Shenwan Hongyuan: The off-season recovery of the building materials industry in Q3 2025 is slowing down, suggesting attention to quality stocks for continued improvement

According to the Zhitong Finance APP, Shenwan Hongyuan released a research report stating that the third quarter is the traditional off-season for the cement industry, and cement prices in 2025 are expected to be high initially and low later. According to Digital Cement Network, the average cement price in Q3 2025 is 353.1 yuan/ton, a decrease of 27.6 yuan/ton month-on-month and a decrease of 33.5 yuan/ton year-on-year. Cement production in July and August decreased by 5.5% and 7.0% year-on-year, respectively. The overall profitability of the cement industry in the third quarter is expected to be under pressure. In terms of glass fiber, according to Zhuochuang Information, the average price of 2400TEX winding direct yarn in Q3 2025 fell by 108.8 yuan/ton month-on-month and by 54.0 yuan/ton year-on-year, but prices of other mid-to-high-end yarn categories remained relatively stable. It is expected that the glass fiber industry in Q3 2025 will continue to show a trend of differentiation, with weaker profitability for low-end coarse yarns and a continued improvement trend for mid-to-high-end categories.

In the consumer building materials sector, since Q3 2025, multiple segments such as waterproofing and gypsum boards have gradually raised prices. The price increases may be gradual and sustained, and prices in Q3 2025 are expected to stabilize month-on-month, with subsequent improvements and easing price pressures, reflecting a shift in corporate strategy from "volume and cost profit" to "price and cost profit," with the possibility of further price increases in the future. In terms of glass, in Q2 2025, driven by the policy of participating in market transactions for new energy grid-connected electricity, the price of photovoltaic glass briefly recovered, but after the rush for installation gradually ended in May, prices have been falling. It is expected that the profitability of the photovoltaic glass sector in Q3 2025 will decline month-on-month, with leading companies showing stronger recovery momentum, but further observation is needed in the second half of the year after the rush for installation ends.

Shenwan Hongyuan's main viewpoints are as follows:

Cement: Profit decline in the off-season of Q3 2025, capacity reduction and steady growth remain the main line of the industry

The third quarter is the traditional off-season for the cement industry, and cement prices in 2025 are expected to be high initially and low later. Starting from mid to late May, cement prices have gradually declined, and in Q3 2025, cement prices continued to fall, with production in July and August decreasing year-on-year. According to Digital Cement Network, the average cement price in Q3 2025 is 353.1 yuan/ton, a decrease of 27.6 yuan/ton month-on-month and a decrease of 33.5 yuan/ton year-on-year, with cement production in July and August decreasing by 5.5% and 7.0% year-on-year, respectively. The coal price in Q3 2025 remains low year-on-year, with an average water-coal price difference of 266.9 yuan/ton, a decrease of 32.9 yuan/ton month-on-month and a decrease of 10.4 yuan/ton year-on-year. The overall profitability of the cement industry in the third quarter is expected to be under pressure. The overseas layout of cement continues to make progress, with Huaxin Cement and Western Cement continuously increasing capacity, and profitability in the African cement market is expected to remain high and continue to improve.

On September 24, six ministries jointly issued the "Work Plan for Steady Growth in the Building Materials Industry (2025-2026)," shifting the policy perspective from the revenue side to the profit side, further requiring the cement industry to complete the overproduction target disposal before the end of 2025. It is expected that Q4 will be the peak period for supplementing production capacity indicators, and the industry's capacity contraction is expected to accelerate.

Glass Fiber: Mid-to-high-end product prices are more elastic, and the profitability contribution of specialty fabrics continues to increase

Since Q1 2024, the price center of glass fiber has continued to rise, with prices of wind power, short-cut raw silk, and thermoplastic yarn products gradually improving. Leading companies such as China Jushi have achieved a certain degree of performance improvement by leveraging product structure advantages. According to Zhuochuang Information, the average price of 2400TEX winding direct yarn in Q3 2025 fell by 108.8 yuan/ton month-on-month and by 54.0 yuan/ton year-on-year, but prices of other mid-to-high-end yarn categories remained relatively stable It is expected that the glass fiber industry will continue to show a differentiated trend in Q3 2025, with relatively weak profitability in low-end coarse yarns and a continued improvement trend in mid-to-high-end categories. The special fabric sector remains prosperous, with the production capacity of special yarns and special fabrics from SINOMATECH and Honghe Technology being gradually released, and sales in the third quarter are expected to further increase on a quarter-on-quarter basis.

