The Zhitong Finance App learned that according to SMM, as of April 1, the price of 2.0mm photovoltaic glass was 17.5-18.5 yuan/square meter, and the price of 3.2mm glass was 27.0-27.5 yuan/square meter. The mainstream transaction prices were 18.0 and 27.0 yuan/square meter respectively. The average price increased by 1.85 yuan/square meter and 1.5 yuan/square meter respectively from the previous month. The price increase for glass came to fruition in April, and glass has already ushered in a new cycle of price increases. It is recommended to focus on leading photovoltaic glass companies such as Follett (601865.SH) and Xinyi Solar (00968), which have significant advantages.

The main views of Huafu Securities are as follows:

Supply and demand are tight, inventory is being eliminated, and the price of photovoltaic glass is rising

Huafu Securities believes that the current price increase for photovoltaic glass is mainly driven by a tight supply and demand pattern and continued inventory removal. Although glass was intensively ignited at the end of March, three new domestic kilns were ignited from March 30 to 31, involving a production capacity of 3,400 tons/day. As of April 1, the production capacity of photovoltaic glass was about 104,000 tons/d, of which the 24-year production capacity was 8150 t/d, and cold repair was 3,350 t/d. However, on the demand side, the March module production schedule exceeded expectations. It is estimated to be 54 GW. Considering the climbing cycle, the current supply and demand pattern is tight; according to SMM, the current industry inventory has dropped to 17 days, a sharp drop compared to 23 days at the beginning of March, leading inventory is even lower and has fallen to an all-time low.

There is a phased mismatch between supply and demand, and glass is expected to enter a cycle of price increases

On the supply side, Huafu Securities predicts that in 2024, new glass production capacity will be limited. Most of them will be put into operation in Q2-Q3, and the climbing will continue until Q4. By the end of the year, the nominal production capacity is about 120,000 tons/d, the actual effective daily melting volume is about 110,000 tons/d, and there is a possibility of cold repair for multiple production lines; in terms of demand, PV installations in January-February 2024 ushered in a good start. With the industry entering the peak season, orders for modules on the first and second lines are good. The rate is mostly concentrated around 80%, and production schedules are expected to continue to rise. According to SMM estimates Production is expected to reach 60 GW in April. Huafu Securities believes that the supply and demand for photovoltaic glass will continue to be tight, and there will even be a phased gap. Prices are expected to continue to rise and enter a new cycle of price increases.

Volume and price have risen sharply, and costs have declined, and attention is paid to the release of profit flexibility

As of April 1, the price of heavy soda ash was 20.5 million yuan/ton, and the price of upstream soda ash is already at a low level. It is expected that it will remain in the oversupply phase for 24 years, and there is room for further decline; with the end of the heating period, the price of natural gas as the main fuel has fallen to a high level. Overall, there is still room for improvement in the cost of photovoltaic glass, and prices are expected to rise, which is beneficial to continued unleash profit flexibility.

Risk warning: Global PV demand growth falls short of expectations, and industry policies fall short of expectations.