In the first quarter of this year, the market demand for the building materials industry was weak, the industry's upward momentum was insufficient, and the buyer's market characteristics such as oversupply and low-level fluctuations in product prices were obvious. Since March, the demand for the construction market has gradually started, but the speed of starting is not as fast as the same period last year. The output of major products in the building materials industry has risen and fallen, and the characteristics of structural changes are obvious. Relevant person in charge of the China Building Materials Federation believes that as the effects of the national macro-combination policy continue to be released, the production of building materials has stabilized, some industries have stabilized and increased, and the economic operation has initially shown signs of stabilizing at a low level.

According to data from the National Bureau of Statistics, from January to March, the added value of building materials industry above designated size increased by 1.1% year-on-year, and the growth rate fell by 2.8 percentage points month-on-month, and fell by 0.9 percentage points from the same period last year, which was 3.4 percentage points lower than the growth rate of China's industrial added value.

Statistical data from the China Building Materials Federation show that from January to March, among the 31 key monitored building materials products, the output of 13 products increased year-on-year, and the output of 18 products decreased year-on-year. Among them, the production of cement, cement products, wall materials, waterproof materials and other products affected by construction and real estate has declined significantly; the output of products with a high degree of correlation with the industrial field and terminal consumption, such as tempered, laminated, hollow glass, glass fiber yarn, composite materials, sanitary ceramics and other products, is higher than the same period last year. For example, the output of flat glass of enterprises above designated size reached 250 million weight boxes, a year-on-year increase of 7.8%.

"In the first quarter, due to the small number of new real estate projects and the suspension of major infrastructure projects in some regions, the demand for cement in China's market was sluggish." Chen Bailin, president of Digital Cement Network, introduced. According to statistics, China's cumulative cement production in the first quarter reached 337 million tons, a year-on-year decrease of 11.8%, and the decline was 10.2 percentage points larger than that from January to February. In March, China's monthly cement production reached 154.6 million tons, a sharp year-on-year decrease of 22%. Both the cumulative and monthly cement production are the second lowest since 2011, only higher than the same period in 2020.

Combined with the cement shipment rate, which reflects the actual market demand index, China's overall cement demand in the first quarter was weak, and the average shipment rate fell by nearly 10% compared with the same period last year. "It is worth noting that from January to February, the overall market fluctuated little due to the Spring Festival holiday, but in March, as the start-up period of the market after the holiday, demand did not recover as quickly as expected, and the cement shipment rate fell sharply by 20% to 30% year-on-year." Chen Bailin analyzed that there are three main reasons for the decline in cement demand: first, it continues to be affected by the downward trend of the real estate market; second, it is affected by the suspension of infrastructure projects and project funding shortages in some provinces; third, there has been continuous rainfall in some areas, and demand recovery is weak.

In the first quarter, the ex-factory prices of building materials products continued to fall. The ex-factory price index of building materials industrial products was 89.4 in March (100 in December 2020), a year-on-year decrease of 7.7% and a month-on-month decrease of 0.5%. From January to March, the ex-factory price of building materials industry decreased by 7.5% year-on-year. Among the 13 medium-sized industries of building materials, the ex-factory prices of 11 industries showed a year-on-year downward trend. Among them, the ex-factory price of cement industry decreased by 20.1% year-on-year, the largest decline. Among other sub-industries, the ex-factory prices of asbestos cement products, thermal insulation materials, limestone gypsum manufacturing, flat glass, technical glass, sanitary ceramics, fiber reinforced plastics, non-metallic mineral mining and selection increased year-on-year, among which the ex-factory price of flat glass increased by 10.4% year-on-year.

Affected by the weakening market demand and the decline in product prices, the growth momentum of the building materials industry is obviously insufficient. In the first quarter, the operating income of building materials enterprises above designated size decreased by 9.7% year-on-year, and the total profit decreased by 59.2% year-on-year. Among them, the industries with a greater correlation with the industrial field and terminal consumption have better benefits. For example, the operating income and total profit of industries such as building stone processing, building technical glass and building sanitary ceramics have maintained year-on-year growth; the profit of the building glass industry has increased significantly compared with the same period last year.

Under the current situation, the fixed asset investment in the building materials industry is still recovering. According to data from the National Bureau of Statistics, from January to March, China's fixed asset investment (excluding farmers) increased by 4.5% year-on-year. By composition, fixed asset investment in construction and installation projects increased by 4.6% year-on-year; by industry, infrastructure investment supporting the stable development of the building materials industry increased by 6.5% year-on-year. From January to March, fixed asset investment in the building materials industry increased by 5.7% year-on-year, and the growth rate of fixed asset investment in building materials further rebounded.

"The upward momentum of economic development remains strong, and demand will not fall off a cliff." Kong Xiangzhong, executive president of the China Cement Association, believes that the current decline in demand is an inevitable stage in the development of the cement industry, and only firm confidence can cope with the difficult situation. The policy side is expected to further exert its strength, the cement market is at the bottom of the repair, and China's super-large-scale market will still maintain a relatively considerable demand for cement. The cement industry has developed a number of leading enterprises with large scale, strong competitiveness, market dominance and strong ability to resist and resolve risks in multiple rounds of cyclical adjustments. Leading enterprises are the main force to maintain the stable development of the industry and adhere to positive values. They must consolidate their own industry status and development foundation, and not be afraid of market panic or market fluctuations.

Kong Xiangzhong believes that companies that have experienced market shocks will have better development space. In the medium and long term, advantageous companies will benefit from the continuous improvement of industry concentration, and there is still a lot of room for growth. With the impact of the market and the intensification of competition, the leading companies in the cement industry have shown strong operating resilience as a whole. With technological innovation, channel changes, product research and development, and optimized regional layout, their competitive advantages will be further highlighted.

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