According to the Zhitong Finance App, cement stocks have continued to decline. As of press time, Dongwu Cement (00695) fell by 21.02% to HKD 1.24; China National Building Material (03323) fell by 3.14% to HKD 2.78; Conch Cement (00914) fell by 2.98% to HKD 18.24; CR Building Materials Technology (01313) fell by 2.13% to HKD 1.38.

According to a research report by Debon Securities, the Materials Industry Department of the Ministry of Industry and Information Technology recently solicited opinions on the "Implementation Plan for Capacity Replacement in the Cement and Glass Industries (2024) (Draft for Soliciting Opinions)"; compared with the 2021 version, this Draft clearly proposes that the energy efficiency of newly-built cement and glass production lines must reach the energy efficiency benchmark level for the cement industry stipulated in the "Energy Efficiency Benchmark and Baseline for Key Industries (2023 Version)". Production capacity of cement clinker production lines that produce less than 30% of the annual production capacity for two consecutive years cannot be used for capacity replacement. The production capacity of flat glass production lines that have been shut down due to force majeure for more than three years can be used for replacement by the end of June 2025, and photovoltaic rolled glass projects can be constructed through capacity replacement.

The Bank points out that capacity replacement policy is becoming stricter. According to data from China Cement Net, the inefficient capacity with energy efficiency levels below the baseline value is around 16%, about 285 million tons. Under the new capacity replacement policy in the future, it may force inefficient production capacity to accelerate exit from the market, and the supply and demand pattern of the industry may gradually improve.