The demands of cement across China remain intact in 2017. A further decline in new cement capacity should support the cement prices to continue uptrend this year. The Chinese government has implemented a new environmental tax policy since the beginning of this year, this policy is likely to have a huge impact on the profitability of cement producers with less operation efficiency. As smaller cement producers tend to have higher unit coal consumption than larger producers, they have relatively higher electricity costs and emission expenses. This kind of cost differentiation should force the weaker players to exit the cement industry and speed up the industry integration. We see signs of acceleration in the infrastructure investment across several regions in China after the release of the next five-year plan in the 19th National Congress of the Communist Party of China. There should be stronger cement demands in Southern China region as subsequent infrastructure projects are ready for launching. We suggest a buy the dip strategy on leading companies within the cement sector, such as China Resources Cement (1313) and Anhui Conch Cement (914).