China’s housing indicators

The real estate sector is the largest metal end consumer in China (FXI). The country’s real estate sector bounced back in 2016 amid the stimulus from the Chinese government. However, the construction-led boost seems to be fading. China’s Housing Indicators Show a Continued Slowdown

Growth stalls

China’s real estate investment grew 9.7% YoY (year-over-year) in the first ten months of 2018. The growth rates have fallen to a ten-month low. According to Reuters’ calculation, “Property investment, which mainly focuses on residential but also includes commercial and office space, grew 7.7 percent in October from a year earlier, slowing from an 8.9 percent expansion in September.” The land area purchased by real estate developers also grew at a slower pace in the first ten months—compared to the first nine months.

Home prices

The data also showed continued softness in property sales. The sales volumes, which is measured in the floor area, fell 4.7% YoY in the first ten months. The data showed an additional deterioration from September. However, Chinese property prices have still held their ground. According to Reuters’ calculation, “China’s new home prices rose 1.0 percent in October from a month earlier, faster than a 0.9 percent increase in the previous month.”

A slowdown in China’s property market is negative for copper and miners like Freeport-McMoRan (FCX), BHP Billiton (BHP), and Vale (VALE).

Next, we’ll discuss some other indicators of Chinese copper demand.

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