Global Metals & Mining_ China property starts for FY’24 on track to be the lowest in nearly 2 decades, sales rate turns positive in Nov’24

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the Global Metals & Mining industry, with a specific focus on the Chinese property market and its impact on steel demand [5][6][7]. Core Insights and Arguments - Sales and Starts Trends: - FY'21 sales increased by 2% year-over-year (y/y), while starts decreased by 11% y/y. - FY'22 saw a significant decline with sales down 24% y/y and starts down 39% y/y. - FY'23 continued the downward trend with sales down 9% y/y and starts down 21% y/y. - FY'24 is projected to decline in double digits from a low base, with FY'23 marking the lowest annual starts since 2008 and the lowest annual sales since 2012 [8][9][30]. - Impact of Property Market on Steel Demand: - The weakness in property starts during the second half of 2022 and into 2023 has significantly affected steel demand, particularly in China, which accounts for about half of global steel consumption. Property now constitutes less than 20% of steel demand in China [8][30]. - Forecasts for FY'24: - Citi's forecasts indicate a sales decline of 18% y/y and a starts decline of 24% y/y for FY'24, reverting to sales levels seen in 2009 and starts levels in 2005 [9][30]. - Recent Performance Metrics: - In November 2024, floor space sales were up 3% y/y, while starts were down 27% y/y. For the first 11 months of 2024, sales were down 14% y/y and starts down 23% y/y. Completions also saw a significant decline of 39% y/y in November [10][30]. Additional Important Insights - Destocking Trends: - There has been a consistent trend of sales growth outpacing starts growth for over four years, indicating significant destocking. In 11M'24, sales outpaced starts by 780 basis points (bps) [29][30]. - Completions Decline: - Completions in the property sector have decreased by 26% y/y in 11M'24, contrasting with a 17% y/y increase in completions during 2023 [10][30]. - Analyst Certifications and Disclosures: - The report includes certifications from analysts regarding the accuracy of the views expressed and potential conflicts of interest due to the firm's business relationships with the companies discussed [12][18][19]. Conclusion - The conference call highlights significant challenges facing the Global Metals & Mining industry, particularly due to the downturn in the Chinese property market, which is expected to continue impacting steel demand and overall market dynamics in the near future. The forecasts suggest a bleak outlook for FY'24, with substantial declines in both sales and starts anticipated.