China Materials_ Demand Tracker – January 10

Summary of Key Points from the Conference Call Industry Overview - Industry: China Materials, specifically focusing on construction, infrastructure, and automotive sectors - Market Sentiment: The overall view of the Greater China Materials industry is considered attractive [9][34] Core Insights and Arguments 1. Fiscal Policy and Economic Support: - The Ministry of Finance indicated a potential substantial increase in the budget deficit rate for 2025, with ample fiscal policy tools available to support economic growth [5][34] - The government plans to utilize these tools to stimulate the economy, particularly in infrastructure investments [5][34] 2. Construction and Infrastructure Activity: - In December 2024, 4,520 major projects commenced construction with a total investment of approximately Rmb2.62 trillion, although total investment for FY24 was down 32% YoY to around Rmb32 trillion [7][34] - Weekly primary unit sales in 50 cities increased by 49% YoY, while secondary unit sales in 10 cities rose by 67% YoY [4][34] 3. Production and Sales Trends: - Lee & Man Paper plans to suspend and reduce production by approximately 270,000 tons during the Chinese New Year [2][34] - Crude steel output from key enterprises was reported at 1.872 million tons in late December, reflecting a 5.3% decrease compared to mid-December [2][34] 4. Automotive Sector Performance: - Retail sales of passenger vehicles (PV) reached 2.622 million units in December, marking an 11% increase YoY and a 9% increase MoM, with total sales for FY24 at 22.88 million units, up 5% YoY [3][34] - New energy vehicle (NEV) sales surged to 1.379 million units in December, a 46% increase YoY and a 10% increase MoM, with total sales for FY24 at 10.975 million units, up 42% YoY [3][34] 5. Building Materials Market: - Cement shipments and prices in eastern China are experiencing a decline due to a slowdown in demand [6][34] - Apparent consumption of long and flat steel products decreased by 8.0% and 1.6% WoW, respectively, with year-over-year changes of -17.0% and +0.7% [6][34] Additional Important Insights - Local Government Special Bonds: The issuance of local government special bonds (LGSB) is expected to play a significant role in financing infrastructure projects, with a total issuance amount of Rmb33.8 billion in January 2025 [5][34] - Policy Measures: Recent policies aimed at stimulating property and consumption recovery include lowering down payment ratios and interest rates for first-time homebuyers, as well as supporting housing inventory buybacks [34][34] This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current state and outlook of the China materials industry.