On April 30, the Political Bureau of the Central Committee held a meeting on real estate, which had two important statements. First, continue to consolidate the responsibilities of all parties. The meeting pointed out that we should continue to adhere to the policy of implementing policies according to the city, consolidate the responsibilities of local governments, real estate enterprises and financial institutions, and do a good job in guaranteeing the delivery of houses. Second, real estate enterprises should go to inventory. The meeting emphasized that the policy measures to digest the stock of real estate and optimize the incremental housing should be studied as a whole, and a new model of real estate development should be constructed to promote the high-quality development of real estate. Among them, "digesting stock real estate and optimizing incremental housing" is a new formulation that has not appeared in recent years, which has aroused widespread concern in real estate and related industries. As one of the important upstream raw material industries of real estate, how will the cement industry be affected?
First, after nine years, China's economy began to enter a new normal from
2014 to 2015, and the real estate industry is facing problems such as credit crunch, explosion of real estate enterprises and high inventory. The shed reform has officially begun. The Central Economic Work Conference held at the end of 2015 put forward the task of "three go, one supplement and one fall", requiring the real estate industry to open up supply and demand channels, digest inventory and stabilize the real estate market. From 2016 to 2021, with the help of policy dividends and demand release, the real estate industry ushered in a period of prosperity and development.
Table 1: Comparison
of two major conferences on real estate destocking Source: Data collated
by Cement Big Data Research Institute shows that as of March 2024, the area of commercial housing for sale in China's real estate development enterprises is 748.33 million square meters, exceeding that in 2015. If the second-hand housing is added, the generalized inventory will be even higher. In this context, after nine years, the central government re-mentioned the inventory, while diluting the "three major projects", digesting the stock inventory as the focus of the real estate industry in the future. The author believes that history will repeat itself, but not simply repeat itself. On the one hand, the relationship between supply and demand in the current real estate market has undergone major changes; on the other hand, the state's determination to guide the high-quality development of the real estate industry is unswerving. Therefore, it is difficult for the real estate industry to reproduce the glorious period of the 13th Five-Year Plan, and it is expected that after deep adjustment, it will turn into a new stage of stable and healthy development.
Figure 1: Current Real Estate Inventory Reaches Historical High
Data Source: Cement Big Data (https://data.ccement.com/)
II. Cautious view of the impact
on the cement industry (I) Short-term: boosting confidence and improving expectations
China Cement Network Cement Big Data shows that since 2023, the confidence index of cement along the Yangtze River has been mostly below 50%, which reflects the lack of confidence of cement enterprises in the context of the declining prosperity of the real estate industry. After the Politburo meeting, Beijing, Hangzhou and other important cities have introduced policies to partially relax or fully liberalize the purchase restrictions, and it is expected that more regions will offer relaxed measures. In the short run, as an industry closely related to the real estate industry, market confidence will be boosted to a certain extent, which will play a positive role in improving the future expectations of business operators.
Figure 2: Confidence index of the cement market along the Yangtze River (%)
Data source: Cement big data (https://data.ccement.com/)
(II) Long-term: downward trend
is hard to change After the central government put forward "de-inventory" in 2015, the real estate industry entered a boom period again, with steady investment growth, rising house prices and doubling house prices in many areas. At the same time, benefiting from stable demand and supply-side structural reform, cement prices are rising step by step, the cement industry is out of the loss quagmire, and real estate and cement achieve a "win-win" situation. In 2022 and beyond, real estate continued to adjust deeply, cement demand shrank sharply, and this boom began to end.
Figure 3: House Prices 2016-2021, Cement prices go
up together Data source: Cement Big Data (https://data.ccement.com/)
2016-2021 This round of real estate inventory was completed in the form of rising house prices, whether by the government or by real estate enterprises and residents. All of them hold optimistic expectations for real estate, coupled with favorable policies and demand release, real estate sales and investment have shown a high degree of prosperity. However, with the passage of time, the current industry environment has undergone significant changes, high-frequency data show that the real estate sales data has not improved since May 2024, and the effect of the new policy remains to be observed. Looking at the long cycle, the demographic dividend has gradually disappeared, the relationship between supply and demand in the market has undergone major changes, the policy of "no speculation in housing" has become a consensus, residents'expectations are generally poor, and housing enterprises are more C autious in opening new projects. Therefore, the impact of this round of real estate de-warehousing policy on the cement market is relatively limited, and it is difficult to change the long-term downward trend of the cement industry.
Figure 4: Land transactions and new construction have not been regularized
Data source: cement big data (https://data.ccement.com/)
