Cement prices experience a phased increase with limited industry profit recovery

Securities Times Reporter Sun Xianchao

Recently, the domestic cement market has experienced a phased price increase. Interviews with industry insiders reveal that, driven by multiple factors such as cost support, staggered production, and marginal demand recovery, this seasonal price hike started earlier than in previous years and shows significant regional differentiation.

Industry experts expect that the release of infrastructure demand in the second quarter could further open up upward price potential. However, the core contradiction of industry overcapacity has not been fundamentally resolved, and price recovery remains phased and structural.

Cement Prices on the Rise

By 2025, due to continued declines in real estate investment and slowing infrastructure investment growth, domestic cement demand has continued to fall. Coupled with intense market competition, cement prices have steadily declined throughout the year. According to monitoring by CCA Digital Cement Network, the average transaction price (PO42.5 bulk cement landing price) nationwide in 2025 was 367 yuan/ton, down 17 yuan/ton from the previous year, a decrease of 4.4%.

In the first two months of 2026, the overall trend of cement prices was not optimistic. However, recent developments have changed the situation.

Recently, several listed cement companies’ subsidiaries issued price increase notices. For example, Jinyu Jidong’s subsidiary Liaoning Jinyu Jidong Cement Trading Co., Ltd. issued a price adjustment letter on March 14, stating that from 6 p.m. on March 15, 2026, all cement sales to Jilin Province will see a factory price increase of 40 yuan/ton.

Huaxin Building Materials’ subsidiary Huaxin Cement (600801) (Daye) announced on March 20 that from 6 p.m. on March 21, 2026, all bulk cement sold in Huangshi, Yangxin, Daye, and Ezhou regions will increase by 20 yuan/ton.

Deyang Jianfeng Cement Co., Ltd., under Jianfeng Group, also issued a price adjustment notice on March 20, stating that from 12 p.m. on March 21, 2026, the sales prices of bagged and bulk cement in Wuhan will increase by 20 yuan/ton.

As of March 20, the Century Construction Network Cement Price Index was 335 yuan/ton, up 4 yuan/ton from early March.

Wang Long, who runs a building materials business in Changchun, told Securities Times that he received his first price increase notice from cement producers since last year, with factory prices rising by 20 yuan/ton.

A staff member from Yatai Building Materials’ sales department confirmed via phone that the company’s recent cement factory prices have increased by 40 yuan/ton.

According to monitoring by Zhuochuang Consulting, from February 24 to March 20, main cement producers in the Northeast, Jin-Ji-Lu-Yu, East China Yangtze River Delta, Sichuan-Chongqing, and Shaanxi Guanzhong regions successively raised prices. The Northeast completed two rounds of price increases, with a total notification increase of 90–100 yuan/ton, and actual landing prices increased by 20–40 yuan/ton; Shaanxi Guanzhong and Jin-Ji-Lu-Yu regions issued notices in early to mid-March for a 20–30 yuan/ton increase, but actual transactions have not yet fully implemented; East China Yangtze River Delta region announced a 20 yuan/ton increase, which is mostly in effect now.

Hou Linlin, an analyst at Zhuochuang Consulting, believes that compared to previous seasonal price hikes, this round started earlier and shows more regional differentiation. Traditionally, seasonal price increases usually begin in mid to late March or early April, coinciding with the resumption of construction sites and demand release. This round’s regional differentiation is more pronounced, showing a pattern of rising prices in the north and falling in the south. Last year, East China led the price hikes and drove nationwide adjustments; this year, the Northeast took the lead, while East China, South China, and Southwest are still seeing price declines. When the second round of increases occurred in the Northeast, East China began to rise, but South China’s decline continued.

Li Kunming, an analyst at China Cement Network and the Cement Big Data Research Institute, said that although cement and clinker prices in East China generally increased by 20 yuan/ton, the actual effect was below expectations. Despite marginal demand recovery, overall demand remains low, and price increases are gradually progressing but have not yet fully materialized.

