Metals Sector Check - When China Sneezes, The World Catches A Cold: Motilal Oswal

Motilal Oswal Report

The effect of that 'sneeze' ripples through the metals and mining industry globally. China accounts for more than 50% of global metal consumption with majority of demand coming from infrastructure and construction. 

Over the last two years, China has been facing headwinds in its construction sector with issues revolving around the Covid-19 pandemic and bankruptcy filed by some of the largest construction companies in the country.

However, in the last two months, the construction sector seems to be improving with support from the government.

Though the monthly capital supply has improved by 3.4% to Chinese yuan 7.75t and China property markets have showed signs of improvement with new home prices across major cities increasing, total unsold inventory continues to stand at a staggering 655 million square metres. as on February 2023.

The property market in couple of cities is under massive stress and banks have restored to drastic and desperate measures such as extending the age limit of mortgage to as high as 95 years. These multi-generational ‘relay loans’ are expected to lift Chinese real estate market from their historic downturn.

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