Glass companies smell the loss of breath, overcapacity, how to resolve

The soil industry can't escape the "excess and loss" spell

In recent years, the glass industry, which has a good profitability in the building materials industry, has begun to smell a loss of interest this year.

China's glass prices A large glass production company in the Shadi area said that demand for the peak season has improved from the previous year, but overall, the balance between supply and demand is quite different from the market price in the peak season last year.

Yangtze River Futures Researcher Yang Xiaoqiang told reporters that in the process of glass production and sales, the profitability of northern enterprises is generally worse than that of southern enterprises. “This is mainly because the production lines of southern enterprises have been established earlier, the cost has been recovered, and the cost of production technology in the early stage has been lower. The production line of northern enterprises has only been launched in recent years. It is costly to put into production a production line. With more advanced environmental protection technologies, these enterprises are faced with the dual pressure of recovering costs and production costs. Shahe Glass Enterprises is the representative of such enterprises."

It is for this reason that on June 11 this year, Zhengshang issued a document to adjust the glass futures benchmark price zone from the Zhangjiagang area in East China to the Shahe area in Hebei, and the adjustment began from the June contract in 2015. “Now the price on the glass futures market actually represents the price of glass in the Shahe area.” A market researcher said that the price of futures varieties is usually the price of the variety “squatting” because of the difference in market prices. The fluctuation is small, and the price operation is relatively stable and unified.

It is such a representative area, and prices have changed this year. The first is that the rebound in April and May is not as good as in previous years. Secondly, the price in the peak season fell sharply compared with the same period last year.

Zhou Zhiwu, deputy secretary-general of China Glass Industry Association, said that the average price of comprehensive monitoring in August was 55.94 yuan/weight box (excluding tax). Compared with the same period of last year, the weight per box decreased by 9.97 yuan, up 0.45 yuan per weight box. He said that since the beginning of this year, the price of glass has dropped sharply, which is the result of multiple pressures of high glass inventory, overcapacity and sluggish demand in the first half of the year. “Continuous destocking is a common practice for companies,” he said.

In this regard, Dai Chunping, director of China Merchants Futures Research Institute, said that China's glass production is indeed much higher than the demand. “Glass inventory data shows that although the operating rate is declining, inventory is still increasing. There is now a production line equivalent to 15% of current capacity ready to start.”

Li Daitao is stagnant. For the glass price, the price level of the Shadi River is lower. Some analysts say that this may not be a good sign for the glass industry in inertia.

A business person said that due to the price last year, the amount of glass business in Shahe District this year has decreased compared with last year. An inescapable reality is that the situation of the domestic real estate industry is more severe, and the actual benefits of the urbanization concept are not obvious.

Data show that from January to July 2014, China's real estate construction area increased by 11.3% year-on-year, new construction area decreased by 12.3%, and housing completion area increased by 4.5%. “The real estate market is in a bad situation, the inventory is increasing, and the willingness to start a new job is very low. This shows that the situation has begun to be severe this year.” Dong Wei, an associate researcher at the Institute of Urban Management of the Chinese Academy of Social Sciences, believes that from the demand side, although China’s urban population growth rate is greater than the total population The growth rate and the rate of urbanization are increasing, but the urban population growth rate is already in the downward channel. The long-term driving force to support the long-term rapid growth of housing prices and the long-term substantial increase in real estate sales area does not exist.

Earlier this year, in the case of weak market confidence, a researcher from Guotai Junan Futures looked at the price of glass futures.

According to Yao Mingshu, deputy general manager of Shandong Jinjing Technology Co., Ltd., since 1996, the glass industry has experienced several iceberg periods, namely 1997, 2002, 2005, 2008 and 2012. “In these cycles, the longest time is in 2012, and the shortest maintenance time is in 2008. In the current real estate de-bubble process, regardless of the macroeconomic situation, market demand and supply level, this round of consolidation time It will be longer than 2012. The last round of consolidation period is 10-11 months. This round of price decline starts from April, and now it is only half a year, and the next half year is still a consolidation period."

Futures new gameplay challenges the old thinking of glass enterprises

Yao Mingshu said that according to the calculation of data from 2009 and 2010, according to the current glass inventory and consumption, under the current production conditions, at least 24 production lines (equivalent to 10% capacity) can be reduced. The current stage of supply and demand balance. “The overcapacity in the glass industry is not a cyclical, phased and structural excess, but a comprehensive surplus. The only solution is to reduce production capacity.”

"There are two ways to reduce production, one is to actively reduce production and engage in price alliances; the other is to passively reduce production." Dai Chunping believes that it is difficult for the glass industry to actively reduce production. One of the reasons is that the cost of production suspension is high, only when the price falls to a certain extent, the enterprise If you can't afford it, you will cut production; the other is low industry concentration, and the price alliance is unrealistic.

Not to mention that in the warm water, the power and ability of glass companies to integrate is not strong enough. Limiting production through passive integration and administrative intervention also faces barriers to local protection. Even if some companies are forced to cut production due to falling profits, the temporary withdrawal may be far greater than the permanent reduction in production. The integration and transformation of the glass industry faces many confusions.

At the same time, the off-market operation of the futures market is changing the survival rules of spot companies. Zhou Bing, general manager of Zhongyou Shunde, said that there was once an export leading enterprise that has been doing well in traditional resource advantages and business models. Not enthusiastic about futures operations. "Not long ago, he took the initiative to find us because several small and medium-sized export companies, each of which was 20 to 30 yuan lower than him, and he was confident that his cost was the lowest. I was very puzzled. I told him that these companies The goods are taken by us, and the prices of these enterprises are about 20 yuan lower than their prices. After I analyzed the case of cooperation with SMEs, he decided to join the futures market."

