CICC: The decline in monthly cement demand has widened, and the supply and demand for steel are both weak

According to the report from China International Capital Corporation (CICC), in September, cement production was 154 million tons, a year-on-year decrease of 8.6% (compared to a year-on-year decrease of 6.2% in August), with the decline slightly widening. It is recommended to pay attention to the industry's coordinated price increase efforts and the progress of cement companies in implementing policies to limit overproduction against the backdrop of supply-side anti-involution. In the steel sector, crude steel production in September was 73.49 million tons, a year-on-year decrease of 4.6%, and domestic apparent consumption of crude steel was 64.52 million tons, a year-on-year decrease of 4.4%, with both supply and demand showing a widening year-on-year decline. Recently, the industry has seen weakening supply and demand, with raw material prices eroding profits due to supply disruptions, leading to a contraction in steel prices and profits. However, the long-term improvement trend in industry supply and demand remains unchanged despite anti-involution.

CICC's main viewpoints are as follows:

Cement: Slightly widening year-on-year decline in September production, seasonal price increase has a slight boost

Cement production in September was 154 million tons, a year-on-year decrease of 8.6% (compared to a year-on-year decrease of 6.2% in August), with the decline slightly widening. According to CICC's construction team statistics, general infrastructure investment in September decreased by 8.4% year-on-year, with sub-sectors such as water conservancy, environment, and public facility management down by 15% year-on-year, indicating weak infrastructure performance and cement demand. Under the pressure of continuous profit decline for enterprises during the off-season in July and August, staggered production halts and coordinated price increases in different regions had a mediocre effect: the national average cement price in September increased by 3 yuan to 342 yuan/ton, lower than the 375 yuan/ton in the same period last year; it is estimated that the industry's gross profit per ton in September decreased by about 18 yuan/year-on-year. It is recommended to pay attention to the industry's coordinated price increase efforts and the progress of cement companies in implementing policies to limit overproduction against the backdrop of supply-side anti-involution.

In terms of targets, it is recommended to focus on Conch Cement (00914), China Resources Cement Technology (01313), and Shangfeng Cement (000672.SH).

Glass: Completion demand continues to be under pressure, the industry may need to experience deep losses to trigger maintenance

From January to September 2025, the area of completed housing decreased by 15% year-on-year to 31.1 million square meters, and the order days for float glass deep processing in September decreased by 10% year-on-year to 10.75 days. Due to the year-on-year decline in raw material prices (soda ash, coal, etc.), the gross profits per box for coal gas, petroleum coke, and natural gas systems at the end of September were 7.1, 6.4, and 0.6 yuan respectively, with most capacities not yet losing cash flow, leading to delays in systematic concentrated maintenance. The daily melting capacity of float glass remained at a high level of 159,000 tons per day at the end of September.

In terms of targets, it is recommended to focus on Xinyi Glass (00868) and Qibin Group (601636.SH).

Steel: Insufficient demand during peak season, weak supply and demand lead to price decline

In September, crude steel production was 73.49 million tons, a year-on-year decrease of 4.6%, and domestic apparent consumption of crude steel was 64.52 million tons, a year-on-year decrease of 4.4%, with both supply and demand showing a widening year-on-year decline. Recently, the industry has seen weakening supply and demand, with raw material prices eroding profits due to supply disruptions, leading to a contraction in steel prices and profits. However, the long-term improvement trend in industry supply and demand remains unchanged despite anti-involution.

It is recommended to focus on two main lines: 1) From a long-cycle perspective, the current valuation of core industry assets is generally at historical lows, and with the profit cycle bottoming out, a valuation recovery is expected. The top pick is Hualing Steel (000932.SZ). 2) From a short-term perspective, production control this year and mid-term capacity clearance have a greater marginal impact on rebar steel companies, so it is recommended to pay attention to steel companies with higher efficiency and a higher proportion of rebar Risk Factors

Risk of continued downward demand, risk of rising raw material prices