Projections indicate that in 2025, the domestic cement industry's total profit from pure cement operations may reach approximately CNY18-20 billion (excluding non-cement businesses like aggregates and overseas cement profits), representing a 12.5%-25% increase over 2024. When factoring in overseas operations, aggregates, and investment businesses, the industry's total profit could reach CNY 28-30 billion.

However, despite the impressive performance of listed companies and the apparent recovery in industry profits, domestic cement producers generally felt the chill in 2025.

1. The truth behind profit recovery. The 2025 profit rebound primarily stemmed from high price levels at the beginning of the year coupled with declining coal costs, rather than significant shifts in the supply-demand dynamics that directly influence industry development.

Data indicates cement prices in early 2025 were approximately RMB 50/ton higher than the same period in previous years. Regarding coal prices, thermal coal prices fluctuated downward overall in the first half of 2025, easing production cost pressures for cement enterprises. By the end of June, the average spot price for thermal coal stood at RMB 625/ton, a year-on-year decrease of 27.2%.

From a corporate performance perspective, Tianshan Cement stated in its interim report that operating costs totaled CNY 29.31 billion, down 16.71% year-on-year, while expenses and other costs amounted to CNY 7.371 billion, a decrease of 9.76% year-on-year.

Regarding industry profit margins, the cement sector recorded a total profit of approximately 13-14 billion yuan in the first half of 2025, compared to a loss of CNY 1.1 billion during the same period in previous years.

2. Cement prices trended “steadily downward,” marking the industry's “most dismal peak season.” Despite higher prices at the beginning of the year, domestic cement prices in 2025 showed an almost continuous downward trajectory. Even by the fourth quarter, the national market remained unable to sustain upward momentum, making it arguably the cement industry's “most dismal peak season” in years.

By the end of last year, the national average cement price had fallen by approximately ¥85 per ton compared to the peak at the beginning of the year.

3. Supply-demand imbalance remains severe, with production recovery efforts intensifying industry concerns. On the demand side, cement market consumption continues to decline, hitting its lowest level since 2010. Data from the National Bureau of Statistics indicates that China's cement production in 2025 reached 1.693 billion tons, a year-on-year decline of 6.9%, with total domestic demand falling below the 1.7 billion ton threshold. The downward trend in future demand appears unstoppable, projected to drop to 1.0-1.2 billion tons by 2030. This will intensify the supply-demand imbalance, forcing many cement companies out of the market.

On the supply side, while the industry has accelerated capacity expansion efforts, nominally phasing out some outdated capacity, this has done little to alleviate the overcapacity pressure. In fact, various issues during the expansion process have exacerbated regional overcapacity problems. Coupled with the disruption of the existing market structure, this has intensified industry concerns about the 2026 market outlook.

4. The diminishing effectiveness of off-peak production further erodes industry confidence. Off-peak production has been implemented in China's cement industry for a decade, playing a significant role in alleviating supply-demand imbalances. However, its effectiveness is steadily declining in 2025.

By 2025, signs of off-peak production's failure have become quite evident. Cement prices across regions continue to rise, yet enforcement remains challenging. The third and fourth quarters, traditionally peak seasons, unexpectedly became the year's price trough. Reports from some markets indicate increasing difficulties in enforcing peak-shifting production.

The core foundation for peak-shifting production lies in relatively robust market demand. Once demand experiences sustained, significant declines, it becomes necessary to continually extend peak-shifting days. Even then, poor demand makes price stabilization extremely challenging. Currently, peak-shifting production is gradually losing its foundation for effective implementation.

Fragile Foundation for Profit Recovery: Industry Faces More Challenges Ahead

Overall, the industry's profit recovery in 2025 stems from a high price baseline at the beginning of the year and declining coal costs. This profit improvement represents more of a “cost dividend” than a “demand dividend,” making its foundation extremely fragile. Simultaneously, the underlying supply-demand imbalance profoundly affecting the industry is intensifying, leading to diminished effectiveness of peak-shifted production and triggering numerous challenges such as shifts in the competitive landscape.

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