China Materials_ Demand Tracker – Stimulus improves demand outlook

Summary of Key Points from the Conference Call Industry Overview - Industry Focus: The conference call primarily discusses the China Materials sector, particularly focusing on steel, cement, and property markets in the Asia Pacific region [1][6]. Core Insights and Arguments - Demand Recovery: There is an improvement in demand outlook due to stimulus measures, with property sales increasing during the holiday period. Steel and cement demand are also showing signs of recovery [1][6]. - Production Adjustments: Some aluminum strip factories have reduced production due to pollution warnings in Zhengzhou, which may become a recurring issue in winter. The national operating rate of alumina producers was reported at 86.70%, up 0.8 percentage points week-over-week [1]. - Steel Output: Daily crude steel output from major producers reached 2.01 million tons in late September, reflecting a 1.3% increase compared to mid-September [1]. - Vehicle Sales: Retail sales of passenger vehicles in September totaled 2.11 million units, marking a 4.5% year-over-year increase and a 10.6% month-over-month increase. Notably, sales of New Energy Vehicles (NEVs) surged by 50.9% year-over-year [1]. - Excavator Sales: Sales of excavators rose by 10.8% year-over-year to 15,831 units, with domestic sales increasing by 21.5% year-over-year [1]. Property and Infrastructure Stimulus - Client Visits and Sales: There was a year-over-year increase in client visits and property sales during the National Day Holiday. Weekly primary unit sales in 50 cities increased by 77% year-over-year [1]. - Local Government Special Bonds: Local government special bond (LGSB) issuance reached Rmb128 billion in October, bringing the year-to-date total to Rmb3.6 trillion, which is approximately 93% of the total quota [1]. - Investment in Infrastructure: In the first nine months of 2024, fixed asset investment in railways totaled Rmb561.2 billion, up 10.3% year-over-year [1]. Building Materials Activity - Cement Shipments: Cement shipments in eastern China improved post-holiday, with prices increasing by Rmb30-100 per ton. Apparent consumption of long and flat steel products increased by 25.5% week-over-week [1]. - Glass Inventory: Glass inventory decreased by 18.3% week-over-week to 52.1 million weight cases, attributed to restocking and speculation after the holiday [1]. Construction Projects - New Projects: In September, 4,247 projects commenced construction nationwide, with total investment amounting to Rmb2,233.26 billion, which is a 38% year-over-year decline but a 67% month-over-month increase [1]. Additional Insights - Future Stimulus Policies: The Ministry of Finance indicated that more stimulus policies are forthcoming, including expanding the investment scope of LGSB to repurchase vacant land and housing inventory [1]. - Market Sentiment: The overall sentiment in the materials sector is viewed as attractive, with analysts highlighting potential growth opportunities in the context of government stimulus and recovering demand [1]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the China Materials sector.