: Zhuzhou Kibing Group Co.Ltd(601636) , Csg Holding Co.Ltd(000012) , China Jushi Co.Ltd(600176) , Jiangsu Pacific Quartz Co.Ltd(603688) , Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , China Liansu
Risk tips
The growth rate of infrastructure / real estate investment did not meet expectations, and the price of raw materials fluctuated sharply
