China Galaxy Securities: Seasonal demand in the building materials industry continues to recover, and anti-involution drives supply optimization

According to the Zhitong Finance APP, China Galaxy Securities released a research report stating that urban development is shifting towards improving quality and efficiency in existing stock. The consumption building materials sector has a well-established channel layout, good category expansion, and industry leaders with product quality advantages and brand advantages are expected to benefit. The "anti-involution" trend is accelerating the optimization of industry supply, and the supply-demand contradiction is expected to ease, with expectations for cement prices to rise, leading to a recovery in the profitability of regional leading enterprises. In terms of fiberglass, demand recovery driven by emerging markets is expected to lead to price increases for mid-to-high-end products, boosting the performance of related companies. Under the "anti-involution" sentiment, the supply-demand pattern in the glass industry is expected to gradually optimize.

The main points from China Galaxy Securities are as follows:

Cement: Demand improvement is limited, and companies are actively pushing up cement prices.

This week, national cement prices rose slightly, mainly due to the current entry into the traditional peak season, with cement companies showing high enthusiasm for price increases. Market demand has recovered somewhat this week, but it remains weak compared to the same period last year; currently, some clinker lines across the country are still in a state of kiln suspension, which has not yet put pressure on companies' clinker inventories. Looking ahead, demand during the "Golden September and Silver October" period is expected to continue to grow, but given the weak end-market conditions, the increase is expected to be limited; considering that winter will bring a long period of staggered kiln suspensions, coupled with the current marginal improvement in demand, cement companies are expected to continue actively pushing up cement prices. Additionally, there are expectations for rising coal prices, which will further support cement prices.

Consumption Building Materials: The home decoration market is expected to recover in September, and demand for consumption building materials is expected to improve driven by urban renewal.

From January to August 2025, the retail sales of building and decoration materials increased by 1.8% year-on-year, a decrease of 0.4 percentage points compared to January to July, with a year-on-year decline of 0.7% in August alone and a month-on-month decline of 1.19%. In August, demand in the home decoration market weakened due to high temperatures and rainfall, leading to a decrease in retail demand for consumption building materials. Looking ahead, with improved weather in September and the continued release of the old-for-new policy, the demand in the home decoration market is expected to gradually improve. Additionally, as urban renewal progresses, the demand for old renovation and repairs will further drive the demand for consumption building materials.

Fiberglass: Prices for roving and electronic yarn remain stable, with strong demand for high-end electronic yarn.

In terms of roving, this week the market prices remained stable, with decent demand for wind power and thermoplastic yarns, while the recovery of traditional thermosetting product end demand is slow, and the supply from pool kiln factories remains high, with inventory pressure still present. Looking ahead, short-term demand for roving is limited, with mid-to-low-end downstream digesting previous stockpiles, and supply remaining stable. It is expected that roving prices will mainly remain stable and watchful. For electronic yarn, this week the mainstream electronic yarn G75 prices remained stable, with ordinary electronic yarn mainly moving based on essential demand, showing overall stable demand; high-end products are in strong demand, with a supply gap. Looking ahead, the downstream demand for traditional electronic yarn products is expected to remain largely unchanged, with stable production, while the supply of high-end products will continue to be tight, and it is expected that electronic yarn prices will remain stable in the short term, with expectations for price increases in the medium to long term.

Float Glass: Seasonal demand is slowly recovering, with slight price increases.

This week, float glass prices increased slightly, with essential demand performing moderately. Driven by rising futures prices, there was a slight improvement in phased shipments, but industry supply pressure remains, with high inventory levels at float glass factories. Looking ahead, market demand is expected to increase seasonally but with limited improvement, and mid-to-low-end companies are mainly purchasing based on demand, leading to significant inventory reduction pressure. It is expected that prices will generally remain stable Risk Warning: The risk of significant fluctuations in raw material prices; the risk of downstream demand being lower than expected; the risk of new industry capacity exceeding expectations; the risk of policy advancement being slower than expected