Consumer Building Materials: High-quality enterprises are expected to further highlight their alpha, and price-increasing varieties in Q3 2025 are worth observing

Demand for residential real estate remains relatively weak in Q3 2025, while retail building materials may perform relatively well. Post-cycle sectors with prominent brand value, strong retail attributes, and a high proportion of renovation, such as coatings and tiles, are expected to shine, especially leading enterprises with strong brands and channels are likely to benefit further. The urbanization rate in regions such as Africa and South America is gradually increasing, maintaining a favorable pattern for post-cycle renovation building materials. Since Q3 2025, multiple sectors such as waterproofing and gypsum boards have gradually increased prices, which may be a gradual and continuous implementation. The price side is expected to stabilize on a quarter-on-quarter basis, with subsequent improvements and easing price pressures, reflecting a shift in corporate strategy from "volume and cost profit" to "price and cost profit," with the possibility of further price increases in the future.

Glass: Slight decline in photovoltaic glass in Q3 2025, flat glass is expected to stabilize and recover

In Q2 2025, driven by the policy of participating in market transactions for new energy grid-connected electricity, photovoltaic glass prices once achieved recovery, but have gradually declined after the rush for installation ended in May. It is expected that the profitability of the photovoltaic glass sector will decline quarter-on-quarter in Q3 2025, with leading enterprises having stronger recovery momentum, but observation is still needed in the second half of the year after the rush for installation ends. The average price of flat glass continues to decline in Q3 2025, with significant profitability pressure, and it is expected that small and medium-sized enterprises in the industry have gradually entered negative gross profit or even losses at this stage. The second half of the year may see accelerated supply contraction due to cold repairs.

The main contradictions in the glass industry currently are twofold: first, the decline in real estate completions has led to weak demand, while the production characteristics of furnaces determine that industry supply is rigid and difficult to adjust; second, there are significant differences in production costs of glass using different fuels. Glass furnaces that have completed coal-to-gas conversion have lower profits compared to enterprises still using petroleum coke fuel. It is expected that in the next two years, the industry will further promote coal-to-gas conversion and facilitate the gradual exit of backward and high-pollution production lines, which is expected to improve industry profitability.

On the targets: It is recommended to pay attention to stocks with improved expectations for Q3 reports and those with prominent self-alpha in the context of stable growth and capacity reduction

In the cement industry, it is recommended to pay attention to CONCH CEMENT (600585.SH), CONCH Venture (00586), HUAXIN CEMENT (600801.SH), Tianshan Shares (000877.SZ), TAPAI GROUP (002233.SZ), Shangfeng Cement (000672.SZ), Jinyu Jidong (000401.SZ), and China Resources Cement Technology (01313).

In the glass fiber industry, it is recommended to focus on the outstanding performance of CJS (600176.SH) and pay attention to SINOMATECH (002080.SZ), Honghe Technology (603256.SH), and International Composites (301526.SZ), which benefit from the high prosperity of special glass fiber fabrics.

In the consumer building materials sector, it is recommended to pay attention to Beixin Building Materials (600176.SH), Sankeshu (603737.SH), Dongfang Yuhong (002271.SZ), Keshun Shares (300737.SZ), Tubao (002043.SZ), Hanga Group (301136.SZ), and Keda Manufacturing (600499.SH) Weixing New Materials (002372.SZ), Jianlang Hardware (002791.SZ), Dongpeng Holdings (003012.SZ), Mona Lisa (002918.SZ), etc.

In the glass sector, it is recommended to pay attention to Qibin Group (601636.SH), South Glass A (000012.SZ), Fuyao Glass (601865.SH), Xinyi Glass (00868), and Xinyi Solar (00968), which have cost advantages. For pharmaceutical glass, focus on leading company Shandong Pharmaceutical Glass (600529.SH).

For new materials and new business directions, it is suggested to pay attention to Yalian Machinery (301191.SZ), Kaisheng Technology (600552.SH), and COFCO Technology (301058.SZ).

Risk Warning

The control of cement production capacity is not as expected, leading to supply shocks in the industry, and the competitive environment further deteriorates, harming product prices