Sep 17 | Jubo Info · Float Glass Market Review: Spot trades at premium to futures: How long can glass price gains last?

In early September, the basis structure of float glass saw a notable reversal. On September 8, large-size sheet spot price in Shahe stood at RMB 876/ton, while FG2701 closed at RMB 977/ton, representing a basis of -101 yuan with deep futures premium. By September 14, Shahe spot was quoted at RMB 900/ton and the main futures contract closed at RMB 927/ton. The basis narrowed to -27 yuan, with futures premium shrinking from 101 yuan to 27 yuan.Spot prices rose by roughly 24 yuan in total, whereas futures fell from 977 yuan to 927 yuan. It tumbled 4.72% on Sep 14 alone, almost erasing all gains since the NDRC’s anti-involution notice. The prominent contradiction in the current glass market lies in relatively stronger spot, visibly weaker futures and rapid basis convergence.

Spot market strength was mainly underpinned by inventory transfer to midstream players.

This week, the production-to-sales ratio in Shahe and Hubei temporarily surged to 110%–145%. Longzhong Information explicitly noted in its analysis that “inventory transfer from manufacturers to midstream traders cannot be ruled out”. Deep-processing sample enterprises held order backlogs equivalent to only 10.3 days, up 8.47% month-on-month yet down slightly by 0.9% year-on-year. Purchases were mostly for immediate demand with just-in-time procurement. In other words, the spot price rally was driven largely by uptake from merchants and cash-and-carry arbitrageurs rather than tangible improvements in end-user demand. With futures in premium, arbitrageurs executed hedging trades and stimulated temporary restocking across mid and downstream sectors; inventories were merely moved upstream to midstream without genuine volume absorption.

Futures weakness directly reflected poor fundamentals.

Following the joint release of the anti-involution notice by the NDRC and the State Administration for Market Regulation on September 10, futures briefly rallied, though the positive policy impact lasted only one day. The root cause lies in the fact that deep industry-wide losses stem not from “cutthroat competition”, but from supply-demand imbalance. Coal-gas fired lines posted average weekly losses of around RMB 196.82/ton, and gas-fired lines lost roughly RMB 168.31/ton. The anti-involution policy cannot reverse such fundamentals. At the same time, supply quietly loosened: the 600 tpd second line of Shanxi Qingchun started drawing glass on September 9 alongside Tianjin Yaopi Line 1, lifting daily float glass output to 142,500 tonnes. Although inventories fell to 70.78 million weight boxes, they remained 14.93% higher year-on-year at an elevated historical level. As supply elasticity came into play and policy optimism faded, futures returned to pricing weak fundamentals.

The futures-spot basis converges rapidly. How long can the spot price rally last?

As the premium shrinks, the futures-spot arbitrage window narrows, and midstream buying interest is likely to cool. Output from resumed production lines will gradually come on stream in October. According to Longzhong Information, "terminal demand recovery remains weak, raw glass inventory stays high. With the dual festivals approaching, manufacturers are eager to destock, leaving limited room for spot price gains."Key monitoring indicators ahead are clear: whether the production-sales ratio in Shahe and Hubei can stay above 100%, and whether the days of orders for deep-processing factories can keep rising from 10.3 days. If these two metrics drop around the National Day holiday, the spot premium pattern may unwind sooner than expected. Is this basis reversal a temporary divergence of spot prices from futures, or an early warning from futures to the physical market? The market will soon reveal the answer.

Data & Sources: Jubowang, Longzhong Information, Glass Observer, major futures websites, etc.