The difference in the characteristics of the industrial chain is the direct cause of the differentiation between glass and alkali.
Glass is characterized by the production line is difficult to stop. Under normal circumstances, the glass production line ignition, the use of most of the cycle of 5-8 years, and some even up to 10 years, in the production process without the need to maintain the production, can only be repaired hot, once the production, the glass production line is almost obsolete, and the cost of each glass production line of the cold repair or remodeling costs to tens of millions of dollars to hundreds of millions of dollars.
This makes it difficult to adjust production according to market demand. At the beginning of the real estate construction hot, glass supply is tight. And now, the real estate downturn in the market demand has fallen sharply, the production line can only cover the nose tired library production, can not be reduced.
It is worth mentioning that in the whole real estate industry from boom to bust cycle, the amount of soda is always constant. This also bodes well for the price difference between the two.
Inventory cycle characteristics: soda ash is unstable
In addition to the production line problem, the physical properties of soda ash is also a "perennial problem" in the industry.
Soda ash should not be stored under simple conditions for long periods of time. In order to reduce storage costs, soda manufacturers usually maintain a storage cycle of one week or less. As the heavy alkali in soda ash is mostly shipped directly to glass companies through direct sales, even distributors are mostly intermediary sales with low social inventories.
Glass companies usually have higher vapor inventories than communities. However, as we said before, glass lines are not susceptible to cease-fires, so a large portion of a company's vapor stock is safety stock, and the actual amount of operating stock is small. As a result, when stocks move (especially when stock prices fall), the price of sodas can fluctuate dramatically.