Zhong Jin: Supply and demand continue to be weak, 26-year consumption of building materials "anti-enclosure" policy expectations rise

Zhongjin released a research report stating that according to the data from the National Bureau of Statistics, the national crude steel production from January to December was 961 million tons, a year-on-year decrease of 4.4%; cement production was 1.693 billion tons, a year-on-year decrease of 6.9%; and flat glass production was 976 million weight boxes, a year-on-year decrease of 3%. Looking at specific industries, cement prices were relatively strong in December, benefiting from the downward trend in coal prices, leading to a slight increase in industry profits; glass prices continued to fall, putting pressure on enterprise profits and accelerating the cold repair process, with the possibility of fuel price increases during the heating season driving further cold repair in the industry; supply and demand in the steel industry continued to weaken in December, with a suggestion to focus on structural market trends. Zhongjin's main points are as follows: Cement: Decrease in cement shipments during the winter, supported by declining fuel prices According to Zhongjin's calculations, in December, the year-on-year growth rate of general infrastructure investment was -16.3% (compared to -12.3% in November, with a continuous year-on-year decline), and cement demand remained weak. In December 2025, the year-on-year growth rate of monthly cement production was -6.6% to 144 million tons, with the national cement shipment rate averaging 41%. Cement prices were relatively strong, with the national average price of cement inclusive of tax being 354 yuan per ton in December, an increase of 5 yuan from the previous month. In addition, benefiting from the downward trend in coal prices, industry profits slightly increased, with the estimated gross profit per ton for cement enterprises in December being 63 yuan, an increase of 11 yuan from the previous month. The industry is expected to continue efforts to eliminate excess production capacity, with subsequent capacity substitution policies expected to drive continuous supply clearance. It is recommended to pay attention to Anhui Conch Cement (600585.SH), Gansu Shangfeng Cement (000672.SZ), and CR BLDG MAT TEC (01313). Glass: Continuation of downward trend in glass prices, possibility of accelerated cold repair process From January to December 2025, the year-on-year completion area of housing decreased by 18.1% to 603 million square meters, with the number of days for further processing of glass decreasing by 17% to 9 days in December. Glass prices continued to fall, with the national average price of float glass inclusive of tax being 1124 yuan as of January 15, 2026. The estimated gross profit per box for coal gas/oil coke/natural gas systems was 2.6/-23.9/-10.2 yuan. Enterprise profits continued to be under pressure, driving the acceleration of the cold repair process, with daily melting volume of float glass in China decreasing to 150,000 tons in January. Fuel price increases during the heating season may further drive the industry towards cold repair, with a recommendation to focus on Zhuzhou Kibing Group (601636.SH) and XINYI GLASS (00868). Steel: Weak supply and demand in the off-season, fluctuating steel prices In December, crude steel production was 681.8 million tons, a year-on-year decrease of 10.3%. Domestic apparent steel consumption was nearly 611.48 million tons, a year-on-year decrease of 8.5%. The year-on-year decrease in supply and demand further widened. Zhongjin pointed out that supply and demand in the industry continued to weaken in December, with daily molten iron production falling below 2.3 million tons, resulting in fluctuating prices for black series futures and spot steel, with weak performance in the steel sector. The structural market trends in the industry in 2026 are worth paying attention to, with a recommendation to focus on two main lines: 1) Differentiated production control is expected to push forward, with green transformation leaders and undervalued high-quality cash flow assets likely to see profit recovery and value reassessment, with a focus on Hunan Valin Steel (000932.SZ). 2) The replacement of imported high-end steel materials by domestic products is accelerating, benefiting leading special steel companies with high growth certainty, with a focus on TIANGONG INT'L (00826). Risk factors include ongoing downward demand risks and rising raw material prices.