CITIC SEC: Photovoltaic glass in short supply, driving prices higher in peak production season and clearing out inventory.

CITIC SEC released a research report stating that it is expected that the price of photovoltaic glass will increase after the peak season for production in the photovoltaic industry arrives, taking into account changes in photovoltaic glass production capacity, inventory trends, and demand in the photovoltaic industry. The daily melting amount of photovoltaic glass may continue to decline, and the inventory cycle is also expected to decrease. Based on the demand, it is estimated that by 2025, with a photovoltaic installation of approximately 550GW, the daily melting amount demand for photovoltaic glass will be close to 95,000 tons, exceeding current production capacity demand. This has a strong impetus for price increases when the peak season arrives, and it is recommended to pay attention to photovoltaic glass companies. The main points of CITIC SEC are as follows: Photovoltaic glass is expected to rise in price during the production peak season Taking into consideration changes in photovoltaic glass production capacity, inventory trends, and demand in the photovoltaic industry, it is expected that the price of photovoltaic glass will increase after the peak season for production in the photovoltaic industry. Looking at the changes in the production capacity of photovoltaic glass, the daily melting amount of photovoltaic glass has decreased from its peak in June 2024 of 115,000 tons to below 90,000 tons. There is a possibility that it will continue to decrease. Looking at the inventory of photovoltaic glass, it has decreased from around 40 days to 34 days, and is expected to continue to decline with changes in demand and production capacity. Looking at the demand in the photovoltaic industry, with a component demand of 600GW, the daily melting amount demand for glass will exceed 100,000 tons if 50GW is produced in one month. Considering the current profitability of photovoltaic glass companies and the changes caused by the factors mentioned above, this situation has a strong impetus for price increases when the peak season arrives. Profit pressures are driving the contraction of photovoltaic glass production capacity Since Q3 2024, photovoltaic glass companies have faced significant profit pressures and started to incur losses. With oversupply in supply, rising inventory, and falling prices, it is expected that the unit losses of photovoltaic glass companies in Q4 2024 will further increase compared to the previous quarter. Under continued pressure from losses, coupled with the push for industry self-discipline against "overwork," photovoltaic glass companies have begun to reduce production through measures such as cold repair. With the continued progress of cold repair, it is expected that the production capacity of photovoltaic glass will further decrease, providing strong support for prices and helping to reduce inventory. The inventory of photovoltaic glass is expected to continue to decrease under the influence of supply and demand In Q4 2024, with the decrease in overseas shipments and the push to clear component inventories, the demand for photovoltaic glass has continued to decrease. The inventory of photovoltaic glass has increased from 30 days in Q3 2024 to around 40 days in Q4, and the price of 2mm photovoltaic glass has dropped from 15 yuan/square meter in July 2024 to around 12 yuan/square meter now. Since the end of 2024, under the influence of cold repair and other factors, the production capacity of photovoltaic glass has continued to decrease. With factors like stocking up for the Spring Festival, the inventory of photovoltaic glass has started to decrease. With the continuous increase in cold repair and the decrease in daily melting amount, it is expected that the inventory of photovoltaic glass will continue to decline. Photovoltaic glass may face supply shortages when demand peaks If the new installed capacity exceeds 550GW in 2025, calculated with a 1.2 capacity ratio, the demand for photovoltaic components would be around 660GW, corresponding to a monthly output of approximately 55GW. In this case, the demand for the daily melting amount of photovoltaic glass would be close to 95,000 tons, exceeding the current production capacity situation. If we also consider a certain level of component inventory, the demand for components in 2025 is expected to further increase, thereby driving up the demand for photovoltaic glass. Looking at it this way, it is expected that the price of photovoltaic glass will have strong support and see a certain degree of increase when the peak season for production in the photovoltaic industry arrives. Risk factors: the new installed capacity in the photovoltaic industry may be lower than expected, photovoltaic glass production restrictions may not meet expectations, and the decrease in photovoltaic glass inventory may not meet expectations.