Dream on, Big Australian:
…Secondary sales in the housing market “continue to be strong, very strong,” Vandita Pant, BHP’s chief commercial officer, said in an interview on Thursday. “We always thought sales and completions of homes will turn around first, and then new starts,” she said, adding “that trajectory is holding.”
…Pant said BHP still expects China’s metals demand “to be a source of stability in the second half, and the second half to be better than the first half,” echoing the words of Chief Executive Officer Mike Henry at the company’s half-year results in February.
The first quarter of 2023 was “better than we were expecting,” but the market got carried away in the second quarter, pushing commodity prices to unrealistic levels, Pant said. China’s economy wouldn’t feel the “full tailwind” of government stimulus measures, introduced earlier this year, until 2024, she said.
Ya think? Does this look like the leading index of a new boom:
How about this?
Credit flow and property developer spreads are the two key leading indicators for a turn in new starts. Both are getting worse, not better.
This makes the fading rebound in property sales moot given developers will continue to deleverage and run down enormous stock inventories instead of building new towers.
The other point of note is that infrastructure spending is likewise fading:
And the special bond issuance that drives it has a 5% lower quota this year than last, as well as having been front-loaded:
Neither H2 nor 2024 will bring the ““full tailwind” of government stimulus measures” because there are none.
Indeed, unless Bejing changes its mind about that quick smart (which there is no sign of) and throws the kitchen sink at property, H2 and 2024 are going to bring the full headwind of China going ex-growth.
Along with an iron ore crash to shake the foundations of BHP.
