A：The recent poor market performance, the interest rate sensitive industry concerns rise, and building materials as a pro-cyclical and undervalued varieties, in the current environment, worthy of moderate attention. Since 2026, the building materials sector has risen brightly, especially after the introduction of Shanghai's real estate policy last week. In addition, the building materials sector in the national anti-roll policy in a higher position, the policy tone to clarify the importance of its steady growth. The building materials sector does face the impact of both policy and marketization expectations. On the one hand, building materials as a real estate chain varieties, its demand is closely related to real estate, but in the real estate downward trend, building materials demand terminal changes, real estate accounted for the proportion of consumer building materials demand contraction. On the other hand, the demand for stock renovation and the activity of second-hand housing transactions have increased, providing a new support point for the demand for building materials.

A：The supply of building materials sector has experienced a four-year downward cycle, and is one of the key industries of the anti-roll concept. From the real estate chain point of view, building materials demand by the impact of the real estate downturn, some of the molecular industries such as waterproof materials, glass, etc. experienced a decline in production and market clearance. At the same time, with the decrease of new construction of real estate and the increase of demand for stock renovation, the demand structure of building materials has changed, and the increase of second-hand housing turnover has formed a strong support for the demand for building materials.

A：Although the new construction of real estate is not expected to be high, the demand for stock renovation, especially the stable expectation of second-hand housing turnover, has strong support for the demand for building materials. Taking Shanghai as an example, the hot sales of second-hand houses have driven the growth of demand for renovation and shop decoration, which has stimulated the demand for building materials.

A：In a super-first-tier city like Shanghai, houses may enter the stage of renovation before 2000 or after the period from 2000 to 2010. With the aging of housing and the change of young people's demand for decoration, the renovation cycle of real estate is expected to further accelerate the iteration, which will bring a certain increase in demand to the building materials market.

A：The total market for building materials may not be huge, but it has reached a stage where demand can be stabilized in some segments.

A：As mentioned in a blockbuster article published by Qiushi magazine at the beginning of this year, the key highlights include the need for policies to be given at once rather than released gradually to avoid a game between the market and policies.

A：The recent implementation of the new real estate policy in Shanghai is an example. There have been substantial improvements in the use of provident funds and housing restrictions. It has responded to the one-time setting of the policy and is stronger than the new real estate policy in Beijing last year.

A：The article emphasizes that housing is the largest and most important asset of ordinary families, and housing prices directly affect the interests of the masses and consumer confidence. Therefore, the policy needs to release sufficient strength at one time to ensure the stable and healthy development of the real estate market.

A：The infrastructure sector occupies an important position in the demand for building materials, urban renewal, old renovation, demolition and construction are infrastructure-related needs, and in the next few years there will be more capital investment, bringing considerable demand for building materials.

A：On the whole, the supply of building materials sector is expected to contract, while demand can remain stable in some sub-sectors, so the building materials sector has investment story and logical support. These three sub-sectors account for about 45%, 34%-35% and 10% of the building materials industry, respectively. They will all benefit from real estate, urban renewal and improved policy expectations, but due to their different industry patterns and production areas, there will be different catalysts and future deductive logic, thus presenting different investment stories.

A：Cement products have four distinctive features. First of all, cement is highly homogeneous. The cement produced by different companies, different regions and even different countries is basically the same, so there is not much premium and difference. Secondly, cement has a short shelf life and is not easy to store, and it will dry quickly after coating, resulting in almost no inventory, and due to the small transportation radius (usually 20-28 days) and high transportation costs, it is mainly manifested in regional product characteristics. There are synergies in the cement industry, and when poor demand leads to lower prices and impaired earnings, companies in different regions can negotiate off-peak production to maintain price stability and avoid industry-wide losses by controlling production.

A：The supply and demand situation in the cement industry is complex due to the high degree of homogeneity, short transport radius and the impact of domestic demand pricing. On the one hand, cement overcapacity is serious, especially domestic demand is large, and exports are limited; on the other hand, cement can be regulated through peak-shifting production and other methods, but due to the easy resumption of production and the inadequate implementation of some enterprises, the actual price effect is often not ideal.

A：The regional and transportation radius characteristics of the cement industry determine that it cannot be purchased or used across regions on a large scale, generally purchased in nearby provinces, and does not tend to transport long distances. Therefore, when analyzing the cement market, in addition to focusing on national production and demand, special attention should be paid to the imbalance between supply and demand between regions.

A：The cement industry's opening costs are relatively low, and even if there are cash flow problems, companies can choose to stop production to reduce losses. However, there will be a certain cost to re-burn the kiln when the production is stopped, but in general, compared with the steel, glass and other industries, the cost of resuming production after the suspension of production in the cement industry is lower.

A：In recent years, some cement companies have begun to actively go to sea, especially in Africa and other places to establish factories to sell cement, which has become a bright spot in cement demand. Africa is accelerating the process of infrastructure construction, there is a large demand for cement, and the local production maturity and technology are relatively backward, so that cement enterprises can sell better prices after going out to sea.

A：The reason why cement companies can have outstanding performance returns is the management of the supply side, especially through the two policies of over-production governance and carbon trading to optimize the industry situation. Among them, over-production governance is mainly to solve the problem of overcapacity, by adjusting the consistency of actual capacity and record capacity, and requiring enterprises to produce in accordance with the record capacity, in order to improve capacity utilization. According to the plan, by the end of 2025, it is expected that about 0.2 billion tons of cement production capacity will be able to withdraw from the market, which will increase the national cement production capacity utilization rate from the current low level by about 10% to 60% to 65%. However, the capacity utilization rate between different regions is still differentiated. For example, the Yangtze River Delta region may form a certain support for cement prices after further improvement due to the high capacity utilization rate.