Multiple Factors Converge

Regarding the recent rise in cement prices, Li Kunming believes that three main factors are driving this round of price increases: first, improved weather after Lantern Festival, workers returning to work, and accelerated construction activity downstream, leading to demand marginally rebounding; second, cement prices have been declining throughout 2025 and are at low levels in recent years, resulting in strong industry willingness to raise prices; third, coal prices remain relatively high, providing rigid cost support.

“The main reason for this price increase is rising costs combined with coordinated price adjustments by leading companies,” Hou Linlin pointed out. Currently, actual demand recovery is slower than in previous lunar calendar periods, and in northern regions, clinker inventories are ample, so the market does not have strong conditions to push prices higher. However, in February, a sharp rise in coal prices increased production costs, and cement prices before the holiday approached or even fell below cost, squeezing profit margins further. As a result, mainstream companies in Northeast, North China, and East China have increased self-discipline in kiln shutdowns and coordinated efforts to raise prices.

Jiang Yuanlin, an analyst at Century Construction Cement, believes that on the supply side, staggered production during the heating season has reduced clinker inventories in Northeast and Henan by an average of 21 percentage points, and regions like Zhejiang have implemented capacity self-discipline controls to actively reduce supply. On the cost side, rising oil prices in March have increased transportation costs by 26–39 yuan/ton, and rising energy and raw material costs support price increases. On the demand side, post-holiday infrastructure projects have resumed and accelerated, with key project cement procurement increasing by over 30% month-on-month. Demand improvement supports price transmission, and profit recovery is also an important driver.

Jiang emphasized that this price increase can only temporarily alleviate the industry’s low-price competition and profit pressure but cannot fundamentally resolve the supply-demand contradiction. In the short term, price adjustments will directly expand corporate profit margins, especially benefiting leading companies. In the long term, overcapacity remains unresolved, with some southern regions’ inventories exceeding 60% of warning levels. If demand recovery falls short of expectations, companies may cut prices again to gain market share. Meanwhile, ongoing cost pressures, weak cost transfer ability of small and medium enterprises, and profit recovery disparities will further deepen industry segmentation.

Limited Profit Recovery

Despite continued demand decline and falling prices in 2025, some listed cement companies have seen profit recovery thanks to cost reductions.

Huaxin Building Materials expects net profit for 2025 to be between 2.7 billion and 2.95 billion yuan, an increase of 11.6% to 21.9% year-on-year. One reason for profit growth is lower fuel costs and the company’s ongoing cost reduction and efficiency measures, which have restored unit profitability of main products.

Tepai Group reported during a March 19 conference call that in 2025, the decline in the company’s average cement sales cost was greater than the decline in prices, leading to an improvement in core profitability and a 2.37 percentage point increase in overall gross margin year-on-year.

When discussing the outlook for cement prices in 2026, Tepai Group indicated that prices after the Spring Festival have shown some softening, with recent significant corrections in the Pearl River Delta market—about 40 yuan/ton, slightly below the same period last year—mainly due to slow real estate resumption and VAT reforms in concrete. Whether prices will rise again depends on the recovery of demand in the near future.

Li Kunming predicts that in 2026, cement prices will generally stabilize with regional differentiation. In the second quarter, with infrastructure demand concentrated, the national average cement price is expected to rise by 5–8%, with supply-demand balance in regions like Northeast and Northwest offering upward potential. Regions with ample capacity, such as the Yangtze River Delta, are likely to see stable prices, with little chance of large increases. On the supply side, staggered production and industry self-discipline will continue to keep capacity utilization around 55%, avoiding large supply releases. On the demand side, infrastructure investment will serve as a stabilizer, with marginal improvements in real estate demand but limited recovery space. Overall, demand will further narrow its decline, maintaining a weak supply-demand balance, and profitability is expected to gradually recover to the average of the past three years.

“Cement demand in the second quarter will seasonally improve compared to the first quarter, but still lag behind the same period last year; the phased demand recovery will support price increases but is unlikely to return to the levels seen in the first half of last year,” Li said. The industry’s core contradiction remains a weak supply-demand pattern. Although capacity control has reduced clinker registered capacity below 1.7 billion tons, demand has declined more sharply, and the supply-demand contradiction has only marginally eased, not fundamentally reversed.