China Materials_ Demand Tracker – December 27

Summary of Key Points from the Conference Call Industry Overview - Industry: Construction and Materials in China - Key Focus: Local Government Special Bond (LGSB) issuance and its impact on infrastructure and property sectors Core Insights and Arguments - Construction Demand: There is a seasonal slowdown in construction demand, with planned production of air conditioners, fridges, and washers expected to decline by 1.5%, 6.5%, and 8% respectively in January 2025 [3][3][3] - Steel Production: Daily crude steel output from major producers decreased to 1.977 million tons in mid-December, down 2.3% from early December [3][3][3] - Vehicle Sales: Passenger vehicle retail sales for December 1-22 reached 1,692,000 units, marking a 25% year-over-year increase and a 14% month-over-month increase [3][3][3] - Shipbuilding Orders: Global new shipbuilding orders rose by 23% year-over-year and 39% month-over-month to 4.04 million CGT in November, with Chinese shipbuilders capturing 63% of the market [3][3][3] - LGSB Issuance: Total LGSB issuance in December was RMB 21 billion, bringing the year-to-date total to RMB 4.0 trillion, which is 102.6% of the 2024 quota [3][3][3] Infrastructure and Property Sector Insights - Policy Support: The Ministry of Housing and Urban-Rural Development (MoHURD) reported that policy-supported housing delivery is expected to reach 3.38 million units in 2024, with 1,790 urban village redevelopment projects initiated [3][3][3] - Local Government Projects: Hunan Province commenced 259 major projects with a total investment of RMB 270 billion as of December 26 [3][3][3] - Cement and Steel Consumption: Cement shipments in eastern China showed slight weakness, while apparent consumption of long and flat steel products decreased by 5.7% week-over-week [3][3][3] Additional Important Information - Market Dynamics: Weekly primary unit sales in 50 cities increased by 5.0% year-over-year, while secondary unit sales in 10 cities surged by 58% year-over-year [3][3][3] - Bond Usage: The usage of local bonds is primarily directed towards infrastructure, land, and housing projects, with infrastructure accounting for 63% of total bond usage [27][27][27] - Future Outlook: Analysts maintain an attractive view on the construction materials sector, anticipating continued support from government policies aimed at stimulating infrastructure and property development [3][3][3] This summary encapsulates the critical insights from the conference call, focusing on the construction and materials industry in China, particularly regarding local government bond issuance and its implications for infrastructure and property sectors.