With the discovery of the matching business of the futures market by the investment company and the development of the risk subsidiary of the futures company, the simple disk hedging is not the only way for glass manufacturers to use futures tools.

Li Youqing, deputy general manager of Shanghai Zhujin Investment Co., Ltd., told China Securities Journal that the company's cooperation with glass companies currently includes warehouse receipt business, value preservation, financing, market analysis and trading.

In the absence of spot protection, when the closing price is unfavorable at the time of expiration, the futures investment institution faces certain risk of shipment and receiving. Under the system of delivery of glass futures, the futures investment institutions became customers of these manufacturers. “In the warehouse receipt business, we have a lot of cooperation space with the glass enterprises. In addition, in the standard range of delivery products, the goods received by the delivery buyer are faced with the problem of non-uniform quality, which can also be handed over to us, we have sufficient resources to allocate To deal with this part of the risk of receiving goods. Even when some enterprises have hedging demand but insufficient liquidity, we can also provide financial support. Bank credit has fully tightened the black industry chain, and as an investment institution, we can In the short-term, a large amount of funds will be raised. Of course, if we make a profit, we will talk about it, and generally adopt a single-minded approach.” Li Youqing told reporters that the company has used its own funds and enterprises to start cooperative hedging, the so-called “follow-up”.

In the process of “follow-up”, the investment company uses its own professional advantages to help the company analyze the market and choose the best admission and timing to achieve more accurate and optimized hedging effect. The spot enterprises are more assured and active with the support of institutional and investment funds. The profit of the investment company is mainly reflected in the profit sharing.

Even some investment companies have begun to plan to jointly set up warehousing operations or companies with spot companies, and the two parties may cooperate in the form of equity.

At the same time, the China Futures Association recently released the revised Guidelines for the establishment of subsidiaries of futures companies to conduct risk management services, and added market-making services to the risk subsidiaries of futures companies. Encourage business innovation.

"As of the first half of this year, about 20 futures companies nationwide have established risk subsidiaries. These 20 companies have a registered capital of about 2 billion yuan and a total capital of 5 billion yuan. Up to now, business income has reached 7.3 billion yuan." Wu Rongji, deputy general manager of Hongye Capital Management Co., Ltd. said, “The overall development of the risk subsidiary business is very smooth. For the five major businesses, the market demand is very high, the response is very enthusiastic, and various innovations have also made breakthroughs.”

How far is the road now combined?

Under the market law of efficiency is vitality, in the collision of overcapacity industry and investment institutions, some sparks of transformation have gradually emerged.

Different from administrative limited production, the logic of financial investment institutions' participation and promotion of the transformation of surplus industries is not to let the industry maintain the average profit level as a whole, but to make the enterprises with advanced management thinking better, expand the market share, and accelerate the The elimination of management and production technology backward enterprises. Objectively, only those companies with advanced business thinking accept the business model that they have not touched before.

“Traditional spot dealers generally look at problems in terms of production, operation, cost and sales model. This is not the same as the perspective of companies using financial instruments.” An investment agency official said that even companies using financial instruments have a hierarchy. There are also differences.

“If the company is only immersed in the traditional manufacturing business model, once there are opponents using financial instruments, such as us, because my shipping price is cheaper than the market, if the volume is large enough, the spot enterprises that rely on the traditional model can’t basically Resist," he said, and with the improvement of the glass futures price discovery function, the opportunities for pricing deviations in the market are also decreasing. The number of people using the basis deviation from arbitrage will be less and less, and some spot companies that rely on this model for profit for a long time also Will have to improve on the investment ideas.

It is understood that the operation of the glass futures since its listing on December 3, 2012 has gone through two stages. First, from the listing to the fourth quarter of last year, the average daily trading volume reached 1.9 million hands, the highest at 4.8 million hands; after that, the volume appeared. Falling down, from the fourth quarter of last year to the first half of this year, the average daily trading volume was below 500,000 hands. After the adjustment of the glass futures benchmark price, the average daily trading volume in September returned to over 1 million hands.

The above-mentioned investors said that this is partly a manifestation of the maturity of the glass futures players. As the market pricing error continues to decrease, the original method of arbitrage for this opportunity has failed. Investment is highly confusing and operationally complex, and companies must communicate well with professional organizations when they use them. “The confusing nature of futures investment is that when you are unprofessional, when you earn money with a method that you don’t know is right or wrong, one day you will pay for his mistakes. The complexity lies in the spot. The integration of the system is more difficult than the average person can imagine." He said that it is a four-year period that he knows that a domestic spot enterprise owner has completed the initial integration. “In four years, this current business owner has been in the investment circle every day, and together with the top investment experts in China to integrate his own spot management team. In the process, there have been various setbacks. To this day, his The sales amount is 48 billion yuan per year, while the profit in the traditional trade period is only about 200 million yuan. At this point, many people may say that it is quite small. But the boss said that this road is only halfway through him. It takes longer to completely transform the entire company into a combination of futures, or a financial instrument-based business."

Along with the increasing application of the company to the futures market, sources said that in the glass futures market, the exchange is also mulling a new policy in terms of cross-species premiums and factory deposits, which will facilitate the participation of enterprises.

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