Report Investment Rating - The investment strategy for the glass industry is to cautiously go long [3] Core Viewpoints - Recently, the market has been speculating on the time and production line issues of the coal-to-gas conversion plan in Shahe, trading on the policy expectations of eliminating backward production capacity and anti-price involution. Technically, both long and short forces have weakened, but the trend remains strong. Against the backdrop of policy expectations, the glass futures market is expected to be more likely to rise than fall. Considering the frequent supply-side news disturbances, it is advisable to cautiously go long on the 01 contract and pay attention to the changes in Shahe production lines [3] Summaries by Sections 1. Investment Strategy - Main logic: Last week, glass futures fluctuated weakly. Some enterprises raised prices slightly, but due to holidays and rainfall, the shipment of float glass factories was restricted, and the trading in the northern and southern markets weakened. On the supply side, one production line resumed operation last week, and the daily melting volume increased slightly. The national factory inventory rebounded, and the inventories of traders in the main production areas of Shahe and Hubei also increased. Although the spot price has risen significantly recently, the market is still mainly selling at a discount, so the profit improvement is not obvious. On the demand side, downstream processors are still mainly waiting and maintaining just-in-time procurement. In the case of soda ash, after the holiday, the downstream replenishment is over, and the purchasing sentiment has cooled. However, the supply-side pressure continues, and the production is still expected to increase, so it is expected to fluctuate, with a weaker trend than glass [3] - Operation strategy: Cautiously go long [3][4] 2. Market Review - Spot Price - As of October 10, the market price of 5mm float glass was 1,230 yuan/ton in North China (+10), 1,220 yuan/ton in Central China (0), and 1,340 yuan/ton in East China (+20). The glass 01 contract closed at 1,207 yuan/ton last Friday, down 63 yuan from the previous week [9][10] 3. Market Review - Basis - As of October 25, the soda ash futures price was 1,240 yuan/ton, and the glass futures price was 1,207 yuan/ton, with a price difference of 33 yuan/ton (-12). The basis of the glass 01 contract last Friday was -17 yuan/ton (+50), and the price difference between 01 and 05 contracts was -127 yuan/ton (-14) [11][15] 4. Profit - For the natural gas production process, the cost was 1,577 yuan/ton (-1), and the gross profit was -237 yuan/ton (+21). For the coal gas production process, the cost was 1,164 yuan/ton (-17), and the gross profit was 75 yuan/ton (+32). For the petroleum coke production process, the cost was 1,091 yuan/ton (-1), and the gross profit was 129 yuan/ton (+1). On October 10, the industrial natural gas price in Hebei was 3.8 yuan/m³, the CIF price of US 3% sulfur shot coke was 165 US dollars/ton, and the price of Yulin thermal coal was 567 yuan/ton [18] 5. Supply - Last Friday, the daily melting volume of glass was 160,155 tons/day (+700). Currently, there are 225 production lines in operation. The first line of Dalian Yaopi in Liaoning with a daily melting volume of 700 tons resumed operation last week [20] 6. Inventory - As of October 10, the total inventory of 80 glass sample manufacturers nationwide was 6,282.4 ten thousand weight boxes (+346.9). Among them, the factory inventory in Hubei was 433 ten thousand weight boxes (+85), the inventory in North China was 1,100.6 ten thousand weight boxes (+188), the inventory in Central China was 634.7 ten thousand weight boxes (+75.7), the inventory in East China was 1,371.1 ten thousand weight boxes (+78.6), the inventory in South China was 965.4 ten thousand weight boxes (+13.4), the inventory in Southwest China was 1,226.6 ten thousand weight boxes (-5.5), and the factory inventory in Shahe was 388 ten thousand weight boxes (+124) [25] 7. Deep Processing - On October 10, the comprehensive sales-to-production ratio of float glass was 90% (-16%), the operating rate of LOW-E glass was 45.2% (-1.9%), and in mid-September, the order days of glass deep processing were 10.5 days (+0.1) [28] 8. Demand - Automobile - In August, China's automobile production was 2.815 million vehicles, a month-on-month increase of 224,000 vehicles and a year-on-year increase of 323,000 vehicles. The sales volume was 2.857 million vehicles, a month-on-month increase of 264,000 vehicles and a year-on-year increase of 404,000 vehicles. In August, the retail sales of new energy passenger vehicles in China were 1.101 million vehicles, with a penetration rate of 55.2% [38] 9. Demand - Real Estate - In August, China's real estate completion area was 26.5913 million m², a year-on-year decrease of 21%; the new construction area was 45.9487 million m² (-20%); the construction area was 43.7767 million m² (-29%); and the commercial housing sales area was 57.4415 million m² (-11%). From September 29 to October 5, the total commercial housing transaction area in 30 large and medium-sized cities was 1.44 million square meters, a month-on-month decrease of 42% and a year-on-year increase of 58%. In August, the real estate development investment was 672.942 billion yuan, a year-on-year decrease of 20% [44] 10. Cost - Soda Ash (Futures) - Last Friday, the soda ash 2601 contract closed at 1,240 yuan/ton (-75). The basis of the soda ash Huazhong 01 contract last Friday was 60 yuan/ton (+75) [51][52] 11. Cost - Soda Ash (Profit) - As of last Friday, the cost of the ammonia-alkali method for soda ash enterprises was 1,297 yuan/ton (-26), and the gross profit was -29 yuan/ton (+8); the cost of the joint production method was 1,712 yuan/ton (-55), and the gross profit was -77 yuan/ton (+1). Last Friday, the market price of synthetic ammonia in Hubei was 2,258 yuan/ton (+233), and the ex-factory price of wet ammonium chloride in Xuzhou Fengcheng was 300 yuan/ton (unchanged) [53][54][55] 12. Cost - Soda Ash (Production) - Last week, the domestic soda ash production was 77.08 tons (a month-on-month decrease of 0.66 tons), including 42.87 tons of heavy soda ash (a month-on-month decrease of 0.28 tons) and 34.21 tons of light soda ash (a month-on-month decrease of 0.38 tons). The number of soda ash warehouse receipts on the exchange last weekend was 7,053 (+2,736). As of October 10, the national in-plant inventory of soda ash was 165.95 tons (a month-on-month increase of 0.83 tons), including 92.07 tons of heavy soda ash (a month-on-month decrease of 0.17 tons) and 73.91 tons of light soda ash (a month-on-month increase of 1 ton) [62][67] 13. Cost - Soda Ash (Apparent Consumption) - Last week, the apparent consumption of heavy soda ash was 51.38 tons, a week-on-week increase of 6.77 tons; the apparent consumption of light soda ash was 36.72 tons, a week-on-week increase of 2.57 tons. The sales-to-production ratio of soda ash last week was 92.23%. In August, the soda ash inventory days of sample float glass factories were 23.6 days [70][71][74]