Despite stagnant revenues, cement companies reported significant profit growth in the first three quarters of the year. However, amid overcapacity and a sharp decline in cement prices, the industry must take further action to sustain this performance.
A prime example is Bbmg Jidong Cement Group Co., Ltd. (000401), which posted revenue of 18.575 billion yuan in the first three quarters, a marginal 0.1% year-on-year increase, while net profit surged 113.60% to 40.3549 million yuan. "Coal prices have dropped substantially this year, along with other raw material costs. Companies are intensifying cost-cutting and efficiency measures, leading to improved profitability," said Ren Qianjin, Vice President and Board Secretary of Bbmg Jidong.
However, due to overcapacity, cement prices have been declining since early April, hitting a near nine-year low. Only the first quarter's price performance supported profit growth. Since 2024, the cement industry has struggled with cyclical price fluctuations—peaking in late 2023 and early 2024 before plummeting again as companies engaged in price wars.
**Revenue Stagnates, Profits Rise** Recent quarterly reports from major cement producers, including Anhui Conch Cement Company Limited (600585), Bbmg Jidong, and Guangdong Tapai Group Co., Ltd. (002233), showed declining or flat revenues but rising profits.
Anhui Conch reported revenue of 61.298 billion yuan, down 10.06% year-on-year, but net profit rose 21.28% to 6.305 billion yuan. Guangdong Tapai saw revenue dip 0.49% to 2.916 billion yuan, while net profit jumped 54.23% to 588 million yuan.
All companies attributed profit growth to lower costs. Anhui Conch cited reduced raw material and production expenses, while Guangdong Tapai highlighted a 7.03% drop in average cement costs, outpacing the 4.34% decline in selling prices.
**Cost Declines Offset Price Pressures** While cement prices fell nearly 19% from early 2025 to September, coal prices also dropped, easing cost pressures. The average cement price decline was smaller than that of coal, creating room for profit growth.
Over the past 22 months, cement prices followed a "parabolic" trend—starting at 320 yuan/ton in early 2023, peaking at 350 yuan/ton in late 2023, then plunging to 270 yuan/ton by August 2025.
"Demand-supply imbalances and overcapacity drove prices down after April 2025," said Hou Linlin, an analyst at SCI International. "Despite initial optimism, weak demand and intensified competition pushed prices lower."
**Cyclical Struggles: Self-Discipline vs. Price Wars** The cement industry has long grappled with cyclical production cuts ("peak shaving") to stabilize prices. While stricter adherence to these measures in early 2025 supported prices, relaxation later led to renewed declines.
"From April onward, weak demand and aggressive price competition among major players drove sustained price drops," Hou noted.
The industry remains caught in a cycle: when prices fall too low, companies cut production to push them back up, only for weak demand to trigger another round of price wars.
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