The hottest glass supply side reform faith vs fule

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Glass supply side reform "faithfulness vs Follett" who is stronger

in 1998, liming and Shu Qi starred in a classic film called "the city of glass". In the film, the hero and heroine set up a virtual "glass city" in London, England, for their sad love. You may have heard or seen this film, but you may not know that there is also a "glass city" in Hebei Province, China. Not as romantic as the movie, "China Glass City" is named for its high output of glass, but it is also important to the development process of the whole industry, because the supply side reform of the industry is starting here

I. glass 2018: the supply side continued to shrink

1. The "China Glass City" ceased production

benefiting from the demand of downstream real estate, the price of float glass has increased significantly in the past two years, which has led to a significant improvement in the profits of the glass industry, making manufacturers reluctant to overhaul. In the first half of 2017, the production capacity of the glass market was still in the mode of net increase

"China Glass City", called Shahe, is located in the south of Hebei Province, at the eastern foot of Taihang Mountain. Glass factories can be seen everywhere in this area, and the glass output accounts for as much as 15% of the total output of the country. That is, due to the concentration of production capacity and being located in such an environmentally sensitive area as Hebei Province, it has become the first "sniper" target of the supply side reform of the glass industry

shot ahead. In November 2017, nine float glass production lines in Shahe region were shut down due to substandard sewage discharge. The total daily melting capacity was about 7850t/d, accounting for 21.7% of the local production capacity, and about 5.2% of the total industry production capacity. Supply side reform gunshots rang out

second bullet. Then, on December 2, 13 glass production lines (3 float and 10 calenders) of 11 flat glass enterprises in the region were revoked their pollution discharge licenses, because these 13 production lines did not obtain the coal consumption indicators confirmed by the provincial development and Reform Commission, and the Municipal Environmental Protection Bureau required immediate shutdown, of which the total daily melting capacity of 3 float lines was about 2050t/d

according to the survey, in the short term, there are still floating production lines in Shahe area that will face the pressure of shutdown due to the non-compliance of environmental protection. In addition, the 12 lines that have been shut down before can account for 10% of the total production capacity of the industry

the third bullet. Before December 31, 2017, flat glass enterprises need to complete the application for emission permits. Enterprises that have not obtained a permit before the end of the year are illegal emissions and should be shut down in theory. Among the national production capacity, the production capacity without pollution discharge license accounts for about 20%, of which the production in progress and cold repair capacity account for 10% and 10% respectively

in this round of glass supply side reform, pollutant discharge permit seems to have become the key. In August, the licenses that have been issued were successively revoked, which also sent two key signals to the market. On the one hand, the problems left over by history, such as lax approval and construction, and coal-fired indicators, are very serious; On the other hand, the government is increasingly strict in the supervision of emission permits in this region, and it is possible to stop more production lines under the reform. Moreover, Shahe area is only the beginning of "sniping", and then it is likely to spread to "2+26" cities and other heavily polluted provinces and cities

in June, the Ministry of environmental protection issued a draft for comments, in which the emission concentration of PM2.5, SO2 and NOx in the glass industry is proposed to be significantly tightened from the previous emission standard of 50/400/700mg/m3 to 20/100/400mg/m3. Under the effect of environmental protection and high pressure, the new emission standard is likely to be implemented in 2018, which is very worthy of expectation. If the policy is successfully implemented, the glass industry will continue to accelerate its capacity reduction

another question about production suspension is whether these production lines can resume production in the future after production suspension? My answer is, very difficult. First of all, the government supervision is very strong, and the possibility of resumption of production after shutdown is very low; Secondly, the cost of production line resumption is also very high. For example, an ordinary glass production line needs to invest about 50million yuan to 100million yuan to change the combustion device, etc. in addition, the daily operation cost of environmental protection devices such as desulfurization and denitration is about 20000 yuan. However, banks have tight financing loans for industries with overcapacity such as glass, so the closed production lines face financing obstacles

2. Production line shutdown ushers in the peak period

first of all, it should be clear that there is a cold repair period after the ignition of the glass kiln, during which the production line is completely shut down. Generally speaking, the glass furnace needs cold repair in the year after ignition. According to the data, the peak of the last wave of glass production capacity was in, so theoretically, it was the peak of cold repair of float glass

among the current production capacity, the ignition capacity in 2012 and previous years accounted for nearly 50%. This means that in the next two years, there will be large-scale kilns for centralized cooling, which will have a significant impact on the production capacity of glass

according to relevant data, the glass production lines that underwent cold repair in were all ignited before 2013. At present, about 50% of the production lines in production are ignited before 2012, which also positively confirms the fact that the next glass production line will usher in the peak cooling period

3. Release of glass capacity replacement plan

on January 8 this year, the Ministry of industry and information technology issued the implementation measures for capacity replacement in the cement and glass industry, which was officially implemented from January 1. The plan points out that for flat glass construction projects located in environmentally sensitive areas specified by the state, the number of production capacity to be replaced and eliminated shall be approved at no less than 1.25 of the construction project, and the same amount of replacement shall be implemented in other regions

generally speaking, if a glass enterprise wants to build a new production line, if it is located in an environmentally sensitive area, it needs to eliminate 1 for every 1 ton of new production capacity. 25 tons of old capacity; If it is located in ordinary areas, 1 ton of new capacity will directly replace 1.25 tons of old capacity

the release of the new plan, on the one hand, shows that the national supply side reform of the glass industry will not be relaxed in 2018, and will continue to deepen; On the other hand, it also shows that the industry is strictly prohibited from net new capacity

