Institutions: Building Materials Industry Supply-Demand Expectations Improve

Caitong Securities believes that the construction materials industry, as a typical resource-processing industry, heavily relies on the petrochemical supply chain for some of its raw materials. Recently, geopolitical conflicts in the Middle East have intensified, causing international crude oil prices to fluctuate upward, which through cost transmission mechanisms, has exerted certain cost pressures on various sub-sectors of construction materials. From the perspective of upstream raw materials, many construction material products are derivatives of petroleum refining or deep processing, with a high proportion of petroleum-related raw materials in their cost structure, making them highly sensitive to oil price fluctuations. Among these, waterproofing, coatings, pipes, insulation boards, and water reducers are most closely linked to oil prices; fluctuations in oil prices can significantly impact their cost structures and profitability.

Industrial Securities believes that the supply and demand outlook for the construction materials industry is improving. 1) In Q3 2025, the fiberglass sector benefits from strong demand for high-end wind power yarns and thermoplastic short-cut products, with smooth implementation of price increases, leading to significant growth in net profit attributable to shareholders; 2) The cement sector benefits from declining production costs and slight price increases, turning losses into profits; 3) The glass and consumer building materials sectors continue to face periodic profit pressures, but a bottoming out in 2025 is already in sight. On the demand side, since 2025, efforts to promote urban renewal, optimize storage and acquisition, and continue debt reduction have helped stabilize the real estate market. Active second-hand home transactions remain, with key cities’ second-hand home trading volume reaching new highs in recent years in the first three quarters, effectively offsetting the decline in new home sales; wind power continues to grow rapidly; meanwhile, infrastructure investment maintained growth in the first three quarters of 2025, supporting demand for construction materials.