China Post Securities has released a research report stating that cement demand remains in a recovery phase, although shipment volumes still lag behind the previous year's levels. Infrastructure funding is relatively secure, while demand from the building construction sector remains under pressure. Demand in the glass sector is subdued, with prices trending weak. Prices for fiberglass roving are expected to rise, and the electronic yarn segment is experiencing high景气度 driven by AI. Profitability in building materials has already bottomed out, and price increases across multiple product categories are expected to improve profits. The report recommends focusing on the cement and glass industries, which stand to benefit from supply-side rationalization due to carbon reduction policies. Companies to watch include Kibing Group (601636.SH) and Conch Cement (00914). The main views of China Post Securities are as follows:
Event: On April 22, the General Office of the Communist Party of China Central Committee and the General Office of the State Council issued the "Opinions on Performing Energy Conservation and Carbon Reduction Work at a Higher Level and with Higher Quality." The document proposes strengthening industrial energy conservation and carbon reduction. It calls for a comprehensive improvement in energy efficiency in key industries such as steel, non-ferrous metals, petrochemicals, chemicals, and building materials. It also emphasizes enhancing energy conservation and carbon reduction in buildings, promoting energy-saving renovations for existing buildings in conjunction with old residential area upgrades and clean heating initiatives, and strengthening energy and carbon management during building operation.
Cement: The cement industry is still in a stage of demand recovery, but shipment volumes remain lower than the same period last year, indicating a modest recovery in demand. Funding for infrastructure projects is relatively well guaranteed, but demand from the building construction sector remains pressured. From a medium-term perspective, cement industry capacity is expected to continue declining under policies restricting overproduction, leading to a significant increase in capacity utilization rates and resulting in profit elasticity. Companies to watch: Conch Cement, Huaxin Cement, Shangfeng Cement.
Glass: Recently, there has been an increase in cold repairs and production halts at glass production lines. However, end-user demand remains weak. Short-term sluggish downstream demand, combined with the release of previously speculative inventory, has led to continued weak price performance. Attention should be paid to the possibility of unexpected production cuts against the backdrop of rising costs. Company to watch: Kibing Group.
Fiberglass: Demand for fiberglass roving is acceptable, supported by structural rigid demand and rising costs. Prices are expected to maintain an upward trend in the short term. The electronic yarn segment is experiencing high景气度, driven by demand from the AI industry chain. Low-dielectric products in the industry are seeing increases in both volume and price. Product structure upgrades for first-generation, second-generation, and third-generation (Q-cloth) products are clear. Industry demand is expected to experience explosive growth alongside AI development, with a positive outlook for sustained volume and price increases. Companies to watch: China Jushi, Sinoma Technology.
Building Materials: Profitability in the building materials sector has bottomed out. After years of competition, prices have no further room to decline. Leveraging anti-involution policies, the industry has a strong desire for price increases and profit improvement. In 2025, price increase notices have been issued continuously for multiple categories including waterproofing, coatings, and gypsum board. Industry profits are expected to have bottomed out, with improvements in profitability for leading enterprises anticipated in 2026. Companies to watch: Oriental Yuhong, Keshun Waterproof, Three Trees, Beixin Building Materials, Tutuba.
Risk Warning: Potential risks include anti-involution policies failing to meet implementation expectations, and a greater-than-expected downturn in real estate and infrastructure demand.
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