4. The price of soda ash plummeted

the start of supply side reform has continuously compressed the supply side of glass, making the prosperity of the industry rise. The price trend of float glass has gone out of a clear deviation from that of soda ash. Since November, the price of soda ash has fallen sharply, with a cumulative decline of 700 yuan/ton, corresponding to an increase of 140 yuan/ton in glass profits

soda ash is one of the most important raw materials of glass, accounting for about 25% of the cost. The glass production capacity was shut down, and the price of soda ash that lost the support of demand also fell. Instead of following the decline of soda ash, the country is about to introduce relevant standards such as air quality requirements for automotive interiors, but the opposite trend has soared, which just proves that the price of the glass industry has been dominated by the supply side under the reform. Next, the glass production line will continue to shut down, and soda ash is expected to be weak and stable

5. Supply gap in the glass industry

at present, 20% of the country's production capacity has not obtained a pollution discharge license, half of which are production lines under cold repair. Based on the stability of demand and the postponement of cold repair by half of the cold repair capacity in 2018, after calculation, assuming that all the cold repair capacity before the shutdown can resume production, the glass supply gap is about 2%; Assuming that only the cold repair capacity with pollution discharge license is resumed, the supply gap is about 14%. Under environmental protection and high pressure, the cold repair capacity was fully restored. Jinhuibo and others adopted PMMA materials. According to the patient's medical history and the specific situation of the eyes, 1078 patients were custom-made and equipped with prosthetic eyes within 10 years, and their cosmetic effects were summarized and analyzed. The results showed that all patients without and without eyeballs were able to successfully apply this kind of ultra-thin and thick prosthetic eyes, and the possibility of no case of extrusion reaction was not high

in general, the pressure of environmental protection plus the effect of cold repair period, the weak price of soda ash and the stable demand of downstream will not be bad in the medium term for the whole glass industry. When the whole glass industry is not bad, Xinyi Glass (00868. HK) is a safe and conservative target

Xinyi Glass is the largest producer of float glass in China at present. Float glass is actually the original glass, which is the most basic glass variety. In, the compound annual growth rate of production capacity of Xinyi Glass was 11.6%, and the total production capacity in 2016 was 4.9 million tons/year. As of September this year, the daily melting volume of float glass of the company has reached 17100 tons. It is estimated that according to the analysis of professional researchers, only some auxiliary functions such as additives have been made, and by 2020, the production capacity of float glass will be increased by another 50%

II. Photovoltaic glass: glass varieties stuck in the tuyere

1. The bipedal pattern of the industry

while paying attention to the basic glass varieties, it also reminds you that there is another high-end variety called photovoltaic glass, which is also a big wind for investment

photovoltaic glass refers to the glass on the battery module in the middle reaches of the photovoltaic industry chain, which constitutes the outermost layer of the module. It is characterized by low iron and tempered, which can not only ensure high enough light transmittance, but also firm, and play a role in protecting the battery and prolonging its life. At present, photovoltaic cells mainly include thin-film cells and crystalline silicon cells. The TCO glass used for thin-film batteries not only plays a protective role, but also the TCO conductive film on its surface acts as the front electrode of the battery to collect current

it can be said that photovoltaic glass is an indispensable link in the photovoltaic industry chain, and it is not likely to be replaced at least in the medium term. Moreover, due to the advantages of cost saving and life extension, the popularity of photovoltaic modules using double glazing is also rising

as one of the country's first new energy sources, photovoltaic itself is an industry with demand prospects. Coupled with the continuous compression of glass supply, leading enterprises in the fourth quarter of 2017 were in a state of almost zero inventory. At the beginning of 2018, the price of ultra white calendered photovoltaic glass increased by 10% to 31 yuan/square meter compared with the end of last year. It is worth mentioning that the first quarter is the traditional off-season of the photovoltaic industry, and the price can be significantly increased in the off-season, which fully reflects the current tension between the supply and demand of photovoltaic glass

when the supply side is suppressed, capacity is power. In terms of the market share of photovoltaic glass, Xinyi solar energy () and Follett glass () occupy the leading and second places in the industry respectively. Moreover, the two enterprises have plans to expand production in the future

Xinyi solar plans to add two more photovoltaic glass production lines with a daily melting capacity of 1000 tons each in Malaysia, which are expected to be put into operation in the fourth quarter of 2018 and the first half of 2019; Follett glass also said that the company's production line with a daily output of 1000 tons in Anhui (leading period) was successfully constructed and has been put into operation in September or October 2017. Vietnam's production line with a daily output of 1000 tons will also be put into operation in 2018

on the whole, Follett glass will get the weight of new production capacity before Xinyi Glass, and seize the opportunity in the wind of the industry

2. Follett glass: full of elasticity

Follett glass and Xinyi solar energy, both of which are good targets worthy of attention when the prosperity of photovoltaic glass remains unchanged. However, for Follett glass, there is another bright spot, which makes the stock price more flexible and more speculative

Follett glass, whose main business is the R & D, production and sales of photovoltaic glass, float glass, engineering glass and furniture glass, as well as the mining and sales of quartz sand for glass and the construction of EPC photovoltaic power station projects, of which photovoltaic glass is the company's most important product

in 2012, Follett glass made its first A-share IPO. But at that time, the whole photovoltaic industry fell into a trough, which led to the decline of Follett glass

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