Our monthly CRR cement report forecasts accelerating recovery in home sales and a bottom for the property construction slowdown as property purchase restrictions continue to loosen.
“Those owning only one property who have paid off their first mortgage will be treated as first time borrowers. As for families that own two properties but have paid off all loans, banks should review their background “case by case” and set the down payment and mortgage rate accordingly”.—PBoC and CBRC announcement on Sep 30.
Our CRR team now more positive on cement consumption over next 3-6mths. Expect to see accelerated property construction in large cities where developers are more likely to have less inventory and more cash than smaller city peers.
Managers at the 51 cement plants we track see sales rising MoM in all 3 major downstream sectors in Oct, and this was prior to PBoC announcement loosening mortgages to 2nd home buyers.
ASP of the 51 plants rose by 1.3% MoM in Sep ending a 3mth long correction and raising the avg gross margin by 1% to 18.2%. Managers predict another 1.5% price hike in Oct.
Hmmm, the jury is still out for me owing to the structural nature of the housing market slowdown. It is not all policy-induced and should not therefore fully reverse with policy.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
