To The Moon

According to data from the National Bureau of Statistics, China's crude steel output from January to December reached 961 million tons, down 4.4% year-on-year; cement output was 1.693 billion tons, a decrease of 6.9% year-on-year; and flat glass output was 976 million weight cases, falling 3% year-on-year. Looking at specific sectors, cement prices in December remained relatively resilient, and with the benefit of declining coal prices, industry profits saw a recovery; glass prices continued to fall, putting sustained pressure on corporate profitability and accelerating cold repair schedules, while rising fuel prices during the heating season may prompt further industry cold repairs; the steel sector experienced continued weakening in both supply and demand in December, with a recommendation to focus on structural opportunities in 2026. The main views of CICC are as follows: Cement: Winter cement shipments declined, but lower fuel prices supported profitability. CICC estimates that broad-based infrastructure investment in December fell 16.3% year-on-year (compared to -12.3% in November, showing a continued year-on-year decline), with cement demand remaining weak. Cement production in December 2025 alone dropped 6.6% year-on-year to 144 million tons, and the national cement shipment rate averaged 41%. Cement prices held relatively firm; according to Digital Cement Network, the national average tax-inclusive cement price in December was 354 yuan per ton, up 5 yuan month-on-month. Benefiting from the decline in coal prices, industry profitability improved, with estimated gross profit per ton for cement enterprises at 63 yuan per ton in December, an increase of 11 yuan month-on-month. The industry's efforts to supplement capacity will continue to advance in 2026, and subsequent capacity replacement policies are expected to drive ongoing supply rationalization. It is recommended to focus on Anhui Conch Cement Company Limited (600585.SH), Gansu Shangfeng Cement Co.,Ltd. (000672.SZ), and CR BLDG MAT TEC (01313). Glass: Glass prices continued their downward trend, and the cold repair process is expected to accelerate. From January to December 2025, completed housing area fell 18.1% year-on-year to 603 million square meters, and the average deep processing days for glass in December decreased 17% year-on-year to 9 days. Glass prices kept declining; as of January 15, 2026, the national average tax-inclusive price for float glass was 1,124 yuan, with estimated gross profit per case for coal gas, petroleum coke, and natural gas systems at 2.6 yuan, -23.9 yuan, and -10.2 yuan, respectively. Sustained pressure on corporate profitability is accelerating the cold repair process, with daily melting capacity for float glass dropping to 150,000 tons by mid-January. Rising fuel prices during the heating season may lead to further cold repairs in the industry. It is recommended to focus on Zhuzhou Kibing Group Co.,Ltd. (601636.SH) and XINYI GLASS (00868). Steel: Weak supply and demand during the off-season led to volatile steel prices. Crude steel output in December was 68.18 million tons, down 10.3% year-on-year, while domestic apparent consumption of crude steel was approximately 61.148 million tons, a decrease of 8.5% year-on-year, with both supply and demand seeing widening year-on-year declines. CICC pointed out that industry supply and demand continued to weaken in December, with daily average hot metal production falling below the 2.3 million ton level, leading to volatility in futures and spot prices for ferrous metals and underperformance in the steel sector. Structural opportunities in the industry for 2026 deserve attention, with a recommendation to focus on two main themes: 1) Differentiated production control is expected to advance, potentially benefiting leading players in green transformation and undervalued high-quality cash flow assets, which may see profit recovery and value re-rating; Hunan Valin Steel Co.,Ltd. (000932.SZ) is highly recommended. 2) High-end steel materials are approaching an inflection point of accelerated import substitution, favoring specialty steel leaders with high growth certainty; TIANGONG INT'L (00826) is highly recommended. Risk factors include the potential for continued downward demand and risks associated with rising raw material costs.