China Galaxy Securities: Weak recovery in traditional building materials demand, electronic yarn prices continue to rise.

China Galaxy Securities released a research report stating that in March, the cement market gradually started up after the double festival, with demand recovery in most regions reaching only 50-60% of normal levels. By the end of March, staggered production across the country ended, with most clinker production lines running smoothly; clinker inventory decreased slightly, while average prices remained stable. As for electronic yarn, demand for high-end products remained strong in March, traditional cloth production capacity shifted, and the electronic yarn/cloth market faced tight supply and increasing prices, continuing the trend of significant price increases from the previous month. Looking ahead, as traditional electronic yarn production capacity is gradually released, supply will increase, but there is a large gap in demand for mid- to high-end products. The downstream electronic cloth market is impacted by slow growth in loom installations, so the short-term supply shortage situation is unlikely to ease, and electronic yarn/cloth is still expected to see further price increases. Key points from China Galaxy Securities: Cement: Demand slowly recovering in March, prices expected to slightly rise. With most regions seeing only 50-60% demand recovery after the double festival in March, and with staggered production ending by the end of the month, clinker inventory down slightly, and average prices stable. Looking ahead, with slow demand recovery in April and current cement prices at historic lows, companies are inclined to raise prices, and it is expected that cement prices will slowly rise in April. The changing supply-demand landscape in regional markets needs to be monitored. Fiberglass: Coarse yarn price increases driven by costs, tight supply boosts electronic yarn. In March, most factories saw improved transactions for coarse yarn, with limited new supply and slight price increases. Looking ahead, due to rising raw material and precious metal prices, the cost pressures of tank and kiln factories will increase, and prices are expected to continue rising in April. As for electronic yarn, with high demand for high-end products continuing in March, traditional cloth production shifting, tight supply in the electronic yarn/cloth market, and price increases continuing, the situation is expected to remain tight. Despite new production capacity for traditional electronic yarn being gradually released, the demand gap for mid- to high-end products is large, and the slow growth in loom installations in the downstream electronic cloth market means that the short-term supply shortage situation is unlikely to ease, and there are expectations of further price increases for electronic yarn/cloth. Consumer Building Materials: Seasonal retail pressure, rising raw material costs drive companies to raise prices again. Retail sales of construction and decoration materials in January-February 2026 were down 2.2% YoY, with a narrower decline compared to the full year 2025. Due to weak real estate sales, the home improvement market has weakened further; the first quarter is a slow season for home improvement, and it is expected that demand for consumer building materials at the retail end will improve marginally in the second quarter. The continued implementation of urban renewal strategies will unleash demand for repairs and renovations, raising the market penetration rate of high-quality green building materials. Leading companies in consumer building materials with product quality advantages and environmentally friendly production technologies are expected to benefit. Recently, due to rising raw material costs, many leading consumer building materials companies have issued price increase notices, and with the catalyzing effect of anti-"internal circulation" policies, the profitability of leading companies is expected to recover. Float Glass: Slight price increase in March, difficulty in short-term demand improvement. In March, downstream essential purchases and speculative demand supported float glass companies' shipments, with overall market production and sales still acceptable, but with limited new orders and no significant improvement in end-demand. By the end of March, net capacity reduction was 20.5 million tons, with some improvement in capacity supply; while enterprise inventories decreased slightly on a monthly basis, they remain at historically high levels, with significant pressure to reduce inventories. Looking ahead, overall production in April is expected to be controllable, with a stable supply-demand structure expected; expectations of more production line startups in May-June, coupled with difficulty in demand improvement, suggest that the market supply-demand structure may weaken, and short-term float glass prices are expected to trend towards stability. Risk alert Risks of significant fluctuations in raw material prices; risks of lower-than-expected downstream demand; risks of industry overcapacity exceeding expectations; risks of policy progression falling short of expectations.