What will the glass industry meet in 2019?
There are too many difficulties in 2018, so we are full of expectations for 2019. But in 2019, I think glass companies should have more reserve capacity to actively respond to changes.
Sino-US trade war will continue for a long time to come
This is an external factor that can not be ignored. Many people say that the forty years of China's reform and opening up are the forty years of opening up to the United States. Because the impact of the United States on the world economy is too obvious and important, once it encounters containment by the United States, the cost will remain enormous. But this is something that will happen sooner or later. It has already happened and there is no way out. Therefore, in the next ten years, we should be prepared to deal with the great changes in the external economic environment. Compared with Southeast Asian countries, China's cost advantage has vanished and can only take the road of high added value and technological innovation. Especially compared with Southeast Asian countries, we need to study our comparative advantages in glass industry and products.
For the integration of glass industry, the power of capital will exceed the factor of environmental protection.
If we say that in the past three years, the reduction of glass industry and the reform of supply side rely on mandatory administrative means such as environmental protection governance, the future reduction through administrative means such as environmental protection will still exist, but its role will be significantly weakened. And through the power of capital, the industry integration brought about by full market competition will continue to emerge in the next few years. Merger and integration among enterprises will become the trend of industry development.
For the market, the supply-side reform has undoubtedly increased the downstream production costs, of which the most beneficiaries are mostly state-owned enterprises. But for the glass industry, the glass industry is dominated by private enterprises, is a fully competitive industry in the market. First, its industry concentration is low, and second, its entry threshold is low. Glass industry is a small industry, not the lifeblood of the national economy, so the state does not attach too much importance to it; its output value is less than a national brand of iron and steel enterprises, but there are nearly 100 large and small enterprises, small enterprises of all kinds of low costs, wandering in the ambiguous grey edge, resulting in the past few years of bad currency to expel good money situation. This has become an obstacle to the healthy and sustainable development of the glass industry. But in the past, the income or so-called success brought about by the grey zone, some private enterprises which accumulated wealth by windfall profits and shortcuts, may return to poverty if they follow the original path in the future and remain lucky and unchanged. Because when the government is having a tough time, regulators will look at these companies. In 2018, for many stars, photovoltaic subsidies, black-hearted drug companies and other heavy punches, it has been explained that sooner or later will be returned.
Therefore, enterprises are differentiating and industries are integrating. 2019 may be the beginning of glass industry integration. So the main body of integration, I still look forward to the capital strength of enterprises, or large enterprises that can get bulk funds. State-owned enterprises and large private enterprises must play a leading role in the integration of glass industry.
Glass Cost and Price in 2019
It can be said that although the price of glass sheet has remained at a high level in the past three years, this price does not reflect its true cost value at present. On the one hand, the cost rises too fast, on the other hand, the market price adjustment brought about by the reduction of demand.
The cost of glass products includes not only manufacturing cost, but also environmental cost, reduction cost, resource and energy cost, capital cost and transportation cost.
The supply-side reform must bring benefits to the upstream, which occupies the downstream. The upstream is mostly state-owned enterprises, while the downstream is basically private enterprises. Therefore, the more downstream, the greater the cost pressure, and in the short term can not change its passive situation. For glass enterprises, the upstream is still mining and energy fuels, especially for glass processing enterprises. Especially when there is no gas shortage in 2018, gas companies have increased fuel prices, which is undoubtedly a disguised robbery for the downstream float glass production line, which uses a lot of gas. This upstream impact on the downstream is also helping the downstream to achieve integration. If the glass enterprise does not have certain cost resistance ability, it will become the object of integration in the future.
Similarly, in 2019, glass enterprises will also face the restrictions of ultra-low emissions, the high price of infrastructure materials for shutdown and cold repair, the pressure of transportation cost for local sales going out, and the pressure of capital cost for refinancing. When glass profits can not cover the sharp rise in their costs, losses will be like a huge black hole, eroding the lives of glass enterprises.
Product price reflects its intrinsic cost value in intrinsic attributes and supply-demand relationship in extrinsic attributes. Therefore, in the external attributes of 2019, the demand for glass must be reduced, but the shutdown and transfer of expired production lines and the reduction of supply can compensate for the reduction of demand to a certain extent; in the internal attributes, the cost pressure in 2019 still exists, which will become a favorable support for glass prices. After the coordination of prices in the past year, the manufacturers have promoted the price increase altogether. Willingness and action are becoming stronger and more consistent. Therefore, the price of the original glass in 2019 is still no problem, the periodic price adjustment will certainly exist, but the overall high price will still be a basic judgment.
But different varieties or in different regions, such as in color glass, such as in Fujian and other regional markets, there may be price bottlenecks.
Expectations are not optimistic. We still need to face them positively in 2019.
In the period of deep macroeconomic adjustment, everything is full of uncertainty, but this is what all enterprises must face, and it is fair to all enterprises. Fairness does not mean equality, so in the process of unequal development, the choice of directional strategies is particularly important. Some enterprises can choose high-quality and low-cost, some enterprises can choose to open and extend the industrial chain, some enterprises can choose to merge and reorganize, and some enterprises can choose foreign capital to survive. But no matter which way, the most important thing is to suit oneself. The diversification of China's market also gives different enterprises more development space and outlet. But in the big trend, I think glass enterprises should always be ready for winter. This winter may be a long one, but we should not passively deal with and accept it. Instead, we should actively reserve energy and wait for the coming spring.