Work on nearly 70% of new or ongoing construction projects across China that had been suspended to allow workers to return home for the Chinese New Year holiday (over January 31-February 6) had started or resumed as of February 24, Mysteel’s latest survey has found. With three weeks now having passed since the holiday’s end, progress on recovering the building sector has been slower than is normal after the annual Spring festivities, a delay which survey respondents blamed on continuing tight liquidity in China’s construction sector.
The latest survey was conducted over February 21-24 across 12,099 construction projects nationwide including both infrastructure and property projects. The resumption rate as of Thursday had improved by 42.3 percentage points compared with the first week after CNY but was still 17.3 percentage points lower compared with the same period after last year’s lunar new year.
Similarly, the ratio of construction workers who had resumed normal work (as a percentage of the total workforce on projects) was only 56.5% as of February 24, 20.3 percentage points lower compared with the third week after CNY last year, according to the survey.
“Activity on many construction sites is delayed because the projects are experiencing a lack of funds. The issue is still prominent at the moment, despite the continuous efforts of the central government begun late last year to enhance liquidity,” a survey participant said. In Southwest China’s Guangxi, for instance, the resumption of work on projects there is generally delayed by 15-20 days, she explained.
Commercial banks and even suppliers of building material such as steel and cement are extremely cautious about lending money or signing supply contracts with property developers in particular, worrying that the builders will default on contracts should they file for bankruptcy, she indicated.
“Expectations in the market for demand from the property sector this year are low, and as for infrastructure projects, the suppliers are waiting for the middle of March when the weather turns warmer to see exactly how strong the demand will be,” she said.
Another Mysteel survey across 237 steel traders in China also indicated low demand from the construction sector due to the slow restart. Over February 21-24, the trading volume of steel for construction use comprising of rebar, wire rod and bar-in-coil averaged 115,505 tonnes/day, far below the average of 181,309.6 t/y traded during March 8-12, 2021, also the third week after the last year’s CNY holiday, Mysteel Global notes.
Written by Olivia Zhang, zhangwd@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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