Since May, futures prices for glass and soda ash have generally trended weaker. However, the price spread between the two has consistently narrowed, fueling market anticipation for a spread correction. Industry experts widely agree that the current convergence of the glass-soda ash spread is grounded in solid fundamental logic, with further room for adjustment. The core drivers are the pace of glass inventory drawdown and marginal improvements in demand.

Industry insiders note that influenced by pessimistic market sentiment and a slowdown in inventory reduction among float glass intermediaries, glass futures have continued to weaken since May. The price of the main contract once approached 1000 yuan per ton, a drop of approximately 60 yuan per ton from early May. Soda ash has also performed weakly. Despite increased maintenance and some production decline in mid-May, the high-supply structure remains unchanged. Coupled with weakening rigid demand from float glass and photovoltaic glass, fundamentals lack significant catalysts for improvement.

Notably, the price spread between the main contracts for glass and soda ash has narrowed against the broader trend. Since May, it has contracted from -200 yuan per ton to around -174 yuan per ton currently, touching -150 yuan per ton in mid-to-late May and oscillating between -150 and -170 yuan per ton during that period.

Shou Jialu, an energy and chemical analyst at Nanhua Futures, stated that this round of spread correction is not coincidental. The core reason lies in the divergent fundamental trajectories of glass and soda ash. Glass is in a capacity reduction cycle, with high inventory drawdown at the intermediary level progressing. Demand in May showed signs of stabilization month-on-month, and the market anticipates inventory replenishment by mid-to-downstream users in June-July, limiting downside price potential. Soda ash maintains a high-capacity, high-supply structure with persistently weak rigid demand. Even with inventories better than expected, the market's perception of a "surplus" remains unchanged, resulting in weaker price elasticity compared to glass. This contrast of relative strength in glass versus weakness in soda ash is driving a steady narrowing of the spread, forming a clear arbitrage rationale.

Hu Peng, a senior energy and chemical analyst at CITIC Securities Futures, similarly believes the overall convergence of the glass-soda ash spread since May stems from concurrent changes in their fundamentals. "From the glass perspective, rising prices for natural gas and coal-based gas in Hebei provide cost support, while Hubei's push to switch from petroleum coke to natural gas is favorable for supply contraction. Regarding soda ash, expectations for cold repairs in float glass are strong, photovoltaic glass prices have dropped sharply with increased cold repairs, leading to declining soda ash demand. The spread convergence under this negative demand feedback is reasonable," Hu Peng said.

Looking ahead, Shou Jialu believes there is still room for the glass-soda ash spread to correct, with the core factor being the pace of glass destocking. On the supply side, based on current cold repair and furnace ignition schedules, daily glass melting capacity may recover from 145,000 tons to around 148,000 tons by early June. Widening losses have not triggered widespread cold repairs, so supply is expected to maintain a weak balance. Regarding inventory, there are expectations for further destocking in intermediaries in Shahe and Hubei, but absolute inventory levels remain high compared to the same period in previous years. The extent of destocking still requires monitoring. Demand overall is weak, but signs of month-on-month stabilization emerged in May. If downstream processing orders improve later, it could stimulate mid-to-downstream inventory replenishment, driving a phased rebound in glass prices and forming a positive feedback loop of "destocking-replenishment-price increase."

Hu Peng added that September-October is the traditional peak demand season for glass, but the short term faces the test of the rainy season. Hubei's accelerated push to switch from petroleum coke to natural gas may lead to a slight supply reduction, benefiting regional price stability, and inventories might see a temporary decrease. For soda ash, expectations of high capacity and high supply remain unchanged. Temporary maintenance impacts are limited, and rigid demand remains weak, especially with significant finished product inventory pressure in photovoltaic glass. Daily melting capacity may further decline, providing insufficient support for soda ash prices. In the short term, soda ash supply is reduced due to summer maintenance, but supply is expected to rebound after maintenance concludes. There are also expectations for new capacity additions in the medium term. Downstream demand is sluggish, with soda ash demand projected to decline slightly. Against the backdrop of rebounding supply and decreasing demand, soda ash inventories may hit new highs.

In Shou Jialu's view, the core of the glass-soda ash spread correction lies with glass. Currently, marginal changes in daily glass melting capacity are limited; the key is the speed of intermediary destocking. If intermediaries accelerate destocking to reasonable levels by June, coupled with improved orders and better market sentiment, it would open the door for replenishment and price rebounds, driving further spread correction. Simultaneously, close attention must be paid to coal price fluctuations, which have a more direct impact on soda ash and could disrupt short-term spread movements.

Hu Peng believes that glass supply and demand may see phased improvement, while soda ash fundamentals are hardly optimistic. The fundamental divergence between the two will continue to support spread correction. Key focuses going forward include the progress of glass destocking, downstream processing orders, and changes in coal costs.