A：The process of realizing unification is divided into two steps: the first step is to formulate a production capacity plan that exceeds the recorded production capacity, requiring cement enterprises to reduce the excess production capacity by 2025, and to achieve the goal of matching the recorded production capacity by discarding part of the production capacity or replacing the production capacity (trading with other cement enterprises according to the capacity index ratio of 1.5 to 1 or 2 to 1). The second step is to carry out strict production verification according to the record production capacity on the basis of unified production capacity.

A：Cement overcapacity is manifested as "small batch see big", that is, enterprises in the application of capacity declaration and the actual construction of completed capacity there is a gap, the actual capacity is often more than 20% of the approved record capacity. Therefore, when investigating overproduction, it is necessary to first unify the standards of actual production capacity and record production capacity.

A：The strictness of the implementation of the overproduction governance policy is not yet clear, and verification may be carried out on a daily basis or according to annual targets, but in any case, the core is to ensure that enterprises strictly comply with the provisions of the record capacity and prevent unapproved overproduction.

A：Another important policy for the cement industry is carbon trading, which covers all high-carbon-emitting industries such as steel, cement and aluminum smelting. Carbon trading mainly uses market mechanisms to control and reduce carbon dioxide emissions, and encourages companies to reduce carbon emissions by buying and selling carbon emission rights to meet the challenges brought by climate change.

A：In the carbon trading scheme, the carbon quota for 2025 is based on the carbon emissions verified in that year plus a correction factor alpha (-3). For enterprises whose carbon emission intensity is higher than or lower than 20% of the benchmark, their quota surplus rate will change. If the company's carbon emission intensity is low and the carbon dioxide emitted per unit of cement produced is less, it will get more carbon allowances and obtain higher profits through carbon trading. Companies with high carbon emissions will face a shortage of quotas and need to purchase additional carbon credits from companies with better carbon emissions management. For companies whose carbon intensity is less than 20% of the benchmark, we will give them a carbon quota that exceeds the benchmark, which is based on historical emissions and multiplied by a factor greater than 1. On the contrary, for companies with carbon emission intensity higher than 20%, we will give them a carbon quota of less than 1, which means that they need to buy additional carbon emission credits in the market to meet the requirements. In this way, a carbon trading mechanism is formed, which gives incentives to enterprises with good carbon emission management and imposes penalties on enterprises with poor management.

A：After the implementation of the carbon trading policy, it can not only achieve market-oriented incentives for companies with poor carbon emission management to improve and reduce overall carbon emissions, but also for the cement industry, it can raise the production costs of the end companies and encourage companies to improve environmental management and technology. Transformation. At the same time, the policy also pays attention to changes in domestic and foreign market demand, especially the sea chain of the African market, and the implementation of the two policies of strengthening production governance and carbon trading in the country.

A：Waterproof materials as a building materials sector in the growth of better sub-sectors, its market share is considerable, in the past few years has experienced the supply end of the clear and industry leading concentration process. Among them, the part represented by waterproofing, supply has contracted by more than 38% in the past year, and leading companies have raised prices many times, benefiting from the logic of rising prices of chemical raw materials. In addition, the improvement of consumers' awareness of the functionality of building materials such as waterproofing has further promoted the development of the industry.

A：Consumer building materials sector performance bright, out of a certain independent market. This is mainly due to the increase of product richness, the growth of product functions of functional enterprises, the improvement of user demand awareness and the further development of the sinking market. Although the overall is still closely related to real estate infrastructure, but the future of the consumer building materials sector deduction logic is more clear.

A：There are significant differences in market characteristics between the glass industry and the cement industry. Cement has a short transportation radius, short shelf life and low start-up costs, while glass can be stocked, the transportation radius is long, and the cost of stopping construction is very high. Because once the glass production line is shut down, the cooling and solidification of the liquid will lead to pipeline blockage, causing damage to the entire production line, so the glass enterprises will not easily shut down when it is not necessary, even if the cost of shutting down and resuming production is very high.

A：The glass industry suffered a large loss last year, especially in the winter due to high energy consumption, rising costs and other factors, cold repair significantly accelerated. The glass industry may continue to lose money for a period of time, when the enterprise can not see the hope will choose cold repair, which will lead to production capacity temporarily out of the market. The high cost of reopening after cold repair means that the capacity has essentially been withdrawn for some time.

A：It is expected that in the next period of time, the glass cold repair may be accelerated, and the production capacity is expected to be cleared. On the other hand, photovoltaic glass is facing the problem of overcapacity, and its new capacity is not restricted. In the past few years, with the rapid development of the new energy industry, the rapid increase in production capacity has led to oversupply and low capacity utilization. The future will follow the evolution of the photovoltaic industry.

A：The building materials industry has entered a downward cycle since 2021 and is currently at the bottom of the cycle. From the perspective of the three major sectors, each has a clear grasp and deductive logic. The bottom of the building materials industry is basically confirmed, and the future direction of interpretation also has its own logic. At present, the performance of the building materials sector is similar to last year's chemical sector, in the cycle reversal logic, some of the funds began to enter the market and high valuation, the follow-up may have further story.

A：At present, the building materials sector is in the stage of gradual entry of funds, clear investment logic, strong policy expectations, moderate prices and high winning rate. Cathay Pacific Fund's Building Materials ETF(159745) covers a wide range of fields, including cement, waterproofing, glass, coatings and other fields, and the current valuation is at a low level, providing investors with a better opportunity for layout. The size of the ETF continues to rise as funds are laid out in the building materials sector.