In December, the market entered the macro month, with several major meetings held in succession. Among them, the Central Political Bureau meeting proposed implementing a more proactive fiscal policy and a moderately loose monetary policy next year, enriching and improving the policy toolbox, strengthening extraordinary counter-cyclical adjustments, deploying a "stimulus policy package," and enhancing the foresight, precision, and effectiveness of macroeconomic regulation. A review of China's monetary policy in recent years reveals that since 2011 , China's monetary policy has consistently maintained a "prudent" tone. The last time a moderately loose monetary policy was adopted was in 2010 . This time, the reintroduction of a "moderately loose" monetary policy marks the first time in 14 years . Therefore, the overall economic tone is relatively positive. Additionally, the meeting further emphasized "stabilizing the real estate and stock markets," sending a strong signal for halting the decline and stabilizing the real estate market. Returning to fundamentals, due to seasonal factors, construction progress declined this month. Outdoor construction projects in northern regions were gradually suspended, while some projects in south-west and south China experienced a rush to meet deadlines. In January, the market will enter the traditional Chinese New Year holiday period, with downstream enterprises gradually suspending operations and taking holidays. Currently, the market lacks confidence in the seasonal rebound in steel demand after the spring, and steel demand in January may hit a seasonal low. 1. New Orders Received by Enterprises According to SMM survey data, 35% of surveyed enterprises recently secured new projects, down 5% MoM, while 65% of enterprises continued working on existing projects without receiving new ones. The Third Engineering Bureau of China Construction Group stated:
We currently have new projects, and in November, we were still rushing to meet deadlines. It is expected that holidays will begin in mid-January, but some projects will continue during the Chinese New Year. There are no funding issues for the projects, but the overall group is facing financial constraints.
Shanghai Construction First Group Development Co., Ltd. stated:
Currently, there are frequent starts and stops depending on project conditions. Recently, material usage has remained stable, and it will likely stay steady through the New Year. Subsequent progress will depend on project requirements, and weather impacts are minimal for now. This year has not been great overall, so we are closely monitoring tenders. Any available tenders must be pursued, but there are currently few projects, intense competition, and significant potential risks, making it difficult to secure projects. Next year's situation is uncertain and will depend on national policy support. We will focus more on provincial and national-level projects next year and leverage our advantages to compete. Zhejiang Zhongnan Construction Group stated:
Currently, there are no new projects or winter stockpiling plans. The operating rate is significantly lower YoY, and no improvement is expected in the next one to two months. Overall project progress is average, and the post-Chinese New Year situation remains unclear. Most enterprises are still operating at a loss. Chart-1: Project Acceptance in Real Estate and Infrastructure Industries
2. Financial Constraints Show No Significant Improvement According to the SMM survey, financial constraints in the construction materials industry showed no significant improvement this period. 42% of surveyed enterprises still face financial difficulties, up 2% MoM, while 58% reported relatively normal financial conditions, sufficient to maintain regular production operations.
The South-west Branch of the Third Construction Engineering Company of China Construction Third Engineering Bureau stated: Recently, new projects have started, with groundwork already underway, but no additional new projects are planned. Some projects have been suspended, mainly due to funding problems. Currently, there is no indication of financial relief for projects, and funds allocated to the government are often directed toward livelihood-related areas.
The Fourth Engineering Company of China Railway 14th Bureau Group stated:
Winter stockpiling plans have not yet been finalized. This year's financial situation is poor, and winter stockpiling is likely to be shelved. In remote areas, some projects have already been suspended, and construction progress in north-east China has slowed. Projects in other regions are mostly ongoing. Year-end financial settlements are expected, but there has been no improvement in funding so far, and project finances remain tight.
The Second Construction Limited Company of China Construction Eighth Engineering Division stated:
Currently, payment recovery is poor, and debt collection efforts are ongoing. We are working on two projects, both progressing normally without rushing. The economic situation remains challenging, and overall payment recovery is weak. Winter stockpiling has not yet started this month, and holidays are expected at year-end. Chart-2: Financial Status in Real Estate and Infrastructure Industries
3. Downstream Enterprises Maintain a Wait-and-See Sentiment Toward the Market According to the SMM survey, 52% of downstream enterprises remain optimistic about the market outlook, down 8% MoM. Market participants are relatively optimistic about the future, while 48% of enterprises hold a wait-and-see attitude, believing that demand remains in the off-season. January demand is expected to hit a seasonal low, with no significant short-term improvement anticipated.
The First Engineering Company of China Communications First Navigation Bureau stated: Previous projects have been completed, and there are no new projects currently. No procurement is being conducted, and personnel are idle. Winter stockpiling will not proceed, and holidays will be taken as usual at year-end. No new projects are expected in the next two months. The company's project plans for next year have not been announced and will depend on next year's project situation. The current financial situation is poor, with no improvement in sight.
Shandong Judo Decoration Engineering Co., Ltd. stated:
The project team has secured a new project, but it cannot be started before the New Year and will begin afterward. Progress will depend on circumstances, but project progress will undoubtedly slow over the next three months, with work stopping in less than a month.
The Fourth Engineering Company of China Railway Seventh Bureau Group stated:
There are no new projects at year-end. Previous projects are progressing normally, and no new projects are planned for the next two months. This year's operating rate is lower YoY, with no significant changes in procurement or personnel. Raw materials are still purchased as needed, and no major changes are expected in the next three months. Chart-3: Market Outlook Expectations in Real Estate and Infrastructure Industries
In summary, the market in December was in the off-season. With the cold wave intensifying, the country experienced widespread temperature drops. Outdoor construction projects in northern regions were gradually suspended, while some projects in south China rushed to meet deadlines. Due to a lack of confidence in the seasonal rebound in steel demand after the spring, enthusiasm for winter stockpiling remains low. In January, the market will enter the traditional Chinese New Year holiday period, with downstream enterprises gradually suspending operations and taking holidays. Typically, enterprises resume work after the Lantern Festival, so demand for construction materials in January may hit a seasonal low.
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[Survey Method: Telephone Survey]
